Case Studies

Single Female- Age 84- Nancy
Nancy was diagnosed with dementia. It is no longer safe for her to live at home. Her children work Full-Time and can't afford to miss work to care for her, so she is going to move into a Nursing Home.

After the premature death of her husband, Nancy's children have been her life. They spend lots of time with her, include her in social gatherings, and have helped provide a fulfilling and quality life for her. She is aware that she is "slipping" mentally and knows that she needs to move to a facility. She strongly desires to move into a facility near her children so they can visit, but she also wants to avoid losing her entire life savings paying for her care. She strongly desires to gift some of her money to her children who work really hard but have some financial struggles, but doesn't know how she can do that and pay for her care.

GOAL: Obtain Medicaid eligibility for Fred as quickly as possible while transferring as much of her assets as she can to her children.

Details:
Nancy's Income:  $2,800/mo
Nancy's Assets:   $175,000
Cost of Care:       $9,500/mo

At the time of this case, KY Medicaid laws indicated that Nancy can keep $2,000 in countable assets and decides to purchase a Funeral Expense Trust for $15,000 to quickly provide assets to pay for her final expenses when she passes away so her children will not be burdened at that time of grief. This leaves her $158,000 in assets.

How we helped:
  • $15,000 Funeral Expense trust to cover final expenses upon death
  • To provide a gift, we need to determine how much she can gift and how much she will need to pay for her care (also referred to as the penalty period) before Medicaid will begin paying for her care.
  • We worked her finances to determine her Divestment Penalty Divisor and that the "penalty period" in her case was 10 months.
  • We multiply 10 months x her Divestment Penalty Divisor and determine she can gift up to $95,000 to her children.
  • Based on her cost of care minus her income, she needs to cover $6,750/mo for 10 months before Medicaid will pay for her care. 
  • Purchase a 10-month Medicaid Compliant Annuity that provides enough income to cover her Nursing Home expenses during her penalty period.

Result:
  • Nancy gifted her children $91,000. This gift helped each of them with some student loan and debt they were struggling with.
  • Her current income and her MCA income will pay for her $9,500/mo cost of care until Medicaid will begin paying in month 11.
  • Final Expenses are pre-paid and ready when the time comes.
  • Alice has less anxiety knowing that she can give back to her children that have been so good to her, and the fact that she will not be a burden as her care will be covered.
  • Since she is paying for her care the first 10 months, she was able to choose a facility in the area convenient for her children, and confirm that a Medicaid bed is scheduled to be available when her assets run out. 
If Nancy would not have proceeded with this plan, she would have exhausted her spend-down amount in about 16 months and she would not have been able to provide a gift to her children.

Note: Names have been changed to protect the identity of those involved in the cases. Also, while the numbers included are real, they have been rounded for ease of summarizing these cases.
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Other Case Studies
Read about actual cases where individuals were able to preserve assets and get the care they needed. Note; these are just a few examples and there are many other potential scenarios to consider.

Note: Names have been changed to protect the identity of those involved in the cases. Also, while the numbers included are real, they have been rounded for ease of summarizing these cases.