medicaid planning for singles

MEDICAID PLANNING FOR SINGLES: HOW TO MANAGE THE $7-9,000/MONTH COST OF STAYING IN A NURSING HOME

P. Haans Mulder, JD, MST, CFP®

Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) [email protected]

Upcoming Seminars• Veterans Benefits, Estate Recovery, and

Changes in the Medicaid Rules-June 13.• Seminar is at 4:30.

Serving the Holland area since 1900

Background• Attorney and Partner at Cunningham

Dalman, P.C.• Have a Masters in Tax (MST), CFP®

and specialize in estates/elder law and business planning.


Background• Cunningham Dalman, P.C. has been serving

the greater Holland area since 1900.• We have 15 attorneys specializing in all

areas of the law.


Overview• Discuss the Medicaid rules and the

program.• Give you some planning options to protect

the assets of a single person.


Did you know?• 40% of people 65 years and older will

stay in a nursing home.• Average cost to stay in a local nursing

home is $7-9,000/month ($84-$108,000/year).


What is Medicaid?• It is a state and federal program that

pays for medical treatment (including long term care).

• Oftentimes confused with Medicare.


When does Medicaid apply?• Historically, it only paid for nursing

home care. • In certain counties (that have the MI

Choice Waiver program), it will pay for care in someone’s home or an assisted living facility.


Who does Medicaid apply to?

• Applies to people who are 65 years or older, blind, or disabled.

• Must satisfy the medical requirements (level of care assessment).

• Need to meet the income and asset tests.



• Monthly income cannot exceed the monthly cost of your stay in a nursing home ($7-9,000 in this area).

• For the Waiver program, income must be less than $2,094/month.



• Under assets test, a single person can only have $2,000 in countable assets.

• Can keep his or her home (if it’s not in a trust) and a vehicle.

• All other assets are countable.


• Client is single. • She has an estate plan (living trust,

pourover will, and powers of attorney).• She is healthy and does not anticipate

needing long term care in five years.


Planning Example #1

• She has a house, vehicle, and $250,000 in investments.

• She receives monthly income of $1,100 in Social Security and $600 from a pension.


Planning Example #1

• She has monthly expenses of $2,200 so there is a shortfall in her income of $500 per month.

• Since her husband passed, she has a son who has started to help her in various ways.


Planning Example #1

• She is concerned about going to a nursing home and not having any resources to take care of her house.

• She is also worried about Medicaid not covering all of her needs (other medical care, clothes, etc.).


Planning Example #1

• She creates an irrevocable trust in which she receives the income (i.e. interest and dividends).

• Her son is the trustee and her children are the beneficiaries of the trust principal.


Planning Example #1

• She makes a gift of $220,000 to the trust.

• She will receive approximately $916/month in income from the trust.

• She will not likely need any other resources.


Planning Example #1

• If she does need other resources, her son can take a distribution from the trust (because he is the trustee and a beneficiary).

• He can then gift it back to her.


Planning Example #1

• There is a five year “look back” period for Medicaid.

• She will need to remain healthy five years from the time of the gift for this planning technique to be effective.


Planning Example #1

• Client is single and is admitted to a nursing home.

• He has a house, vehicle, and $75,000 in investments.


Planning Example #2

• Without any planning, he will have to spend the $75,000 in investments down to $2,000.

• He could then receive Medicaid.


Planning Example #2

• With only $2,000, he would over time be unable to pay for his house.

• In these cases, he could rent it.• Or, his children will have to come up

with the funds to pay the house expenses.


Planning Example #2

• There is planning that could protect approximately half of his $75,000 of investments (or $37,500).

• These funds could pay for what Medicaid does not cover (i.e. other care, clothes, etc.).


Planning Example #2

• It could also pay for expenses with the house.

• If there are any funds left over, they would be an inheritance to his children and other beneficiaries.


Planning Example #2

• Upon entering the nursing home, he (or his power of attorney) creates an irrevocable trust.

• His daughter is the trustee and his children are the beneficiaries of the trust principal.


Planning Example #2

• He then makes a gift of $37,500 to the trust.

• This gift results in him being ineligible for Medicaid for approximately five months.


Planning Example #2

• He invests the other $37,500 in a “Medicaid annuity.”

• The annuity and his other monthly income pays for his care for the five months of ineligibility.


Planning Example #2

• At the end of the five months, Medicaid pay for his care.

• He will have to pay all, but $60 of his monthly income to the nursing home.


Planning Example #2

• However, the funds in the trust can be used to pay for non-covered care.

• They can also be used to pay for house expenses.

• Any funds that are remaining become an inheritance.


Planning Example #2

Questions……


Upcoming Seminars• Veterans Benefits, Estate Recovery, and

Changes in the Medicaid Rules-June 13.• Seminar is at 4:30.


Thank YouP. Haans Mulder, JD, MST, CFP®Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) [email protected]


medicaid planning for singles

Health & Medicine