My sister just sold her home. What should she do with the proceeds (around $60,000) to protect it from Medicaid?

Hopefully your sister will live beyond 5 years for Medicaid look back, buy, when she moves , your sister will need her nest egg to supplement putting a roof over her head.. it’s an asset. That’s about the amount of money my mom had when she sold her mobile home. I’m thinking about 2 to 3 years ago… my mom had SS , a post office pension, and VA aide and attendance. My mom passed this last week as I had the appointment made to apply for Medicaid… she almost out lived her money..

Assets are to be used to pay for her care. Not to shelter from Medicaid.

My suggestion about Medicaid is the look back , being aware if one needs Medicaid, they need to FOLLOW the rules , no borrowing, no gifting , no hiding …no protecting because Medicaid has 5 years to look back..

She won't be losing it to a home. She will be paying for her care until she can't, then the taxpayers pick up the tab.

You can't protect money from medicaid and you shouldn't try to. The money will go for her care until it is gone, then medicaid will pay unless there has been gifting of her funds over the previous 5 years.

She will not be loosing $ but spending down $ properly 2 b Medicaid eligible for when her care & oversight goes beyond living independently.

Your Sis has significant health challenges. If an elder is anywhere close to needing care & oversight in a facility, it imo is way way too too late to do any ahem.. creative financial planning to get assets outside of the Medicaid look back.

That ship 🛳 has sailed. & it’s off on the horizon…

Look back is 5 years for most states although some will do a 3 or will do less if they have been on private pay in a facility prior to application. Her 60K from her house sale in states database and easily found by a caseworker. In all probability, she is going to need spend every penny of the 60large on her own personal living and personal care expenses. There is imo no real extra $ she has…. FFS it’s only 60K & realistically 60K not very much $ at all. It’s not 600K, it’s 60K, no real $.

Actually I’d be very concerned that as she has now has 60K in assets, that she will be ineligible for her low income apartment. The month that house sale went thru, it was 60K in “income” that mo & then became an “asset” every mo afterwards. Please please go over her contract for the apt to see in detail what reporting requirements she has to do to be compliant for her existing contract. $ will surface & she really needs to do things that are ok for how low income aka “at need” programs run.
Sissys monthly income (like what she gets from SSA) may have stayed the same but the infusion of the 60K has changed her overall financial “at need” status.

That Sis is in NYS is a good thing as NY seems to have a way more flexible approach to income & assets than other states do. And NYS has community based managed care plans (Integra) which seem to allow those enrolled to pay a modest premium and retain some assets. Please realize a lot of states LTC programs run that if your assets are over 2K beyond the initial month of deposit, you are now ineligible as no longer “at need” financially even if they are beyond “at need” medically for facility care OR if they go beyond 10-14K in assets for community based care, your no longer “at need” financially. She has 60K!, she is no longer “at need” financially.

Please before she spends any $, help her find out requirements on her low income apt. If she going to have to pay an increase in rent, find out what it is & set aside $ for this expense for several months and perhaps spend down on things that are exclusively for her care or her needs. No gifting, no tithing. She can spend on Legal, so she can go and update all her r legal documents and also talk frankly with the atty as to how NYs Medicaid review is done and how to are it work for her in her future. Spending on items that LTC Medicaid rarely pays for can be a good thing…. Like dental work or new eyeglasses and hearing aids or a more expensive wheelchair. ((Dental could easily use up most if not all of her 60K)). Buying in full a preneed funeral and burial within Medicaid limits on price is a good thing.

Don’t let her be suckered into an annuity!

Really 60K is maybe 4-5 months at a NH or MC, maybe 8-10 mos at AL. Again imo she has no real extra $.
Yes her SSA adds into the equation but unless she is a high income earner getting SSA $3400 max & still working, she’s likely to end up filing for LTC Medicaid. She’s going to have her health issues increase & will run out of $ and end up filing for NYs LTC Medicaid in some way. And she, as well as whomever is her POA, really needs to be mindful of the penalties that can effect her eligibility if she gifts in any way any of that $60,000.00 now that will be a serious issue for Medicaid later until it’s past Summer 2027.

I'm fascinated.

So what do you think should happen to the money that your sister will have "protected"? What better cause does she want to spend it on rather than her own comfort and care?

May she find a good place with a caring team to support her, whatever else happens.

Your sister needs to see a good elder attorney to best handle this.

I think the issue here is that she now has liquid assets that might make her ineligible for low income housing. And how did she get that anyhow when she had a house? If a person can pay their own way, that's what should be done. Medicaid is for after that. What did you have in mind for HER 60k?

Protect it from Medicaid? why? Medicaid is for people who have no assets, paid by the taxpayer, so these people can receive healthcare and, if needed, skilled nursing. Your sister would only qualify for Medicaid if she was poor.

Or is your question really "how can my sister sock away 60K yet have the taxpayer, through Medicaid, fund her for nursing home care" - as a taxpayer - i say "no - she has assets, use HER assets for HER care" When those are gone, if she needs Medicaid then so be it.

How did your sister qualify to live in a low income apartment and yet owed her own home, or have $60,000 in assets?

All states differ, but Medicaid will recover any funds that are in her name. And if she cannot transfer any assets out of her name within five years, Medicaid will recover those as well. There is such a thing as a Medicaid Asset Protection Trust. This is an irrevocable trust, which can't be changed or revoked. The idea is to pass these assets on to her beneficiaries after your sister dies. Otherwise, the state where she received Medicaid benefits will attempt to recover them. Not all states have this kind of trust and trust terms can vary from state to state. They also cost money to set up and a trustee has to be named. These trusts usually are subject to the five-year look back rule too, though again this differs by state. The end result is that your sister most likely cannot protect assets in her name for her use.

I don't think with your sister's health problems, she will go over the 5 year look back for Medicaid. And who profits if she is able to put her money into a trust? 60k will not even pay a year for an Assisted living and Medicaid does not pay for AL. In my State only if you have privately paid at least 2 years. Then the AL has to except medicaid and not hit the amount of Medicaid residents they allow.

I think Sister should just put that 60k in something that will earn her some interest but she can drawl on when needed. It should be there to offset any expenses that may come up. Make her life a little better. Then if she needs LTC, if she has money, it will be easier for her to get into a facility and then have time to apply for Medicaid and then go from private pay right into Medicaid.

I really can't see trying to protect 60k. In this economic climate it won't go far. And then as said, it may effect her low income status. There is a Special needs Trust you may want to look into. But, it has stipulations on how it can be spent. Two are no housing or food. Having this kind of Trust will allow her to still get low housing benefits and others like Medicaid. Be aware though, if she needs Medicaid in any way, when she passes, the money in the trust reverts back to Medicaid. If there is any money left over after Medicaid recovers, that will go to the beneficiary.

I paid almost a million dollars for my mothers 5 1/2 pleasant years in
residential care.

The money had been made by my father, and saved by my mother, dollar by dollar.

Worth EVERY CENT, and ZERO REGRETS.

The money will need to be spent for her benefit. Concentrate on how best to do that rather than focusing on how to protect it from Medicaid.

Does she have a prepaid funeral plan and a nice assortment of low vision and mobility aids? Does she need dental work or hearing aids? Is there an assisted living facility in her area that even accepts Medicaid, but only if she self pays for so long? Is there a skilled nursing facility that accepts Medicaid and has only unshared rooms that does the same?

What does she enjoy doing and can it be pre-acquired or prepaid (Audible books/credits and Alexa devices? Subscriptions to other online or delivered products? Prepaid insurance or other expenses on any pets (especially if there is a nearby caretaker that might bring them for visits if they can’t stay with her)?)

What would increase her comfort? A quality bed, power recliner, big screen TV, well labeled clothing, something that emits a scent that she enjoys?

Any bucket list experiences that she could still enjoy? A disability friendly park/animal/boat/helicopter tour nearby? Foods? Concerts?

https://www.agingcare.com/topics/105/medicaid-spend-down/articles