Today we are going to continue our exploration of Medicaid planning in North Carolina by looking at some specific details surrounding the process. Learn more about medicaid planning in North Carolina in this presentation.

1. “Today we are going to continue our exploration of Medicaid
planning in North Carolina by looking at some specific
details surrounding the process.”
NORTH CAROLINA
MEDICAID PLANNING
PART 2
CHERYL K. DAVID
North Carolina Estate Planning and Elder Law Attorney

2. North Carolina Medicaid Planning – Part 2 www.cheryldavid.com 3
As we mentioned in our previousdiscussionon thistopic, Medicaid
planning is something that cangreatlyhelp you preserve as manyof your
assets as possiblein the face of needing to payfor the expensesassociated
with long-term care. Even if you don't thinkyou will need such carein the
near future, talking to your attorneyabout developing and Medicaid plan
canbe one of the best estateplanning decisionsyou make.

3. North Carolina Medicaid Planning – Part 2 www.cheryldavid.com 4
ASSETS AND MEDICAID PLANNING
One of the biggest issuessurrounding Medicaid planning isdetermining
whether you canmeet theindividualasset limit associated with the
program. Medicaid, unlikeMedicare, isa form of welfare, not an
entitlement program. Assuch, there arestringent asset restrictions
associated with it.
Those who own more
thanthe asset limits
are not ableto qualify
for the program, and
must use their
personal assetsto pay
for long-term care
until those assetsare
below the maximum
asset threshold.
In other words, if you own too much, you will have to pay for your own
long-term careexpenses and "spend down" your assets until you own so
little that you canqualifyfor Medicaid.
COUNTABLE ASSET CALCULATION

4. North Carolina Medicaid Planning – Part 2 www.cheryldavid.com 5
But how much can
you own? Let's take
a look at an
example. Let's say
that you are a
single person,
living alone, and
need to go into a
nursing home or
assisted living
facility. In order to
qualifyfor
Medicaid, you canhave no morethan $2,000 in"countable" assets. This
$2000 threshold isknown as the "reserve limit," and anyone with assets in
excess of this amount cannot qualifyfor the program.
But what is a "countable" asset? Theanswer to thisquestioncanbe a little
complicated. For example, takethe questionof real estate. If you own your
own home, you cankeep up to $543,000 of the home's value out of the
countableasset calculation. Aslong as you plan on returning to thehome
after your stay in the nursing home, or have a spouse or dependent who is
living in thehome while you areaway, you can keep the $543,000 of the
home's value out of the countableasset determination, but nomore. So, if
your home is worth $548,000, however, that $5,000 excesswillbe counted
against you when determiningifyou are eligiblefor theprogram.

5. North Carolina Medicaid Planning – Part 2 www.cheryldavid.com 6
Let's take another example. Let's say you have a retirement planthat pays
you or a beneficiarya specific amount asa lump sum. In thissituationthe
value of retirement plan, regardlessof whether there are negativetax
consequencesassociatingwith accessing thosefunds, is countableagainst
you when determining your eligibility. Onthe other hand, if those
retirement fundsarepaid as a fixed, irrevocableannuitystream, thefunds
are not counted against you.
Of course, these are only a coupleexamples, and there arenumerous other
ways that Medicaidwilllook at your propertyto determineifyou are
eligible.
STRUCTURING ASSETS
So, if the Medicaid asset limitsareso stringent, what will a Medicaid plan
do to help you qualifyfor the program? Whiletherearemany ways to
reduceyour countableassetsin order to qualifyfor Medicaid, manyof them
involve restructuring your assets in such a way that theyare not considered
as countable. You do thisprimarilybycreating oneor more types of trusts.
Of course, there areso
many types of trust that it's
almost impossibleto
discussthem all in a single
overview. Nevertheless,
regardlessof what you own,
and regardlessof whether

6. North Carolina Medicaid Planning – Part 2 www.cheryldavid.com 7
that asset can be counted against you for termsof Medicaid qualification,
there is likely one or more types of trustsavailablethat canhelp you keep
those assets while still qualifying for the program.
TALK TO YOUR LAWYER AS SOON AS POSSIBLE
If our discussionhasnot yet swayed you that Medicaid planning mightbe
something you need to
look at now, as opposed
to putting off untillater,
consider one final point.
Medicaid hasa 60-
month, or five-year, "look
back" timeperiod in
which it will consider the
assets you have in your
possession during that
timewhen considering
you for eligibility. Should
your assets exceed the
maximumthreshold
during that time, you will
not be eligiblefor the
program.

7. North Carolina Medicaid Planning – Part 2 www.cheryldavid.com 8
In other words, if you haven't developed a Medicaidplanas early as five
years prior to needing Medicaid topayfor long-term care expenses, you
might beout of luck. For this reason, and all theother reasons we talked
about, talking toyour lawyer as soon as possible is one of the best things
you cando to help protect yourself, your assets, and your family if you need,
or might need, long-term care.

8. North Carolina Medicaid Planning – Part 2 www.cheryldavid.com 9
ABOUT THE AUTHOR
Cheryl David is a graduate of UNC-Chapel Hill, the
University of Baltimore School of Law, and the
prestigious Trial Lawyer’s College presided over by
Gerry Spence. A former Administrative Judge, Cheryl
is certified as an Estate Planning Law Specialist by the
ABA accredited Estate Law Specialists Board, Inc. She
is also a member of the American Academy of Estate
Planning Attorneys, Medicaid Practice Systems and
the National Academy of Elder Law Attorneys.
In 2008, Cherylreceived the honor of becoming a Fellow with the American
Academy of Estate Planning Attorneys. The Fellow programrecognizes Academy
Members who demonstrateadvanced expertise and significant practical
experience in the total estate planning, trust, tax planning, guardianship, probate
and estate administration fields. In order to maintain this advanced expertise,
Cheryl takes over 36 hours of continuing education in Estate Planning, Elder Law,
and Taxation each year. Also a Financial Planner, sheholds the Series 7 and 66
InvestmentLicenses in addition to both Insuranceand Long Term Care/Medicare
designations.
Her professionalcapabilities, together with over 25 years in practice, have
combined to bring positivechange to the lives of over 4500 clients and their
families.
528 College Road
Greensboro, NC27410
Phone: (336) 547-9999
Fax: (336) 547-9477
WWW.CHERYLDAVID.COM