The cost of long-term care can be substantial. Assisted care costs can range from $50,000 to $100,000 a year, depending on the type of care required. Many families and individuals do not have the funds or resources to pay for extended stays in nursing homes or other assisted living facilities, and Medicare does not pay for long-term care. 

If a person or family does not have the funds to pay for nursing home care, Medicaid can help. Medicaid is a government health care insurance program governed by state law, even though some funds come from the federal government. Medicaid can cover the cost of nursing home care for residents who are eligible for needs-based assistance. However, if you have funds in a retirement account, it could be difficult to qualify for Medicaid. 

Retirement Accounts and Medicaid

To be eligible for Medicaid benefits, you must have limited income and resources. To qualify for Medicaid, resources can include retirement accounts, such as Individual Retirement Accounts (IRAs), SEPs, and 401(k) accounts. Ohio treats retirement accounts as either income or resources when it determines a person’s eligibility for Medicaid benefits. 

If you receive guaranteed lifetime payments from a pension plan, the state considers this to be income. Likewise, if you have funds in a retirement plan, the state considers this money a resource. Therefore, before you could become eligible for Medicaid benefits in Ohio, you would need to spend down the money in your retirement accounts to a level that falls below the eligibility requirements for Medicaid benefits. 

Are There Other Ways to Qualify for Medicaid Instead of Spending Down Retirement Funds?

Depending on your family situation, needs, and finances, there could be other ways to qualify for Medicaid benefits that do not involve spending down retirement funds.

For example, some couples might utilize the provisions passed by Congress in 2006, whereby some individuals may covert retirement accounts into annuities to become eligible for Medicaid benefits. However, the income from the annuity for the spouse remaining at home cannot exceed Medicaid income levels. Also, Medicaid can recover payments for nursing home care from any amount remaining in the annuity after the death of both spouses. 

For some couples, this option might be great. Unfortunately, if you want your family to inherit the money remaining in your retirement accounts, transferring a retirement account to an annuity to qualify for Medicaid may not be the best option for you. The good news is that you might have other options available for Medicaid planning.

What is Medicaid Planning?

Medicaid planning involves reviewing your current financial situation to determine the steps you can take now to qualify for Medicaid benefits in the future. Medicaid rules prevent an individual from transferring property simply to qualify for Medicaid benefits. In other words, you cannot transfer all your property to your children this week just so that you can receive Medicaid benefits for nursing home care next week. 

However, there are various exceptions to these rules that can allow a person to transfer property and remain eligible for Medicaid benefits. Therefore, there could be several ways for you to protect your property from a Medicaid recovery action after your death while allowing you to become eligible for benefits to pay for long-term care costs, if necessary. Because Medicaid rules are complex, it is best to speak with an experienced attorney before you transfer assets or take any other steps. A misstep could result in a lengthy penalty period in which you cannot qualify for Medicaid benefits.

Ask a Mentor Medicaid Planning Attorney for Help

Planning for long-term care costs can be complicated. You must be careful not to take any steps that can place your assets or income in jeopardy while taking steps to ensure you can qualify for Medicaid benefits if you need them in the future. A Medicaid planning attorney can help you accomplish both goals.

If you have questions about Medicaid planning in Ohio, contact Attorney Heather Moseman to schedule a consultation by calling (440) 255-0832 or by completing the contact form on our website.