02/27/2025
We often get asked "Why use a Medicaid Planner?" This is one case study of an actual client that we assisted in obtaining the Medicaid Waiver, finding placement and preserving A LOT of money for the client and family.
Sally has $490,000 in assets from the sale of her home and vehicle that will need to be managed/transferred/moved or spent down before she can apply for Medicaid. Many people would tell Sally she needs to privately pay all her money until it is spent before she can apply for Medicaid.
Sally’s monthly cost at the assisted living currently is $4990 a month and is expected to increase as her health declines and care needs increase. At this rate, for facility costs alone, the client would spend all of her money in just over 8 years. During that time, she would not qualify for Medicaid or have assistance with any medical bills and would be impoverished when her money ran out, requiring Medicaid, and leaving the client with approximately $130 a month for spending needs.
Sally’s family agrees with this plan however, Sally would like to preserve some of her assets to pass on to her children and grandchildren. Sally hired Legacy Navigation’s Certified Medicaid Planners to assist with this process. After a discussion with Sally, the facility she resides at, and the family, Legacy Navigation started crunching numbers.
Sally makes a total of $1650 a month between her required minimum distribution from her IRA and her social security income. Her care at the facility far exceeds her income each month and she has signed a contract for at least 24 months of private pay.
LN provided 3 scenarios for Sally. Sally decided on the following scenario:
Scenario 2: 24 months of private pay to the facility
24 months facility cost = $119,760 - income $39,576 = $80,184 We will put $80,184 into a Medicaid-compliant annuity that will pay Sally an income over the 24 months of $3350. This, in addition to her monthly income of $1650 = a monthly income of $5000.00 will cover the cost of her facility stay.
Total assets $490K - $80,184 for the annuity leaves a total asset of $409,816. This will be the total amount of gifted funds.
Each state has a penalty divisor for gifted funds. In Idaho, the penalty divisor for 2025 is for every $10,653 gifted, the client is in eligible for Medicaid x 1 month.
If we gift $409,816 and divide that by the divisor of $10653 = this leaves a penalty period of 38.5 months in which Sally will not be eligible for Medicaid Services. We plan around this penalty period and understand that now Sally has an income high enough to cover costs of her care at the facility and now her family has a large amount of money tucked aside out of Sally’s name for any additional needs she has.
The annuity will pay for the first 24 months of this penalty leaving 14.5 months to pay privately for the remainder of the penalty period. This amount will come out of the gifted funds to the family.
The cost of the facility for 14.5 months at $4990= $72,355 minus Sally's income of $39,576 leaves $32,779 to be paid from gifted funds to the facility.
Total gift $409,816 - $32,779 = $377,037 preserved for Sally and her family.
After the total penalty period, Sally has now paid the facility privately for over 3 years, has secured her room at the facility, and will roll over to Medicaid, paying only her income minus approximately $130 for a personal needs allowance to the facility each month for her care. $1650-$130= $1420 for her rent as opposed to $4990 or more depending on her care needs and preserving $377,037 for her family to use to supplement her care or to continue to pay for a “buy up” at the facility which will secure her private room.
This is just one of the ways Legacy Navigation works to preserve assets and help your loved one get the services they need and deserve!
