One attorney calls it the "Get out of Dodge plan"—the best way to keep your assets intact before applying for Medicaid to cover nursing home costs. New Jersey is one of the most restrictive states when it comes to permitting residents to preserve assets for their benefit while Medicaid pays for nursing home care. In the Garden State, there are steps that should be taken before applying for Medicaid, the government insurance program for people of all ages who are too poor to afford health care including long-stay nursing home care. Nursing homes can cost $120,000 a year in New Jersey, sometimes more.
Even though Medicaid is a federal program that's regulated by each state, the way in which the money is distributed can vary. Restrictive states are siding with protecting public money over letting individuals and their spouses keep assets, the Asbury Park Press article titled "Protecting assets: Three things to know before Medicaid" explains. So your retirement strategy can be quite different based upon your state of residence. Not everyone can Get Out of Dodge, meaning not everyone can move into a second home in Florida.
But do-it-yourself planning may not be the way to go. Elder law and Medicaid planning is constantly changing, and your assets can easily be wiped out by nursing home costs without careful planning. For example, when a husband places his wife in a nursing home, their home may be excluded from assets that must be spent for nursing home care before Medicaid pays for it. So the husband is still able to live there. However, if the husband dies before the wife enters the nursing home, it gets complicated: the house could be lost to the nursing home for the cost of her care.
There are a few facts to keep in mind. Families should:
- Create a comprehensive power of attorney—it's critical to prevent court involvement;
- Do your Medicaid estate planning well in advance because all your assets within five years of applying are subject to the government's grasp, even gifts;
- Ask your estate planning attorney about trusts to turn assets over to children or other family members. Although trusts can be a great Medicaid planning tool, they are complex and missteps can be costly.
Despite all of this complexity, an experienced elder law attorney may be able to help preserve a couple's resources.
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Reference: Asbury Park Press(January 24, 2015) "Protecting assets: Three things to know before Medicaid"