In Maryland, with a huge budget shortfall—the State is trying to save money on Medicaid

Medicare does not pay for long-term care, except for 100 days of rehabilitation in a nursing home. Nursing home care falls primarily to Medicaid, the jointly funded state and federal program. The program now is shouldering 40% of the country's long-term-care spending, according to the Kaiser Family Foundation.

To be eligible for Medicaid in Maryland, can have no more than $2,500 in cash and investments. (Spouses are allowed to keep a home, a car and up to approximately $110,000.) In the past, regulators looked at any gifts you made up to three years before applying for Medicaid. However, in 2006, a new federal law increased the "look back" period for most transfers to five years.

In Maryland, with a huge budget shortfall—the State is trying to save money on Medicaid and, also, retrieve money from the estates of people who used Medicaid to recover those expenses.

Here's how to preserve some assets and possibly still qualify for help.

Consider consulting an elder care lawyer to find out what the current laws are where your loved one needing long-term care lives—and how the rules are changing.

There is a waiting-period penalty for making a gift within five years of applying to Medicaid for long-term care, determined by dividing the cost of nursing home care, $6,800, into the amount you gave away. So, for example, if care costs $6,800 a month in your state and you gave away $68,000, you would not be eligible for Medicaid for 10 months. Plan wisely.

Buy long-term-care insurance to cover the five-year look-back period. That way, they can use their assets until coverage kicks in, and then transfer what is left to their children.

Set up an irrevocable asset-protection trust more than five years in advance, it can work if it's properly drafted. Additionally, parents setting up such a trust also need to make sure that it spells out that they can live in the house and that no one can sell it without written consent.

When should you set up the trust? The people who do it are adult children who have seen their parents go on Medicaid and lose their homes.

If you need help with Medicaid, please contact our office at 301 663 9230 or visit our elder care attorney website at David Wingate for help, advice and strategies.

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