By Ellen Mason, Hotline Attorney
Betty Williams worked her entire adult life. She has some savings but, at 73, she’s going blind. She’s worried that her savings won’t cover the cost of a nursing home for very long. Betty has Medicare, and she wants to know if she qualifies for Medicaid.
Medicaid rules vary from state to state. In Michigan, to qualify for Medicaid, a person must:
- Be age 65 or older, or disabled, or blind;
- Have less than $2,000 in property and money; and
- Have an income of less than $1,366 per month.
Betty rents an apartment, gets $1,004 a month in Social Security, and has more than $2,000 in savings. She wants to know if she can give the savings to her grandchildren for their college fund. If Betty does that, she won’t qualify for Medicaid for up to five years. Michigan has a “5-year look-back period.” That means that, once Betty applies for Medicaid, the state will examine her records for the last five years to see if she has given away anything of value. If she has, then she will not qualify for Medicaid for up to five years.
So, Betty asked, what if she bought stocks and sold them to her grandchildren for a small amount. That won’t work either. Any sale of anything, for less than fair market value, is an improper “divestment” and also disqualifies a Medicaid applicant for up to five years. So Betty wants to know what she can do to qualify for Medicaid. Betty can “spend down” her savings by buying things for herself and still qualify for Medicaid. Some of the things she can buy for herself are:
- A car – any value;
- Household goods – any value;
- Clothing and jewelry – any value;
- A primary residence worth less than $552,000;
- An irrevocable funeral contract up to $12,240; and
- A burial space.
“Hmm,” Betty said. “Clothing and jewelry of any value?”
Yes, that’s right.
“And I can buy myself anything I want and still qualify for Medicaid?”
Yes, as long as it’s for yourself and no one else.
“That’s kind of selfish. Don’t you think?” Betty paused. “I think I’ll buy some nice clothes take a trip around the world before I go into a nursing home.”
All perfectly legal, Betty.