Let’s assume that you are entering a nursing home for skilled nursing care, or that you may do so in the near future. 

Medicaid planning starts with consideration of all your assets – your checking and savings accounts, cash on hand, certificates of deposit, stocks, mutual funds, IRAs, real estate, business interests, and so on.  Count everything you and your spouse own, including accounts either of you own jointly with others (for example, a savings account that lists you and your daughter as owners).  Be sure to include anything that has monetary value, such as the cash value of a whole life insurance policy. 

Of your total assets, some will be exempt, meaning they will not count for Medicaid eligibility purposes.  Common exemptions in Pennsylvania include the house (value up to $500,000), one motor vehicle, personal items such as clothing and jewelry, household goods and furnishings, irrevocable burial reserves and burial spaces, community spouse pension funds, trade or business property, and a limited amount of life insurance cash value.

Let’s suppose the couple’s combined assets look like this:

Medicaid rules allow the community spouse to keep some non-exempt assets in the form of a community spouse resource allowance (CSRA for short).  The CSRA consists of one-half of the couple’s non-exempt assets on date of nursing home admission, but can be no less than $19,908 and no greater than $99,540.  (Note:  These figures are adjusted annually for inflation.)

After calculating the CSRA, the total picture might look something like this: 

What do you do with the assets subject to further Medicaid planning?  The answer depends on any number of considerations, including the amount of the remaining assets, your income, your spouse’s income, your spouse’s health, whether or not you have long-term care insurance, whether or not you have a disabled or caregiver child, and so on.

Options could include:  gaining the state’s approval for the community spouse to receive an enhanced CSRA; transferring the house penalty-free to a caregiver child; placing assets into a special needs trust for a disabled child; purchasing an annuity to provide ongoing income for the community spouse; purchasing additional exempt assets; or spending down assets.

Well designed Medicaid plans can look much different depending on the circumstances.  Here are just a few possible examples: 

There is no “one size fits all” answer.  Here is where you need the advice of a good elder law attorney, who can work with you to identify your objectives and make recommendations that best suit your needs.