Medicaid for Single People
Show #275 Airing 11/14/04
After divorce or the death of a spouse, it seems managing your affairs often gets tougher. It may be more difficult to avoid probate, eliminate estate taxes, and plan for disability. The Medicaid law is a prime example. It discriminates against unmarried people trying to protect their life savings from a nursing home. Here to help us deal with the long term care issues faced by single folks is my singularly excellent law partner, Laurie Steiner.
Question: Does the Medicaid Law really discriminate against single people?
Answer: Yes. Medicaid is the safety net for single or married folks who need long term care. It is a very important program. By taking steps to plan, the law allows you to protect a portion of your life savings. But the Medicaid law is much tougher on single people than on married couples.
Question: Can you give us an example or two?
Answer: Let’s start with the asset rules. For a married couple, when 1 spouse goes to the nursing home, the other spouse may keep the home plus half of the total of the other assets, up to $92,760. A person who is single, widowed, divorced, or never married, may only keep $1,500. And the house is not protected.
A married couple gets to keep a car, regardless of its value. A single person can keep a car only if it’s worth less than $4,500.
For a married couple, a specialized Medicaid annuity may be used to protect a major portion of their life savings. For a single person, an annuity almost never makes sense.
Even long term care insurance may be less expensive for a married couple than a single person.
Question: What can a single person do to protect her savings?
Answer: While the planning is often easier and better for a married couple, thankfully there’s still a lot that a single person may do.
Probably the most common planning tool is gifting assets to children or others. By putting money or property into the kids’ names, it may be protected. And while married couples can do this too, there’s no advantage. You’re not limited to gifts of $11,000 per person per year. You can give away a million dollars with no taxes or penalties.
Another planning tool is the irrevocable Medicaid trust. This is not the same as the popular revocable living trusts that so many people are doing to avoid probate. A revocable trust does not protect anything from nursing homes, but a carefully drawn irrevocable Medicaid trust is a good tool that many single people like using.
And there are lots more, too.
Question: Where can people get more information about Medicaid and nursing home planning?
Answer: It’s really aggravating that there’s not a lot of good information available to the public. You know, the IRS puts out hundreds of brochures in plain English discussing every exemption, credit, and deduction available to cut taxes. But the Medicaid department, the Ohio Department of Job and Family Services, puts out almost no public information.
Our law firm, you and I and our partner Jennifer Peck, will be doing free seminars around the area this week on Medicaid planning, both for married couples and single folks. And your viewers are invited.
Don’t shoot the messenger. Don’t blame Laurie or me because the Medicaid law discriminates against single people. Whether you’re single or married, you need to consider all your options, and take steps to protect yourselves. If you’d like more information, call the number up next and make plans to come out to one of our seminar programs this week.
