Do the rules permit a nursing home to force a resident to liquidate an IRA and spend it down to pay for care, before they’re eligible for Medicaid? Likewise, can a nursing home make the spouse who’s not in a nursing home liquidate money in an IRA and spend it on care for the spouse?

The answer to these questions is based on the state in which you live, because Medicaid eligibility and spend-down rules vary by state. For example, in Missouri, the answer to both of these questions is yes.

A recent article on nj.com’s recent article “Can a nursing home make me spend down an IRA before applying to Medicaid?” says that there’s no protection in New Jersey for IRAs, when it comes to Medicaid. The same is true in many other states, including Missouri. In certain other states, such as California and Florida, IRAs and other retirement plans are protected (non-countable).

While it’s not the nursing home that’s making this demand, it’s the Medicaid program itself that requires the spend-down. The nursing home is simply following what it knows to be the Medicaid rules in its state.

However, with the help of an elder law attorney, you can implement a strategy to preserve the spouse’s IRA up to a maximum of $126,420 for 2019. In addition, the nursing home resident’s IRA can, in some cases, be converted to a Medicaid annuity. An elder law attorney can help protect a significant portion of your estate from being lost to Medicaid asset spend own. For the spouse remaining in the community, the attorney can make sure that she or he has sufficient money to live on.

While Missouri is a very difficult state in which to qualify for Medicaid, there’s always the possibility that advance planning can help protect significant assets from being lost in the future.

Whether Medicaid planning with an attorney is worth the expense, depends on how much could be saved. If, for example, Medicaid planning will cost $10,000 but there is the opportunity to protect $100,000 from long-term care expenses, it’s well worth doing for the $90,000 that would be saved.

Talk to an elder care attorney in your state, who can look at the specifics of your finances to see if you can benefit from planning to protect against Medicaid asset spenddown now or in the future.

Reference: nj.com (September 18, 2019) “Can a nursing home make me spend down an IRA before applying to Medicaid?”