The Laureate Way

Articles to Help Families and Older Adults Manage the Challenges of Aging

Medicaid Planning and Spousal Retirement Accounts

Medicaid Planning and Spousal Retirement Accounts

What happens if your spouse enters a nursing home? What assets are protected for you? Chances are, you have either received incorrect information or incomplete information about Medicaid planning and spousal retirement accounts from family and friends. An example of this relates to IRAs (Individual Retirement Accounts).

If you or your spouse have an IRA and are struggling Medicaid planning and spousal retirement accounts, seek advice prior to taking any drastic measures. Good thorough planning provides protection, and it is more important than ever to plan before the crisis.

Misconception about Medicaid

Medicaid (also referred to as “Title 19” or “Medical Assistance”) is a joint federal-state program which provides funding to cover the costs of nursing home care for individuals who meet certain income and asset requirements. The rules vary from state to state and are very complex.

In years past, the only option with IRAs, in the context of Medicaid planning, was to cash it in and pay the taxes. This has changed. Planning opportunities now exist!

Planning opportunities allow you to protect the IRA of the Institutionalized Spouse(the spouse residing in the facility) while eliminating the necessity of cashing it in. In addition, the income flow of the IRA can benefit the Community Spouse (the spouse able to live independently).

Community Spouse

Community Spouse is the spouse who is able to live independently. The Community Spouse’s IRA is exempt, meaning it is completely ignored for Medicaid purposes, and does not have to be spent on the Institutionalized Spouse’s care.

Institutionalized Spouse

Institutionalized Spouse is the spouse who is going to reside in the facility. The Institutionalized Spouse’s IRA is countable. However, it can be converted to a Medicaid Compliant Annuity that is payable to the Community Spouse thereby preserving that asset.

Attorney Jennifer Imediegwu

Attorney Jennifer Imediegwu

This article is a reprint of a guest blog post submitted by Attorney Jennifer Imediegwu
Moertl, Wilkins & Campbell, S.C.