30 Jul
If there’s one thing that weighs heavily on the minds of older adults living in Texas, it’s what happens to their homes and savings when nursing home care is required. It’s only natural to think that the state will take everything you own to pay for your care.
While that can undoubtedly be a reality, it doesn’t always have to be with careful Medicaid planning in Texas. Now’s the time to talk to an elder law attorney in DFW and discuss the following nursing home asset protection options:
Protecting Your Family Home from Nursing Home Costs
In Texas, the primary residence is an exempt asset. For your peace of mind, the state can’t take it as long as you or your spouse intend to return to the home. However, when you undertake Medicaid planning and learn more about the process, you’ll discover that the state can place a lien on your home through its Medicaid Estate Recovery Program (MERP) and use it to recover the costs of your care upon your death.
A range of services and programs are affected by MERP, including:
- Nursing facility care
- Intermediate care facilities for individuals with an intellectual disability or related condition
- Medicaid waiver programs
- Hospital and prescription drug services
So, how do you stop your home from being used to cover your nursing home costs? Contact a Medicaid lawyer to create a Lady Bird Deed.
What Is a Ladybird Deed?
A Ladybird Deed, also known as an enhanced life estate deed, is a special type of deed that allows you to name the beneficiaries of your property upon your death, if you still own it.
You’ll still retain full control of your home during your lifetime, but the ownership automatically transfers to the person(s) you named in your deed documents upon your death. This deed allows you to completely bypass the probate process and avoid MERP claims.
What does this mean?
MERP accesses a deceased Medicaid recipient’s home through the probate process. As a Ladybird Deed bypasses the probate process and transfers property ownership outside of it, the state can’t reach your property.
Protecting Your Savings and Cash
To qualify for Medicaid, any individual must have countable assets of $2,000 or less, or up to $3,000 for a married couple. This criterion can be frustrating for individuals who may have more assets than the minimum, but still don’t have enough to pay for their care out of pocket.
Fortunately, there are other eligibility options. Your Medicaid planning attorney in Bedford, TX, or another part of the state can discuss the following with you:
Spend-Down Strategies
If you’re eager to ensure a straightforward and fast way to become eligible for Medicaid, employ a spend-down strategy. There are many ways to legally spend down your excess cash without triggering a transfer penalty. The following enables you to pay off debt or convert your cash into non-countable assets:
- Pay off debt like medical bills, credit cards, and mortgages
- Make necessary home modifications, like installing wheelchair ramps
- Personal care agreement in which you prepay family members or friends for caregiving services at fair market rates
Protection Trusts and Annuities
Spending down savings and cash isn’t always an option, especially for those with significant wealth they want to protect for their loved ones. In that case, it’s important to set up protection trusts and annuities long before a health crisis happens.
Medicaid Asset Protection Trusts (MAPTs)
A Medicaid Asset Protection Trust, or MAPT, is an irrevocable trust. You transfer your assets into this trust, which is managed by a trustee. Once the assets have been in the trust for five years, they tend to be shielded, allowing you to qualify for Medicaid.
Medicaid-Compliant Annuities (MCAs)
Medicaid-compliant annuities are financial tools that you can use in Texas to turn your excess countable assets into a fixed income stream. Establishing an annuity may help you become eligible for long-term Medicaid care in Texas without triggering the look-back penalty.
Instead of being denied Medicaid care because you have countable assets above the minimum limit, an MCA lets you turn your countable sum into steady income. As it’s an income flow, rather than an available asset, you’ll immediately qualify for benefits.
It’s important to note that the applicant must meet a range of criteria to ensure an annuity complies with Medicaid.
Understanding the Five-Year Look-Back Period
It’s only natural that you’ll want to do everything in your power to protect your assets, cash, and savings to ensure it remains in your family, rather than going to the state. However, before you take any drastic actions, it’s crucial to understand what the five-year look-back period could mean for you and your family.
What is the Five-Year Look-Back Period?
Eligibility criteria for Medicaid is strict, with individuals being required to meet specific income and asset requirements. However, Medicaid doesn’t just look at your current assets and financial transactions. They look at them dating back five years from the day you applied for Medicaid benefits.
The purpose of the five-year look-back period is to confirm that you haven’t tried to shield assets that you could otherwise use to pay for the care you need. Such actions include selling your home to a family member below market value or giving money or assets to friends or family.
As there are some exemptions to these rules, talk to a Medicaid planning Texas attorney who can explain what the five-year look-back period could mean for you.
The Penalties of the Five-Year Look-Back Period
If, during a look-back investigation, the Texas Health and Human Services Commission (HHSC) discovers uncompensated asset transfers, such as selling a home to a relative below market value or cash gifts, a penalty period of Medicaid ineligibility can be triggered.
The HHSC calculates the total value of the transferred assets and divides it by the state’s average daily or monthly private-pay nursing facility rate to determine the number of days or months that you won’t receive Medicaid benefits. This figure will mean that for that period of time, you’ll need to fund your own care.
Learn How to Protect Your Home and Savings with Help from Livens & Reed in DFW, Texas
Medicaid planning in Texas can be overwhelming, especially when you must meet a range of criteria while knowing that the HHSC will thoroughly review your finances. If you need help and guidance while navigating this process, Livens & Reed Attorneys at Law in Dallas-Fort Worth, Texas, are here to help.
Our experienced Medicaid planning and elder law attorneys provide comprehensive planning services and help you navigate the intricacies of elder law. Contact us today to start your legal service.
