My father is in a nuring home where his social security benefits are used to pay for the cost of his care. He has an IRA. Will Medicaid seek recovery and take the IRA or is it exempt ? Will the payments made by taking his Social Security income be considered full payment?

This question has been closed for answers. Ask a New Question.
Find Care & Housing
Your question about Social Security income is answered with an understanding of the concept of "Patient Paid Amount." The PPA is the total amount of monthly income that must be paid for care, minus the Personal Needs Allowance ("PNA"). The PNA is the small amount that your state allows your father to keep each month for personal needs.

(If you father has a spouse, the spouse gets to keep all of the couple's income, up to an amount called the spouse's Minimum or Maximum Monthly Maintenance Needs Allowance.

The answer to your IRA question depends on the state where your father is located.

For example, my state (Massachusetts) is very restrictive. The IRA will count against the applicant. In my state, the IRA must be cashed out and then spent down for care or for non-countable assets. The only exceptions are found when the Medicaid applicant has a disabled family member to whom the cashed out IRA proceeds can be transferred, or a spouse who can keep an amount up to the Community Spouse Asset Allowance.

(As you know, there can't be joint ownership of an IRA because: it's an Individual Retirement Account.)

But in Kentucky and DC, the institutionalized person's IRA is an exempt asset.

Other states like New York and California are almost as generous. The Medicaid applicant can keep the entire IRA as long as it is paying income to him or her, and the income helps pay for care.

Eight states, including NY and Florida, allow a community spouse to keep an unlimited amount of their own IRA funds as long as the IRA is paying out income.

And, more than a dozen states allow the community spouse to keep an unlimited amount of their own IRA funds even if the IRA is not paying out income yet.

As you can see, talking with an elder law attorney in your state can help you make the best decisions on how to apply and qualify for Medicaid long term care.
Helpful Answer (4)
AlvaDeer Jul 23, 2019
I am always so happy when you "weigh in" and I always appreciate your "expert " advice. Thanks for being here on this forum and know you help many with your advice.
I’m surprised Medicaid/ MediCal allowed existing IRA to stay as asset. Was it clearly included in his application?
was IRA allowed to be kept as it’s value was within limits of what your mom can have as her own assets under community spouse (CS) rules?

Its in distribution mode, right?
If so where is the IRA $ paid to him going?
Like to the NH along with his SS$ as part of his Medicaid required copay or SOC (share of cost)
is it on a waiver to go to your mom as she’s a CS so she has her own income & then his IRA in distribution income paid to her each month?

Most states want you to spend down all possible non-exempt assets - like an IRA - ahead of being eligible. So the IRA would need to be cashed out do spent down. But having a CS - I’d bet - totally changes that requirement. Try to find out if it’s your mom’s CS stuff that’s allowing the IRA to be retained.
Realize state may require beneficiary to be changed to or added to have the state as a co/primary/secondary beneficiary along with your mom in order for him to be eligible. States can & do require a change to beneficiary for IRAs, annuities, larger term no-cash-value life insurance policies to have state as the primary beneficiary or co-beneficiary in order for Medicaid to be available. States do this predeath & in tandem with the application eligibility process to get around the probatable assets only aspect of MERP / Estate Recovery.

So if there’s state added as beneficiary then upon his death any $ left in his IRA (or annuity) or to be paid by life insurance can paid to state as they are beneficiary. & hopefully the $ paid to state paid but only after your mom as she’s a CS pays for funeral costs and other debts that are his or his % of ownership.

A summary on recovery terms had to be in his initial application and then again in any renewals if your state does these. If you don’t have his paperwork, if your dpoa ask for a copy from the state or your mom can request this as his spouse.

Doing CS stuff is not simple. Personally I think CS /NH couples situation needs a NAELA or CELA level of elder law attorney as there lots of little items that come into play. Like your mom may be needing to actually be regularly putting $ into an account only in her name and have it increase up to whatever is the state $ limit for a CS so that when he dies, that $ is hers only and not possible to be considered part of his estate. And have it set up so that he is not personally the beneficiary of it should mom predecease him. Most states have CS max assets at 120k, if mom is quite a bit younger she likely needs the max and more to stay living in the community for another decade or two.
Helpful Answer (1)
shovelheadseven Jul 20, 2019
They are divorced. He named her as beneficiary on IRA only worth 50K. She has received zero payments. He was taking the required deductions when he was doing his banking. We have no idea what his bank account status is as we do not receive his mail for some reason it stopped when he went into long term care.
No. His social security won’t be considered full payment for the nursing home. If he’s on Medicaid/medi-cal, then Medicaid pays whatever his SS check doesn’t cover. Social security doesn’t pay anywhere near the monthly cost of a nursing home. IRAs are not exempt assets, only a few states don’t count it as an asset if he’s receiving the minimum monthly payment from it. Otherwise Medicaid/medi-cal will require him to cash it out and spend it on his care. And yes MERP can go after a retirement account.
Helpful Answer (0)
shovelheadseven Jul 12, 2019
He has nothing else to his name but the IRA. They will deduct his social security payments from the total spent and whatever the balance is of the remainder they will put the IRA towards that and anything left after that would be unrecoverable?
Is he already on medicaid or are you thinking that he will need to apply for medicaid? If he's already on and they didn't make him cash out the IRA, then have him set the beneficiary to someone. Then the IRA won't be subject to probate. In most states medicaid recovery is only on assets going through probate. A beneficiary on a financial account avoids probate. Thus there can't be any MERP on that.

If he isn't and he is going to apply, then medicaid will consider it an asset that needs to be spent down.
Helpful Answer (0)
shovelheadseven Jul 12, 2019
See 2 more replies
This question has been closed for answers. Ask a New Question.
Ask a Question
Subscribe to
Our Newsletter