Planning for long-term care is something many families delay until a health crisis makes the need for care unavoidable. Unfortunately, nursing home and other long-term care expenses can quickly deplete a lifetime of savings. Medicaid may help cover the cost of nursing home care for those who qualify, but eligibility is governed by detailed rules concerning income, assets, transfers and timing.

With proper planning, South Carolina families may be able to preserve assets while still obtaining the care they or their loved ones need. 

Medicaid is a government program that can help eligible individuals pay for certain long-term care expenses, including nursing home care. However, qualifying for Medicaid is not simply a matter of completing an application. South Carolina Medicaid considers an applicant's income and resources and may review financial transactions made during the five-year period before the application.

Proper Medicaid planning can help families understand the rules, avoid unnecessary penalties and make informed decisions about how to use and preserve their assets.

Understanding Medicaid Eligibility in South Carolina

There are several important factors to consider when determining whether an individual may qualify for Medicaid long-term care benefits in South Carolina.

Income

Medicaid considers income received by the applicant, which may include Social Security benefits, pensions, retirement income and other sources of income. The treatment of income can vary depending on the type of Medicaid benefits being sought and the applicant's circumstances.

Having income above a particular amount does not necessarily mean that an individual cannot qualify for Medicaid. There are planning strategies and specific rules governing how income is treated for individuals receiving long-term care.

Assets

South Carolina Medicaid also considers an applicant's countable resources. These may include cash, bank accounts, investments, certain retirement assets and other property.

Not every asset is necessarily counted. Depending on the circumstances, a person's home, vehicle, personal belongings and certain other resources may receive an exemption or special treatment under Medicaid rules.

Determining which assets are countable and which may be protected is often one of the most important parts of Medicaid planning.

The Five-Year Look-Back Period

South Carolina Medicaid generally reviews certain transfers made during the five years preceding a Medicaid application for long-term care.

If an applicant has transferred assets for less than fair market value during this period, the transfer may result in a period of Medicaid ineligibility. The rules surrounding transfers are complicated and simply giving assets away shortly before applying for Medicaid can create significant problems.

This is one of the primary reasons that Medicaid planning should be considered before a crisis occurs.

Medicaid Asset Protection Strategies

There are lawful planning strategies that may allow a family to preserve assets while preparing for the possibility of long-term care. The appropriate strategy depends on the family's circumstances, the type of assets involved and how soon care may be needed.

Spousal Protections

When one spouse requires nursing home care and the other spouse remains in the community, Medicaid provides important protections for the spouse who remains at home. These rules may allow the community spouse to retain certain assets and income rather than requiring the couple to spend everything on nursing home care.

Understanding these protections can be particularly important when a married couple has significant savings or owns a home.

Trust Planning

Certain types of trusts may be useful as part of a long-term Medicaid planning strategy. Depending on how the trust is structured and when assets are transferred, assets placed in an appropriate trust may receive different treatment for Medicaid purposes.

Because of the five-year look-back period, however, creating a trust shortly before an individual needs nursing home care may not produce the intended result. Trust planning should therefore be carefully coordinated with the family's overall estate and long-term care plan.

Exempt Transfers

Medicaid allows certain transfers to occur without imposing the same penalty that may apply to other transfers. Depending on the circumstances, these may include transfers involving a spouse, certain disabled children and other specifically protected individuals or transactions.

The rules are highly fact-specific, so families should seek legal advice before transferring a home, investments or other significant assets.

Spend-Down Planning

Sometimes a person who needs Medicaid benefits has more countable assets than the program allows. In that situation, a family may need to engage in what is commonly called a "spend-down."

A Medicaid spend-down does not necessarily mean simply spending money until nothing is left. Proper planning may allow excess resources to be used for legitimate expenses and purchases that benefit the individual or the individual's spouse.

Examples may include:

• Paying off a mortgage or other legitimate debt;
• Paying medical, dental, or other necessary expenses;
• Making needed repairs or improvements to the home;
• Purchasing or replacing an automobile when appropriate;
• Making accessibility improvements to the home; and
• Taking advantage of other planning opportunities permitted under Medicaid rules.

The goal is to use available resources wisely rather than unnecessarily giving them away or spending them without a plan.

Medicaid Planning with The Conner Law Firm

At The Conner Law Firm, P.C. we help South Carolina families navigate the complicated intersection of Medicaid, long-term care, estate planning and asset protection.

We can review your family's financial circumstances and help you understand how South Carolina Medicaid rules may apply to your situation. Whether you are planning well in advance, preparing for a potential future need for nursing home care or dealing with an immediate long-term care crisis, our goal is to help you make informed decisions while protecting as much of your family's financial security as the law allows.

Medicaid planning should be part of a comprehensive plan rather than something addressed only after a nursing home admission. If you are concerned about the cost of long-term care or want to know whether your current estate plan provides adequate protection, The Conner Law Firm, P.C. can help you understand your options.

Contact The Conner Law Firm today to schedule a consultation.