What is Medicaid Planning and is it worth it? What is Medicaid Planning? You can find many different definitions of Medicaid Planning. A quick internet search will yield hours of descriptions, definitions, and ethical discussions related to Medicaid Planning. I like to think of Medicaid Planning simply as the following: Strategically arranging your assets in such a manner so as to maximize your retention of those assets for the purposes you choose, especially considering the incredibly high costs of long-term care should that become necessary. That’s it. At the end of the day, Medicaid Planning means maximizing your assets so they can remain available for your use to the largest extent possible. Is it worth it? Let me give you just a quick example of a married couple living in Ohio: Richard and Beverly have the following assets: A. Exempt Assets: A jointly owned home worth $100,000 – no mortgage; B. Countable Assets: $100,000 (such as cash, stocks, bonds, mutual funds, CDs, automobiles beyond the first car, etc. – for the example, we will just assume it is a bank account with $100,000 in it). Situation A: No Medicaid Planning If Richard becomes ill and must enter a nursing home, the law only permits Beverly to protect and keep 50% of the couple’s countable assets, which, in this case would be $50,000 (50% of $100,000 bank account). The law allows Richard, the Medicaid recipient, to keep only $2,000 of countable assets to be eligible for Medicaid. Therefore, the couple would need to deplete or “spend down” a full $48,000 of the bank account before Richard would be eligible for Medicaid to begin paying for his care. This would leave Beverly with $50,000, Richard with $2,000, and the jointly owned house (which is an exempt asset), for a total of $152,000. Situation B: Basic Medicaid Planning: If Richard and Beverly did some basic Medicaid Planning before Richard entered the nursing home, here is an example of what could happen instead: Richard could deed his entire interest in the couple’s home to Beverly. There would be no penalty for this property transfer because Beverly is Richard’s spouse. Beverly’s attorney could then create a simple, revocable trust, and then deed (transfer ownership of) the house to the trust. Don’t get hung up on the details – this is a simple process. Once the house is owned by the trust (with Beverly as the sole beneficiary, of course), the house would no longer be an exempt asset, and would now be considered a “countable asset.” Then, when Richard enters the nursing home, they would apply for Medicaid on his first day. On that day, when the calculation to determine the amount of countable assets Beverly and Richard can retain, the couple would now have the following assets: A. Exempt Assets: $0.00 B. Countable Assets: $200,000 (the $100,000 countable assets from before, along with the $100,000 value of the house in the trust). Now, when the same calculation is performed (on the day Richard enters the nursing home and applies for Medicaid), Beverly would still be permitted to retain and protect 50% of the Countable Assets, and Richard would still be able to retain and protect $2,000. However, since the couple has converted the house to a Countable Asset, Beverly would be able to retain and protect $100,000 (50% of $200,000), instead of the $50,000 prior to the transfer. Richard would still be able to retain $2,000, but that would not be necessary because Beverly had already protected the entire bank account. Afterwards, the house can be transferred from the trust back to Beverly, and back to an Excluded Asset. Since that calculation only occurs once for Beverly (the community spouse), she now is able to keep the entire $100,000 bank account, the house as an Excluded Asset ($100,000), and Richard is now eligible for Medicaid. This would leave Beverly with the entire $200,000. So, for Beverly and Richard, a couple with $200,000 in total assets, some basic Medicaid Planning could potentially permit them to protect almost a full 25% of their assets that would otherwise need to be “spent down” or depleted before Richard was eligible for Medicaid. Is Medicaid Planning Worth it? Even under the facts of the very simple example above, the couple would be able to preserve an additional $48,000 through some very basic Medicaid Planning. If you throw in additional assets, debts, and monthly income for one or both spouses, the strategies become more involved and more complex, and the stakes get higher, but the concept remains the same. In addition, even if you or your spouse has already entered the nursing home and are currently not eligible for Medicaid, strategies can be employed to save you money as well. So, is Medicaid Planning worth it? I’ll let you decide.
 There is a maximum of approximately $119,000, but it is not relevant for this example.