If you or a loved one must enter a nursing home, be ready for some "sticker shock." The monthly cost for nursing home care can easily wipe out your life savings at a rate of $6000 to $9000 per month. The one governmental program available to cover nursing home costs is Medicaid. It is a federal health care safety-net program, administered by the state, to provide coverage for the middle class for long-term care costs. As a welfare program, it is hard to protect any of your life savings and receive Medicaid benefits.

Bank accounts, stocks, bonds, IRAs and even the cash value of life insurance policies are countable assets. A single person may keep only $1500 of assets in order to qualify for Medicaid. A married couple can keep a home as long as one spouse is living in it, and one-half of the countable assets, up to a maximum of just under $110,000 (this amount is indexed annually). The excess assets have to be "spent down." In the past, it was relatively simple to keep and protect these allowable assets from Medicaid. However, the state of Ohio has Medicaid regulations that make it terribly hard to obtain benefits in the first place and then pass the allowable assets on to children or other heirs.

For example, Medicaid lets a married couple keep a home as long as one spouse is living there. However, if at the time the first spouse enters the nursing home, the couple has their home in a revocable living trust (very common for probate avoidance and perfectly legal), the house is NOT exempt and is subject to spend-down. Additionally, assuming Medicaid is available for the nursing home spouse, if the healthy spouse dies first and the house is left back to the ill spouse, it will be lost to nursing home costs. Under previous Medicaid law, in order to protect the house, we disinherited the ill spouse and left the house to the children, without a problem. Now, Medicaid takes the position that the healthy spouse could have and should have left the home to the ill spouse. Therefore, if we use the same planning, when the home passes to children, it is as though the ill spouse GAVE AWAY the home and he or she is disqualified from getting Medicaid benefits for a period of time because a gift was made at death. In fact, Medicaid now even forces the house to remain in the healthy spouse's sole name as long as the ill spouse is receiving Medicaid. Any attempt to change the title during the lifetime of the ill spouse will create a gift at the time of the title change and disqualify the ill spouse from Medicaid immediately!

Another punitive regulation is the procedure when a mistake is made in the application process. Mistakes are common because, typically, the person in the nursing home cannot apply on his own. A family member is handling the application. In the past, mistakes were handled simply and easily. The caseworker allowed the spend-down of any additional funds and Medicaid continued. Now, when a mistake is made, the mistake is presumed intentional, Medicaid fraud has occurred and the person can be turned over to the prosecutor's office for prosecution.

Medicaid planning is very complex. In order to protect yourself and your assets, you need to consult an attorney who is well versed in Elder Law issues, including Medicaid eligibility.