There is much confusion regarding the rules to qualify for Medicaid nursing home care in Louisiana. A common misconception is that retirement accounts (IRAs, 401k accounts, 403b accounts, etc.) are not countable as a resource (asset) when qualifying for Medicaid nursing home benefits. Some of the confusion arises from different rules that apply in other states. Many states exempt retirement accounts from countable assets. Unfortunately for Louisiana residents, retirement accounts are countable as a resource for Louisiana Medicaid nursing home eligibility purposes.
Louisiana Medicaid Eligibility Rules for a Single Applicant
The basic rule is an unmarried applicant is allowed to keep $2,000 of countable assets. Typically the $2,000 exemption is used for the applicant’s checking account. If the applicant has an IRA or other retirement account, the applicant must withdraw the entire account and spend down the account assets on their monthly nursing home expenses. Keep in mind that there are special planning strategies that allow the applicant to preserve approximately half of their countable resources-even within the five year look-back period. Therefore, you do not have to spend-down to $2,000. Contact our office to learn more about crisis planning options for unmarried Medicaid nursing home applicants.
Louisiana Medicaid Eligibility Rules for Married Couples
Married couples have additional options. If the Medicaid applicant’s spouse owns the retirement account, up to $128,640 (2020) of the account may be sheltered under the Community Spouse Resource Allowance. Most couples spend-down their retirement accounts that exceed the exemption to qualify for Medicaid nursing home benefits. So, if a Medicaid applicant’s spouse has a $300,000 IRA, the spouse must spend-down this account on the cost of the nursing home until their total assets are less than $128,640 (2020). Spending down to the asset qualification levels results in leaving the spouse at home with drastically diminished retirement assets. The good news is there are planning options available to help protect assets for the spouse at home. Again, you do not have to spend-down to the basic asset thresholds set by Medicaid. One option for accounts that exceed this exemption is to convert the account(s) into an income stream for the spouse with a specialized Medicaid annuity. If the Medicaid applicant owns the retirement account, the account may be turned into a monthly income for the applicant’s spouse under the “name on the check rule”. Louisiana follows the “name on the check rule” that means the income belongs to the person to whom it is paid. Some states apply different rules for allocation income between spouses. Contact our office to learn more about crisis planning options for married Medicaid nursing home applicants. Many of the planning techniques apply without having to wait through the five year look-back for transfers.
Although retirement accounts are countable in Louisiana for Medicaid purposes, many planning options are available to protect all or a portion of IRAs or other retirement accounts.
If you have questions or concerns about protecting retirement accounts or other assets from Medicaid spend-down for the nursing home or other estate planning questions, contact estate and elder law attorney and Certified Financial Planner, John Sirois at 985-580-2520 or by email at john@jsiroislaw.com. You can also find more information about long-term care and planning for incapacity in John’s book, Louisiana Retirement and Estate Planning, Sixth Edition, available by contacting John or through Amazon.com.
