I was recently speaking with a couple from Smyrna, Tennessee, and this couple had a variety of questions about nursing home expenses, long term care insurance, and Medicaid. Specifically, this family had a history of living well into their 90s. Also, both had grandparents who lived out their lives, for several years, in a nursing home facility. This couple’s concern was that if they went into a nursing home facility, would they qualify for Medicaid and would Medicaid cover all of their expenses.
I explained to this couple that any one who goes into a nursing home, Medicaid (TennCare as it is called in Tennessee) will review all of the assets that you own. Medicaid lets you own a home, a vehicle, a prepaid funeral, and no more than $2,000 in other assets in your name. If you own any other assets, Medicaid will force you to spend those other assets on your own care, and spend down your assets until you have no more than $2,000 in other assets in your name. After you spend down your assets to this amount, you will qualify for Medicaid and Medicaid will cover the remainder of your nursing home expenses.
In addition, I discussed with this couple that nursing home facilities can range anywhere from $5,000 to $8,000 per month, and it is very common for families to blow through their life savings in just a few years of nursing home expenses. Also, I discussed with this couple, TennCare’s estate recovery rights. I explained that after you die, Medicaid can force the sale of your home so that Medicaid can be reimbursed for all the costs that were paid out while you were in the nursing home and accepting those Medicaid benefits.
However, I also discussed with this couple that there are legal strategies available so that you can protect your assets from having to spend them on your future nursing home costs. I explained with this couple that there is a special type of irrevocable trust commonly referred to by lawyers as the irrevocable Medicaid trust. I discussed with this couple that we could set up an irrevocable Medicaid trust, and transfer all of their assets, including their real estate, into the name of this trust, at least five years before nursing home expenses begin. So long as we set up their legal affairs this way, if they end up going into the nursing home, they will qualify for Medicaid, will not have to spend their own assets on their nursing home care, and their life savings will be protected and preserved for their loved ones.