A few months ago, Alan was referred to our firm for advice regarding his parents and their financial situation. He wanted to know what had to be done so that Medicaid would pay for his father’s nursing home care and to find out if there was any way to protect the limited assets they had left. Alan’s father had been in the nursing home for 15 months. Pursuant to the advice of another elder law attorney in 2014 the family spent all $175,000 in his father’s IRA on his care. In addition to the IRA his parent’s also owned a home in Nassau County worth $225,000, a bank account worth $200,000 and a car in his father’s name. He was concerned about the continuing nursing care costs and about his mom’s ability to keep her home and some assets.
Alan had called the first elder law attorney and he was told that. because his mom had given his brother a gift during the 60 month look back period, his mom and dad would have to private pay for 27 more months to get through the look back period. In order to do that, his mom would have to use the rest of their cash and she would have to sell her home to pay the nursing home an additional $100,000. The attorney also advised him, that because the house was now converted to cash, his mom would be able to prepay her and his dad’s funerals, but then would have to pay an additional $25,000 for nursing home care after the look back period expired before his dad would qualify for Medicaid. Alan was very upset and was mad at his brother for taking the money, mad at the nursing home for charging so much money, and mad because he wasn’t told this until the Medicaid application was about to be filed. He asked me if there was anything that could be done.
I thought about it and shared the following:
- Had Alan come to us earlier, I would have made a recommendation that would have protected most of their assets. If his mom loaned him $75,000 in the month before his dad went into the nursing home, and he agreed to repay the loan over 8 months, put the car and house in her name, and applied for Medicaid, his dad would have been eligible the next month for limited coverage Medicaid, and he would have been on full Medicaid at the end of 8 months. Had they done that, the total amount that would have been spent on dad’s care would have been $75,000 and they would have the house (the community spouse is entitled to own a homestead), the whole IRA (because IRA’s are exempt), $74,820 of their cash for mom, $14,850 for dad and they could have prepaid for their funerals and a funeral for each son saving another $30,000.
- Fortunately, all was not lost. Even though they hadn’t taken the steps outlined above, there was a way to preserve the house and some of cash that was left. With the remaining funds, they could still make an 8 month loan to Alan of $75,000, prepay their funerals, keep $90,000 in cash for mom and dad would be eligible for Medicaid in 8 months. Mom would not have to sell the house and she would not have to spend all of her cash and some of the house money as he had been told by the other elder law attorney.
While it was unfortunate that Alan hadn’t met with us in the first place and saved nearly everything, he was able to take some action that helped his mom and dad and, for that, he was very grateful.