1. Cohen & Oalican, LLP
Protecting Your Assets
Legal Services for Older and Disabled
Clients and their Families
Elder Law, Boston, Raynham and
2. PROTECTING YOUR ASSETS FROM THE
COST OF NURSING HOME CARE
Many fail to plan for the possibility of entering a
their spouse’s financial security, life savings, home
and children’s inheritance at risk
Nursing homes in Massachusetts cost
approximately $10,000 a month
Traditional health insurance policies and Medicare
provide little or no long term care coverage
Medicaid rules are complicated and include many
traps for the unwary
3. The Asset Rules
Nursing home Medicaid specifies that an
applicant, single or married, may have no
more than $2,000 in "countable" assets
"Countable" assets include everything you
own, except for the applicant's home (if it is
located in Massachusetts and it has equity
less than $750,000)
Everything else, second homes, retirement
savings, life insurance, is counted and may
have to be spent down before you can
4. The Home
Homes with equity of less than $750,000 are not considered a
However this does not mean that the house is protected
Without proper planning, at death the State will have a lien against
your house and at death Medicaid will seek reimbursement for
With proper legal planning you can avoid a Medicaid lien and
protect your home saving hundreds of thousands of dollars
Giving your home to your children might be the worst choice
Transferring a home outright to children can result in large capital gains
Things can happen to children that can place the house at risk.
What happens if a child gets divorced, is sued or has creditor problems
Seniors have been literally forced out of their own home as a result
of ‘gifting’ their house to their children.
One strategy our office uses to protect homes from the Medicaid
lien is an irrevocable trust.
An irrevocable trust can protect your home from a Medicaid lien and
avoid the risks of outright gifts.
5. The Transfer Penalty and the
Look-Back - 1
If you give away your assets it will make you and your
spouse ineligible for Medicaid benefits for up to five years.
When you apply for benefits, Medicaid reviews five years of
bank statements in order to identify any disqualifying
This is known as the “look-back period.”
Any transfers that happened before the five year period are
protected and do not have to be reported to Medicaid.
However, if you apply for benefits during the look-back
period, Medicaid imposes one month of ineligibility for
approximately every $8,000 you give away.
In addition, the clock does not start “ticking” on the
ineligibility period until you are in a nursing and have spent
down your assets.
6. The Transfer Penalty and the
Look-Back - 2
The easiest way to explain the transfer rules is by
way of an example.
Mrs. Smith transfers $24,000 to her grandson on March
15, 2008. On April 15, 2009,
Mrs. Smith suffers a stroke and is admitted to a nursing
Assume she spends down her assets below $2,000 as of
Because she would be applying during the look-back
period, Medicaid would impose three months of
($24,000 ÷ $8,000 = 3 months).
The transfer penalty would not start until August 1, 2009
and would end in November 2009.
7. Protecting Your Spouse/Assets
Medicaid law provides for special protections for the spouse
of a nursing home resident, known in the law as the
The spouse of a Medicaid applicant is entitled to keep a
portion of the couple’s assets.
The community spouse is entitled to keep a maximum of
$109,560 (2009 figures).
This assessment is not affected whether the assets are
jointly held by the couple or they are all in the name of the
nursing home spouse.
For example, if a couple owns $75,000 in countable assets on
the date the applicant enters a hospital, the community spouse
will be entitled to a resource allowance of $75,000. If they have
$250,000, the community spouse can keep the maximum of
8. Protecting Your Spouse /
One means of protecting assets for the community spouse is
through the purchase of an annuity.
The purchase of an annuity transforms excess assets that
would otherwise make the nursing home spouse ineligible
for Medicaid into a non-countable stream of income for the
In other words, we can typically protect all of a couple’s
savings for the at-home spouse and obtain Medicaid
eligibility for the nursing home spouse, even at the last
minute through the purchase of a Medicaid qualified annuity.
However, the annuity does not need to be purchased ahead
of time. In fact, the annuity should not be purchased until the
spouse enters a nursing home.
The possibility for a spouse or parent to
need nursing home care is the greatest
financial risk facing most seniors.
Given the State’s tightening budget, it has
become even more difficult to obtain
Medicaid eligibility and protect your assets.
For your own peace of mind, it’s more
important than ever to hire an experienced
Elder Law Attorney to create a
comprehensive Asset Protection Plan to
preserve all that you have worked for.
10. Cohen & Oalican, LLP,
Metro Boston Office
18 Tremont Street
Boston, MA 02108
108 North Main Street
Raynham, MA 02768
North Suburban Office
15 Railroad Street
Andover, MA 01810