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Asset protection for older adults

On Behalf of | Jun 18, 2024 | Estate Planning |

Nobody wants to spend time in a nursing home. However, 70% of Americans 65 and older will eventually need some skilled care. 

Many times, it is a short stay, such as recovering from an illness or while rehabilitating after surgery. But there are others who will require an extended stay, and unless there are protections in place, they could lose a significant amount of assets to cover their care.

Medicaid look-back

To be eligible for Virginia’s Medicaid assistance for a nursing home stay, your income can only be $2,829 per month, and total assets of $2,000 (income and asset criteria are slightly higher for married couples). If you have income and assets above that threshold, you must pay for your care out-of-pocket until you’ve spent enough to be eligible for assistance.

Cash, savings, stocks, bonds and real estate that isn’t used as a primary residence are countable assets that count towards the Medicaid limit.

Some tools and strategies to consider include:

  • Purchasing long-term care insurance before health issues arrive is a proactive way to cover future nursing home expenses. However, policies vary, so it’s essential to understand and compare coverage limits, maximum payouts and specific services covered by the policy.
  • Take advantage of allowable expenses under Medicaid’s look-back period. Use excess assets to pay off debts or make home improvements. Paying off outstanding medical bills can help reduce countable income.
  • Establishing an irrevocable trust can protect assets from being counted towards Medicaid eligibility. Transferring assets to the trust allows you to preserve them for beneficiaries while qualifying for Medicaid after the look-back period. It’s crucial to remember that once you transfer your assets into an irrevocable trust, you can’t remove them.

Protecting your assets if you need long-term skilled care takes a lot of consideration and planning. It’s vital that you work with someone who can develop a plan that meets your goals while also complying with Virginia’s laws to avoid penalties and protect your eligibility for benefits.