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Medicaid Planning for Married Couples
1. MEDICAID PLANNING FOR
COUPLES: HOW TO MANAGE THE
$7-9,000/MONTH COST OF
STAYING IN A NURSING HOME
P. Haans Mulder, JD, MST, CFP®
Cunningham Dalman, P.C.
321 Settlers Road
Holland, MI 49423
(616) 392-1821
phmulder@holland-law.com
2. Upcoming Seminars
• Medicaid Planning for Singles-April 18
• Veterans Benefits, Estate Recovery, and
Changes in the Medicaid Rules-June 13
• All seminars are at 4:30
Serving the Holland area since 1900
3. Background
• Attorney and Partner at Cunningham
Dalman, P.C.
• Have a Masters in Tax (MST), CFP®
and specialize in estates/elder law and
business planning.
Serving the Holland area since 1900
4. Background
• Cunningham Dalman, P.C. has been
serving the greater Holland area since 1900.
• We have 15 attorneys specializing in all
areas of the law.
Serving the Holland area since 1900
5. Overview
• Discuss the Medicaid rules and the
program.
• Give you some ideas to help the healthy
spouse protect more of your assets if
nursing home care is necessary.
Serving the Holland area since 1900
6. Did you know?
• 40% of people 65 years and older will
stay in a nursing home.
• Average cost to stay in a local nursing
home is $7-9,000/month ($84-
$108,000/year).
Serving the Holland area since 1900
7. What is Medicaid?
• It is a state and federal program that
pays for medical treatment (including
long term care).
• Oftentimes confused with Medicare.
Serving the Holland area since 1900
8. When does Medicaid apply?
• Historically, it only paid for nursing
home care.
• In certain counties (that have the MI
Choice Waiver program), it will pay for
care in someone’s home or an
assisted living facility.
Serving the Holland area since 1900
9. Who does Medicaid apply to?
• Applies to people who are 65 years or
older, blind, or disabled.
• Must satisfy the medical requirements
(level of care assessment).
• Need to meet the income and asset
tests.
Serving the Holland area since 1900
10. Who does Medicaid apply to?
• Your monthly income cannot exceed
the monthly cost of your stay in a
nursing home ($7-9,000 in this area).
• For the Waiver program, your income
(not your spouse) must be less than
$2,094/month.
Serving the Holland area since 1900
11. Who does Medicaid apply to?
• Asset test allows a married couple to
keep their home (again, if it’s not in a
trust), a vehicle, and one-half of their
other assets (up to a maximum of
$115,920).
Serving the Holland area since 1900
12. Planning Example #1
• Clients are a husband and wife who
are in their 70’s.
• They have a house and $250,000 in
investments.
Serving the Holland area since 1900
13. Planning Example #1
• They previously planned to avoid
probate by having an estate plan
(which included a living trust,
pourover will, and powers of attorney)
and titling their assets in their trust.
Serving the Holland area since 1900
14. Planning Example #1
• They are now worried about the cost
of long term care.
• They are also concerned about one of
them passing and what “safety net”
will be available for the surviving
spouse.
Serving the Holland area since 1900
15. Planning Example #1
• To plan for these risks, they convert
their joint living trust into a single
living trust.
• If one spouse passes away, the single
living trust becomes a “spousal
supplemental needs trust.”
Serving the Holland area since 1900
16. Planning Example #1
• If the surviving spouse needs nursing
home care in the future, she will likely
qualify immediately for Medicaid.
• The trust creates a “safety net” to pay
for the house and expenses not
covered by Medicaid (so the children
do not have to).
Serving the Holland area since 1900
17. Planning Example #1
• If one spouse was already on
Medicaid, that spouse will remain in
the program.
• It also creates a “safety net” to pay for
expenses not covered by Medicaid
(so the children do not have to).
Serving the Holland area since 1900
18. Planning Example #2
• The client is a husband and wife in
their mid-70s and have three children.
• Their son is trustworthy and lives
close by.
• Have a house, vehicle, and $350,000
in investments.
Serving the Holland area since 1900
19. Planning Example #2
• They receive monthly income of
$2,200 in Social Security and $600
from a pension.
• They have monthly expenses of
$3,200 so there is a shortfall of income
of $400 per month.
Serving the Holland area since 1900
20. Planning Example #2
• The wife is very healthy.
• The husband has been diagnosed with
an early onset of Alzheimer's and they
are concerned about him going to a
nursing home and the wife not having
sufficient resources.
Serving the Holland area since 1900
21. Planning Example #2
• They create an irrevocable trust in which
they receive the income (interest and
dividends).
• Their son is the trustee and their three
children are the beneficiaries of the trust
principal.
Serving the Holland area since 1900
22. Planning Example #2
• They make a gift of $200,000 to the trust.
• They will receive approximately of
$667/month in income from the trust.
• They will not likely need any other
resources.
Serving the Holland area since 1900
23. Planning Example #2
• If they need other resources, their son
can take a distribution from the trust
(because he is the trustee and
beneficiary).
• He can then gift it back to them.
Serving the Holland area since 1900
24. Planning Example #2
• There is a five year “look back” period for
Medicaid.
• The husband will need to remain healthy
for five years from the time of the gift for
this planning technique to be effective.
Serving the Holland area since 1900
25. Planning Example #3
• The clients are a husband and wife in
their late 70s.
• They have a house, vehicle, and
$250,000 of investments.
• The wife had to go to a nursing home.
Serving the Holland area since 1900
26. Planning Example #3
• They could keep the house (because it
was properly owned) and their vehicle
• Without any Medicaid planning, they
would have had to spend down their
investments to the less of one-half or
$115,920.
Serving the Holland area since 1900
27. Planning Example #3
• Drafted a “sole benefit trust” that allowed
the husband to protect all of their
investments (as opposed to just half).
• The wife was able for qualify immediately
for Medicaid and no spend-down was
necessary.
Serving the Holland area since 1900
28. Questions……
Serving the Holland area since 1900
29. Upcoming Seminars
• Medicaid Planning for Singles-April 18
• Veterans Benefits, Estate Recovery, and
Changes in the Medicaid Rules-June 13
• All seminars are at 4:30
Serving the Holland area since 1900
30. Thank You
P. Haans Mulder, JD, MST, CFP®
Cunningham Dalman, P.C.
321 Settlers Road
Holland, MI 49423
(616) 392-1821
phmulder@holland-law.com
www.holland-law.com
Serving the Holland area since 1900