Elder and Disability Law Planning & Strategies

     Member-National Academy of Elder Law Attorneys, Inc.                                    www.texaselderlawattorney.com

Richard M. Barron Attorney at Law 209 E. Main St. Whitesboro, Tx. 76273 903-564-3663 or 940-612-3663 [email protected]

September, 2004

Medicaid Planning & Division of Assets

Medicaid, a federally funded program administered by the states, pays some health care costs (assistance with bathing, light housekeeping, cooking and laundry) while an eligible patient remains at home, as well as nursing home costs for qualified individuals.

You may not want to think about using Medicaid benefits. But most families are financially unprepared to pay for health care costs for an Alzheimer’s patient. Over a patient’s lifetime, those costs average $174,000.00. Even if you enter a nursing home as “private pay” resident (paying your own way), you may eventually exhaust personal funds and need Medicaid assistance. And even if you can manage the costs, you may worry about depleting your assets and impoverishing your family.

You may share the frequently expressed fear among potential Medicaid applicants, “I’m afraid I’m going to lose everything.” However, with legal assistance and proper Medicaid planning, you can typically save at least half–and frequently all–of your assets.

Medicaid planning uses legal strategies to maximize the amount of money your family can keep for their care while qualifying you for government benefits. Consult an elder law attorney to help you with the planning process. It’s like asking a certified public accountant (CPA) to prepare your income tax forms to be sure that you are taking all legal deductions the tax code makes available. Don’t apply for benefits before making sure you’ve taken all the steps possible to protect yourself and your family.

Medicaid Application and Division of Assets

Applying for Medicaid is a complicated process. You may need legal assistance to be sure you complete forms accurately and completely. Incomplete forms and other errors can delay or jeopardize benefit payments. Married couples go through a process called division of assets. An elder law attorney can help you list and review your assets and income sources in terms of what you can keep (called exempt assets), what you can’t keep, and what’s at risk.

While you are expected to pay as much as you can toward the cost of your care, Medicaid law does not require your spouse to live in poverty while you live in a nursing home. Division of assets, in general, means dividing your and your spouse’s assets in half after deducting exempt assets from the total.

Your spouse keeps his or her half (up to a maximum of approximately $92,760) but you, must “spend down” your half until your assets total nor more than $2,000.

Exempt assets (those you can keep without affecting Medicaid eligibility) include your residence, one motor vehicle, furniture and household belongings, personal jewelry and clothing, prepaid funeral plans, and whole life insurance with a death benefit of $1,500 or less.

Non-exempt assets (assets that DO affect Medicaid eligibility)  include checking and savings accounts, 401 (K) plans and individual retirement accounts (IRAs), and stocks, bonds and mutual funds.

You should consult an attorney experienced in Medicaid matters before giving away money or property to family members or others. Transferring assets during a “look back” period of three years prior to making Medicaid application can create periods of ineligibility for benefits.

Your individual situation affects decisions about how to accomplish the division of assets. You or your spouse can “spend down” your half of the assets to:

           1. pay nursing home bills
           2. pay off outstanding debt (like credit card bills)
           3. prepay an outstanding mortgage, property taxes, and estimated income or capital gains taxes
           4. make home repairs or buy household furnishings
           5. prepay funeral expenses
           6. buy clothing
           7. travel
           8. pay legal and medical bills
           9. buy an annuity (Consult and attorney before purchasing an annuity to be sure you’re complying with recent changes in the law.)

Important note: Be sure to map out your spend-down plan in advance and coordinate it with your Medicaid application before you move into a nursing home.

The community spouse can often increase the amount available to him or her by working with an advisor skilled in this area.

Additional rules exist concerning income for you and your spouse. Generally, your spouse may keep his or her income. However, your income, except for $30 per month, must go to the nursing home for your care. If your spouse’s needs exceed his or her income, some or all of your income may be used to make up the difference. But proper planning an knowledge of applicable rules are important to guarantee compliance with the law. Consult a professional.  

Free In-Service Training Available:

The Law Firm offers free in-service training on topics related to:

  • Division of Assets

  • Medicaid Planning

  • Guardianship

  • Powers of Attorney

  • Other Elder Law Issues

  • This information is for general informational purposes only and does not constitute legal advice. For specific questions, you should consult a qualified attorney.

    Elder and Disability Law Planning & Strategies is made available and published as a service of Richard M. Barron, Attorney At Law, 209 East Main Street, Whitesboro, Texas 76273, 903-564-3663.

    Richard M. Barron, Attorney at Law encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Richard M. Barron. If you are interested in a free subscription to the Elder and Disability Law Planning & Strategies, then please e-mail us at [email protected]  or call us at 903-564-3663, or fax us at 903-564-5562.


    First Legal Steps

    When the diagnosis is Alzheimer’s or similar disease, find out as much as you can about the disease. Then plan for the future. While the disease is in its early stages, you may be able to complete important documents that will give you peace of mind and save you and your family money. It’s critical that you authorize another person (e.g. a spouse, adult child or close friend) to make decisions for you. And you should take this step now, while you’re still able, so that you, and not some judge, can select the person best-suited to carry out your wishes.

    As a “first legal step” it’s important to seek help from an attorney to put three documents in place.

    1. Durable Power of Attorney
    This document grants legal rights and powers to another. Choose someone you implicitly trust, such as your spouse or adult child, to act as your agent (sometimes called your attorney in fact). If you become incapacitated, a durable power of attorney lets your agent act for you in financial and business matters.

    2. Durable Power of attorney for health Care Decisions
    With this document, if you can’t make health care decisions yourself, another person of your choice can make a broad range of decisions for you. These decisions cover virtually everything to do with medical matters, such as selecting doctors, hospitals, treatments, procedures or medications.

    3. Health Care Treatment Directive (Living Will)
    This document concerns whether or not life support should be withdrawn in the case of a patient who is terminally ill. It states your wishes regarding this issue.

    Without these powers of attorneys, you may need a court appointed Guardian to handle financial and a health care matters. In that event, a court would control your personal and financial life. A judge would have to approve your decisions and expenses. This situation can easily be avoided if you act now and put proper powers of attorney in place.


    If you need or would like any of the following pamphlets please call or email us, they are FREE!!

    1. Texas Nursing Home Guide.

    2. Do You Qualify for Financial Assistance for Nursing Home Care?

    3. A Consumer Guide to Understanding and Protecting Nursing Home Residents Rights.

    4. Alzheimer’s Survival Kit.

    5. Alzheimer’s Special Report.

    6. The Top 8 Mistakes People Make with Medicaid.

    7. 9 Questions You Might Ask If You or a Loved One Is Going into a Nursing Home.

    903-564-3663, 940-612-3663, [email protected]


    Legal Disclaimer

    This information has been provided for informational purposes only.  It does not constitute legal advice.  The receipt of this information does not establish an attorney-client privilege.  Proper legal advice can only be given upon consideration of all the relevant facts and the law.  Therefore, you should not act upon any information contained herein without seeking appropriate legal counsel.  


    Richard M. Barron

    Attorney at Law

    209 E. Main Street

    Whitesboro, Texas 76273

    903-564-3663, 940 612-3663, 800-939-9093

    Fax - 903-564-5562

    Email- [email protected]

    Not certified by the Texas Board of Legal Specialization

    Licensed to Practice Law by the Supreme Court of Texas