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Court relaxes Medicaid rules

By Jennie L. Phipps · Bankrate.com
Monday, December 9, 2013
Posted: 9 am ET

The courts recently relaxed a long-term care retirement planning regulation that should make it easier for couples to use Medicaid to pay for nursing home care for one without impoverishing the healthier person.

State and federal regulations severely limit the amount of savings a couple can have if one of them needs Medicaid assistance to pay for a nursing home. In Hughes v. McCarthy, an Ohio couple faced this problem when the wife entered a nursing home in 2005. The couple was able to pay for her care until 2009, when they applied for Medicaid assistance. Shortly before making the application, the husband took $175,000 from his IRA and bought an immediate annuity, reducing his assets by that amount, but guaranteeing that he would have enough on which to live.

The Ohio Medicaid agency called this an improper transfer of funds, claiming that his IRA was community property and saying the nursing home should have first dibs on that money. The couple appealed and ultimately the 6th Circuit U.S. Court of Appeals agreed that the husband could use the annuity purchased with his IRA to support himself without jeopardizing his wife's right to assistance from Medicaid.

Following Medicaid's complex rules and regulations is difficult and made even more complex by the inconsistent mix of state and federal rules. With long-term nursing home care costing about $75,000 per year on average for a semiprivate room, according to U.S. Department of Health and Human Services, the loosening of this regulation could make a big difference in how couples living in retirement pay for long-term care.

If you fear that you may have to ultimately rely on Medicaid to pay for long-term care, now -- while you're healthy enough not to need assistance -- is the time to consider how to manage assets for when the time comes.

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5 Comments
Ellen McPhetres
December 09, 2013 at 9:09 pm

Sooo...if you have 175,000 IRA/savings, and a home worth say 200,000...that will pay ?5 years in a nursing home. What if you have the incredible bad taste to live 10 years? Or 15? Nothing left for your children and AnitaG happens to be correct.....Oh and your spouse had better have had the good sense to die so that your home could be used to pay for your care.....

Woodman
December 09, 2013 at 8:32 pm

Darn it, why can't Americans take care of themselves and not depend on others. Long term care is available and anyone can buy it.
Why are so many so lame to even think someone else should pay for you in the end after you have played in the front? Medicaid the give away and Medicare the paid for with earnings Get real!

George Busse
December 09, 2013 at 6:35 pm

Medicare does NOT pay for long term care. Only Medicaid will pay if you meet their restrictions after Medicare has been exhausted with their short term payments for care.

AnitaG
December 09, 2013 at 4:46 pm

You are incorrect, hryder. Medicare pays only for short term care. Once you cross a certain number of days of medical care (I believe that it's 100, but I may be wrong), Medicaid kicks in. Nursing homes, aka long term care facilities, don't like Medicaid because it fails to cover the costs of ethically adequate levels of care (rarely provided by for-profit facilities) - and, they lose $$ every day. Neither the federal government nor most state gov'ts mandate a minimum # of nurses to care for patients and elder patients in nursing homes (most of whom are women BTW) require HIGH levels of care.

hryder
December 09, 2013 at 4:26 pm

A person(s) with $175,000.00 IRA is supposed to be on Medicare, not Medicaid. What is the deal? Or is this a sham article or someone ripping tax payers?