Can Medicare seize a 401k to pay for nursing home costs?

Geri - just reread your postings. Does your DH see a gerontologist? If not, perhaps you can get him an appointment with a gerontolgy group. If there is a medical school or teaching hospital health science center, they will have a gerontology group. It may be 3 months out before his appointment, but it might be well worth doing this even if it means driving to do so. He could well be the type that gets seen twice a year especially since he is so young.

My mom is mid 90's and now in a NH. But years ago, she was still living in her home of 50+ years and had her internal medicine doc along with various other MD she had seen for years. She tore her rotor cuff cleaning the wooden venetian blinds (really! can you imagine an 89 yr old on a step stool dusting) anyway in order for the ortho surgeon to OK surgery he required that she be evaluated by the geronotology group at the medical school which he is a part of. I must say this is probably one of the best things ever done for her. She was on about 8 meds and there was a dz more half finished stashed about her house. They weaned her off all meds and put her on two (Exelon & Remeron). At least 4 of the old meds were interacting and causing depression & lethargy and she wouldn't take them as indicated so there were issues with all that too. The whole viewpoint of the gerontolgy group is totally different and more about long term health management than what her internist did which was all about giving her something to cure whatever her current complaint was. My mom was evaluated and found to likely be Lewy Body Dementia and as such her last years will be very different than that of an Alz patient. Her meds are different too and many of the psych meds are NEVER to be given to LBD patients. Your local MD isn't likely to have the resources to test (Folstein & MOST) & evaluate where your DH is for aging and what type of dementia. At your age, again, you both are very young so you could be looking at 10 - 15 - 20 years of aging in place. Good luck.

Igloo572, You have answered so many of my questions and I really do appreciate all of your examples to inform me of how things work. Somehow I need to make my husband understand the importance of seeing an Elder Attorney. I have checked and we have one near us. You have made me feel better telling me about the community spouse rights, I will check on that.

You have given me so many ideas of things we can do such as buy a new vehicle, pre-pay burial expenses, etc. Our home is already paid for and it is one we moved to 3 years ago as a down size for us, it's a one-story, garden home with a very small lawn which we are now having done for us. In our city (small town) we do not have anything for 55+ but this is close to that type.
We are very convenient to doctors, shopping, etc., not too far to drive to anything we need. We live just on our SS income but that is above the limit to qualify for any type of aid at this time. Our SS is sufficient for us to be comfortable and still be able to have most things we need or want.
I'm sure with the small amount of assets we have it would be very easy to spend down to the required minimum amount to qualify for Medicaid. I would like to have our two bathrooms updated to walk-in showers with seats and safety bars plus a few more home updates such as a new heat/ac unit as this one is 16 yrs old and that is about the time they have to be updated so all of this would take most of what we have saved, of course a new vehicle would be nice too.

I just hate the idea of having to spend our savings, it always made me feel good knowing we had it in case of an emergency but then I suppose this is what we saved it for, this is now the "emergency". My husband is not to the place where he needs to go to any type of home but I can see him getting a little more "lost" weekly. His short term memory is getting so bad and he is seeing our family doctor as well as a Neurologist and they have him on Aricept, Seroquel and Xanex as well as his regular med's for heart problems, BP, etc.
He cannot drive anymore and he is depressed most days. He has lost interest in going places we used to such as the local senior center where they have an indoor pool. We used to use this daily but now he doesn't want to go.
He has also decided he doesn't want to go to church which we always did.

It just seems time to think about our future and get prepared. Again, I want to thank you for all of your advice, it is appreciated.

Geri

Geri - another thing for couples, if you both have life insurance policies that you are each other's beneficiary, then you should consider changing that if you are applying for Medicaid. Not trying to be ugly but here is something that could happen and be a problem: say you each have a 50K term life policy; your DH goes into NH and is on Medicaid; you are still living at home and doing just fine; there is an accident and you die; your DH is paid the 50K of the policy and now doesn't qualify for Medicaid and his dementia is such that he cannot understand.
Panic for family as they live far away and don't have any idea of where paperwork is, etc. What you could do now is have the attorney change the beneficiary to others and set a part of the policy to become a special needs trust for your DH in the NH so that extra's he might need and that are not paid for by Medicaid are paid for from the trust created from the $ from the insurance policy. The trust when done correclty by your attorney will not disqualify him from being on Medicaid (the trust is not an asset) but it's not a do-it-yourself project, really.

Geri - you would be what is considered "The Community Spouse" and as such how Medicaid for NH works somewhat differently that what was required of my widowed mom financially in that the state does NOT expect you to become impoverished in order for you DH to be in a NH (if being in a NH is what he needs and requires medically). Personally I think you should see an attorney to advise you as each state's Medicaid program is very much dependent of each state's law and spin on death and probate. If you don't have DPOA's, MPOA's, wills (or updated codicil's to the will if it was written ages ago), Guardianship in case of incapacity done by both you and your DH, then you can get all done and the advise on how you as community spouse could approach dealing w/Medicaid. If this is about costs, most law schools have pro-bono projects for the elderly in their community and usually it's co-ordinated with your local Agency on Aging.

My BFF from high school mom lives 1 block away from my mom's house and she is a community spouse and this is what she dealt with:

COMMUNITY SPOUSE: For couple's, Day 1 of "institutionalization" or admission into the NH is the key date for finances, this is often called the "snapshot" day.If you have assets, you & hubby are expected to do private pay @ the NH or "spend down" assets to get to their state's couples asset ceiling to be Medicaid covered.

For couples, you are the "community spouse" as such the asset ceiling is higher and is limited to ½ of couple's joint assets.This is “spousal protected resource allowance” and equal to one-half of the countable resources but not more than $109,560 OR an individual state standard between 22K and 109K. Amount can vary depending on states. But in other words, the state does NOT expect you to become completely impoverished in order for your DH to be in a NH and paid for by Medicaid. That is what the spousal protection allowance is for and each state administers it differently. This is why and attorney is needed..to sort through the nuances of your state's rulings on it.

All assets are counted against these limits unless the assets fall within the short list of "noncountable" assets:
-personal possessions of both you and your hubby,
-1 vehicle (regardless of value),
- your principal residence, provided it is in the same state in which the individual is applying for coverage & the house may be kept with no equity limit if the Medicaid applicant's "community spouse" lives there;
-prepaid funeral plans and a small amount of life insurance.
Over that you must “spend down”.

“Spend down” – means get assets (excluding “non-countables”) under the state’s Medicaid asset ceiling for married couples. If you have a home, prepay for utilities, cable, insurance, repairs. If you are planning on staying at the home, spending down by doing repairs or paying off the mortgage, is often a super good plan and can for most folks get the community spouse down to the max asset limit in 1 fell swoop.

For spouse's there's other issues, like how to deal with income if you still work or if you never worked and your only income is his SS &/or retirement and you need to get a MMMNA - minimum monthly maintenance needs allowance. (Say that 3 times fast!) These are all sticky and vary state by state, you'll likely need someone to work with you in figuring that out like an elder care attorney. The MMMNA is based on your state's AVERAGE and seem to be on the low side in general and often the community spouse will have to do an appeal to the state for more MMMNA or get a court order for spousal support to get more monthly support. If you find that needs to happen, you kinda need an attorney to do it for you to be successful.

At 71, you are still super young and really you could live at the house for another decade or 2, so you need to really think about if the house could work over time or if perhaps while your DH is still with you, you all move to something smaller, easier and before he goes into a NH. What happened to my BFF's mom was that her hubby got dementia early and needed a memory unit, they didn't have much in savings (maybe 30K) but their house was easily over 400K in value, so financially he qualified for Medicaid as the house is an exempt asset. But after a few years of her being at home alone, the house really go to be almost too much to manage. She's late 80's now and still very fit and mentally sound but the house is just big and lonely for her and now after years of his being in the NH has basically years of delayed repairs as she just puts off doing stuff. She wanted to sell it and move into something smaller-----but here was the whole problem, if she sold the house for 400K and bought something for 100K that would be 300K in assets which 50% would be his as community property so that 150K would have to go to his care or reimbursement to the state for Medicaid payments and he would no longer qualify for medicaid as his assets just increased by 150K. So she was stuck in having to live at the house and they got home health care to come in & it kinda works for them although a whole part of the house doesn't get used. What my BFF from HS said was that on retrospect they should have sold the house quickly for whatever they could (even if it had been at 75% of value), have bought in full for cash a 1 level house closer to her; and prepaid for lawn maintenance and utilities; bought mom a brand new car (go from 2 used cars to 1 new and with a service warranty), bought and paid in cash funeral and burial (20K) and gotten home health care to come in for their dad till all the paperwork and banking transfers got done and then applied for Medicaid for their dad. They would have been able to gift out $ too and without penalty as it's been more than 5 years. My point is that there are alot of things you have to consider because it's NOT just his long term care needs but yours also that need to be considered and an elder care attorney will be able to give you options for your both to consider that are based on what's what in your community. Compared to community spouse issues, doing Medicaid for my widowed mom was simple and we had an elder care attorney! Good luck.

When a house cost less than $500K, it is not included in Medicaid spend down or recovery if there is a spouse living there. If once spouse has to go on Medicaid, the other spouse is able to continue living in the home. There are differences among states when it comes to recovery if the spouse later dies or moves. If the house is considered a life estate, the state will have a lien on it so that money can be recovered when the house is sold. Other states, from what I've read, are more lenient when it comes to recovery.

If the house is sold, it is important to have caregiving records. If someone is cared for inside the home for a time, and the care enabled the person to stay out of a NH, then the value of caregiving services is taken into account when the house is sold. Often the value of the services given is greater than the house, so the caregiving family member is granted ownership of the house.

Better to plan ahead than to hope your husband is right and he'll never have to go into a care center. Do see an attorney who specializes in ELDER LAW. That specialty is important!

You will not need to give up your home. You will be able to keep SOME of your assets. In some situations, some of his income may be diverted to you instead of all going to the NH. The spend down requirements and ongoing rules are complicated, especially when there is a community spouse. (I am a community spouse. I know!)

I suggest that you see a lawyer sooner rather than later. Do not take your husband's advice on this matter. He has dementia, remember? (It was very hard for me to take over all decision-making, but it has to be done.)

It is possible that he will qualify for in-home care, and use the Elderly Waiver provisions of the Medicaid program. Get professional guidance!

Information to add to my question above - we live in GA, I understand Medicare would be used first because we do not qualify for Medicaid but if our money is used up, we have a very small savings, and we have to apply for Medicaid, what then? I suppose an Elder Law Attorney would be helpful but I talked to my husband about that and he said we cannot afford an attorney. He says he will be just fine staying here at home and for me not to worry about him going into a NH. I don't think he is thinking clearly. Thank you for your advice.

I understand Medicaid would take your 401K and any bank savings but what
about your home?
Could and would they force you to sell your home to pay any NH bills? What I am concerned about is this; husband needs NH so money assets are used to pay NH but wife is still living in their home. Will all money type assets be taken away from her and also her home sold? This is becoming my own situation and I am concerned. I would like to be able to live in my own home as long as possible but I would still need some of the money we have saved to pay my bills. My husband is 74 and has dementia which is getting worse quickly, I am 71 and so far still in good health.

Does your frend already have Medicaid benefits? I believe that Wisconsin is one of the states where SSI recipients are automatically enrolled in Medicaid. If she has a case worker, that would be the place to start getting answers to her questions. I would think the next stop is an elder law attorney.

In general, yes, if she needs long-term nursing home care she would be expected to use her 401K for that. And that is consistent with what we work hard to built up a 401K for, right? To take care of us in our old age or if we are disabled.

As cat said, she is best finding an elder care attorney in her state.

There is a lot of confusion on what MediCARE does vs. MediAID.

In general, MediCARE is a health and hospitalization entitlement program available to those over 65 but you have to apply for it. For the seniors getting a social security every month an amount (about $ 97.00) is taken out of their ss check to pay for Medicare. For those still working Medicare funding it is taken out of your paycheck. If you go into the hospital, Medicare is the 1st source of paying for your hospitalization and medical expenses. Medicare doesn't pay for all and most folks get a secondary insurance policy - like Blue Cross or some type of group policy that is usually affiliated with a health/hospital system in their city or state and you have to go to the facilities within the network to use the insurance. MediCARE is federally run.

MedicAID is an entitlement program for the very poor. In general, you are limited to income of about $ 2,000.00 and non-countable assets of $ 2,000.00. MedicAID is a joint state and federal program. So each state puts it's own spin on how applications are done and the qualification process.

MediCARE & NH: If an individual covered by MediCARE is discharge from a hospital to a nursing home for continued care (rehabilitation) after an inpatient stay of at least 3 days, Medicare will cover 100% of the first 20 days and MAY pay up to 100 days, subject to a co-payment by the patient of $141.50 per day for days 21 to 100 (for 2011). Medicare does not pay for the many months/years that some people reside in a NH for long-term custodial care. In general, Medicare is limited to short-term acute care.

But this MediCARE paid period of time in the NH is when you need to get the documents together to apply for MedicAID if you qualify both financially and medically for Medicaid paid NH or long term care. Otherwise you are expected to pay for the NH either through your assets, income or long term care insurance.
A 401K can be liquidated to pay for their care as it is an asset.

Your friend has a number of good questions. Really, it would be best for her to consult with an elder attorney who can give her proper guidance based on all the information. Suggest to your friend that she call her local Area or Aging. They would probably be able to give her the names of several good elder care attorneys in her area. She needs solid advise for future planning. Best wishes, Cattails

The person is in poor health, but still living on her own. She is in Wisconsin, 60 years old,and is currently on medicare due to disability. Her concern is that something might happen to cause her to need short term NH care, but if the NH stay happens to be longer than medicare will help with would she find herself without the income she is planning on having. She also has a $5,000 already in a burial trust. Can Medicaid take from that?

Do you mean Medicare or Medicaid. It's important to be clear which one you are asking about. If you can give additional details on the situation it might be helpful also. I don't believe Medicare would seize a 401K. If this NH stay is short term, like for skilled nursing and rehab help, then Medicare would pay their portion of the cost and it would be up to the Nursing Home to bill for the balance. If the person in question is going to a NH for long term care and is applying for Medicaid, the 401K will be considered an asset and will be used to pay NH costs. In Washington state, a Medicaid applicant is allowed to set aside a maximum of $1,500.00 for burial and also have $2,000.00 in cash assets. Other assets will be used to pay NH care until they are eliminated and then Medicaid picks up. Check with your local state social services department on your state regulations.