I was working with a family today. Dad was in the nursing home getting rehabilitation. Elderly Mom was still living at home, and she is too fragile to be able to take care of Dad if he comes home after rehab. Mom and Son said Dad weighed about 230 pounds, and Dad would need someone around the clock to care for him. Dad is likely to live in the nursing home until he dies.
Mom was disappointed because she expressed how hard Dad had worked over the years to save some assets to pass along to their children. They owned a paid-for home, and they had another roughly $230,000 of life savings. We discussed how, normally, people in a nursing home have to spend all of their savings until they have less than $2,000 remaining. She also told me that the nursing home in Lake Charles, Louisiana, would cost her husband $5,400 monthly. She could foresee their life savings that they had spent seven decades saving - wasting away.
We discussed a particular legal strategy that would enable them to save Mom about $175,000 of her $230,000. The only way this strategy works is that if the bulk of the non-home assets are liquid, and there is a child or children that will cooperate with the plan. The legal strategies are very complicated, but it involves:
- The parents transferring their Countable Resources to other parties;
- The parent applies for Long-Term Medicaid - and gets denied due to the transfer of resources. Medicaid will assess a penalty period that lasts a number of months;
- Assets are returned to the parents to reduce the value of the original transfer, thus reducing the penalty period;
- Parent spends the returned funds on their care.
All of this is very complicated and there is a significant amount of documentation that is necessary. One mistake can cost the family their entire life savings and perhaps even their home.
Taking advantage of legal strategies to protect your assets from losing to the nursing home is most effective when you plan ahead - at least five years before a nursing home situation. Since no one knows if - or when - they will go into a nursing home, it's difficult to determine when you should engage in Medicaid planning. But we know that the sooner you take the right action, the better.
But if you have a relative who is in the nursing home right now, or they are within days of going into the nursing home, and they have cash assets of $120,000 or more, you may want to give us a call so that we can help you determine if there are actions you can take within the rules of the Louisiana Long Term Care Medicaid Manual to protect what you've save for yourself and your loved ones.