1. MEDICAID PLANNING FOR
SINGLES: 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
• Veterans Benefits, Estate Recovery, and
Changes in the Medicaid Rules-June 13.
• Seminar is 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 planning options to protect
the assets of a single person.
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?
• Monthly income cannot exceed the
monthly cost of your stay in a nursing
home ($7-9,000 in this area).
• For the Waiver program, income must
be less than $2,094/month.
Serving the Holland area since 1900

11. Who does Medicaid apply to?
• Under assets test, a single person can
only have $2,000 in countable assets.
• Can keep his or her home (if it’s not in
a trust) and a vehicle.
• All other assets are countable.
Serving the Holland area since 1900

12. • Client is single.
• She has an estate plan (living trust,
pourover will, and powers of attorney).
• She is healthy and does not anticipate
needing long term care in five years.
Serving the Holland area since 1900
Planning Example #1

13. • She has a house, vehicle, and
$250,000 in investments.
• She receives monthly income of
$1,100 in Social Security and $600
from a pension.
Serving the Holland area since 1900
Planning Example #1

14. • She has monthly expenses of $2,200 so
there is a shortfall in her income of $500
per month.
• Since her husband passed, she has a
son who has started to help her in
various ways.
Serving the Holland area since 1900
Planning Example #1

15. • She is concerned about going to a
nursing home and not having any
resources to take care of her house.
• She is also worried about Medicaid not
covering all of her needs (other medical
care, clothes, etc.).
Serving the Holland area since 1900
Planning Example #1

16. • She creates an irrevocable trust in which
she receives the income (i.e. interest and
dividends).
• Her son is the trustee and her children
are the beneficiaries of the trust
principal.
Serving the Holland area since 1900
Planning Example #1

17. • She makes a gift of $220,000 to the
trust.
• She will receive approximately
$916/month in income from the trust.
• She will not likely need any other
resources.
Serving the Holland area since 1900
Planning Example #1

18. • If she does need other resources, her
son can take a distribution from the trust
(because he is the trustee and a
beneficiary).
• He can then gift it back to her.
Serving the Holland area since 1900
Planning Example #1

19. • There is a five year “look back” period for
Medicaid.
• She will need to remain healthy five
years from the time of the gift for this
planning technique to be effective.
Serving the Holland area since 1900
Planning Example #1

20. • Client is single and is admitted to a
nursing home.
• He has a house, vehicle, and $75,000 in
investments.
Serving the Holland area since 1900
Planning Example #2

21. • Without any planning, he will have to
spend the $75,000 in investments
down to $2,000.
• He could then receive Medicaid.
Serving the Holland area since 1900
Planning Example #2

22. • With only $2,000, he would over time
be unable to pay for his house.
• In these cases, he could rent it.
• Or, his children will have to come up
with the funds to pay the house
expenses.
Serving the Holland area since 1900
Planning Example #2

23. • There is planning that could protect
approximately half of his $75,000 of
investments (or $37,500).
• These funds could pay for what
Medicaid does not cover (i.e. other
care, clothes, etc.).
Serving the Holland area since 1900
Planning Example #2

24. • It could also pay for expenses with the
house.
• If there are any funds left over, they
would be an inheritance to his children
and other beneficiaries.
Serving the Holland area since 1900
Planning Example #2

25. • Upon entering the nursing home, he (or
his power of attorney) creates an
irrevocable trust.
• His daughter is the trustee and his
children are the beneficiaries of the trust
principal.
Serving the Holland area since 1900
Planning Example #2

26. • He then makes a gift of $37,500 to the
trust.
• This gift results in him being ineligible for
Medicaid for approximately five months.
Serving the Holland area since 1900
Planning Example #2

27. • He invests the other $37,500 in a
“Medicaid annuity.”
• The annuity and his other monthly
income pays for his care for the five
months of ineligibility.
Serving the Holland area since 1900
Planning Example #2

28. • At the end of the five months, Medicaid
pay for his care.
• He will have to pay all, but $60 of his
monthly income to the nursing home.
Serving the Holland area since 1900
Planning Example #2

29. • However, the funds in the trust can be
used to pay for non-covered care.
• They can also be used to pay for house
expenses.
• Any funds that are remaining become an
inheritance.
Serving the Holland area since 1900
Planning Example #2

30. Questions……
Serving the Holland area since 1900

31. Upcoming Seminars
• Veterans Benefits, Estate Recovery, and
Changes in the Medicaid Rules-June 13.
• Seminar is at 4:30.
Serving the Holland area since 1900

32. 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