Ask the Expert – Mom’s Medicaid Matters

​By Jennifer B. Cona, Esq.

The Problem: My mother was just admitted to a nursing home.  She did not do any estate or Medicaid planning and all of her assets are still in her name alone.  Can she still qualify for Medicaid?  Will she lose everything to the nursing home?  Will I lose my inheritance?

The Expert: Jennifer B. Cona, elder law attorney, Melville.

The Rules: Medicaid applicants must be both residing in a long-term facility and have “spent down” their remaining assets to the resource limit set by the state before the Medicaid penalty period kicks in for any asset transfers made in the past five years.

The Strategy: Despite the five-year Medicaid “look back” period, your mother can save about half of her assets for your inheritance by using a strategy called a “note and loan” plan.

How it Works: Your mother can transfer all of her assets to you as a part-gift, part-loan transaction. Half of the assets transferred would be a gift to you, and the other half would be a loan.  You would need to sign a promissory note, agreeing to pay back the loaned assets, plus interest, to her on a monthly basis.  The monthly amount to be paid back would be calculated based on the average monthly cost of the nursing home she is in, minus her monthly income.  You would pay back the calculated monthly payback amount to your mother, and she would then write a check for that same amount to the nursing home.  The loan repayment will cover the amount due to the nursing home during the penalty period resulting from the gift of the other half of your mother’s assets to you.  Also, to keep you mother’s eligibility for Medicaid benefits, make sure the monthly loan repayment amount is greater than the nursing home’s Medicaid rate but less than the private-pay rate.

The Results: At the end of the loan repayment term, your mother will be eligible for Medicaid benefits, and you will be able to keep the half of the assets transferred to you – free and clear.