Navigating the complex rules and regulations of Medicaid laws in Iowa estate planning

BY ADAM DOLL | Hopkins & Huebner, P.C. | Adel Office

This subject comes up a lot in my practice.  The conversation usually goes a little something like this.  A child calls me in regard to his or her parents.  The child’s parents have worked hard during their lifetimes and have saved up a sizeable nest egg.  Mom or Dad’s physical and/or mental health begins to fail, which necessitates the kids to start thinking about an assisted living facility or a nursing home for Mom or Dad.  Everyone involved is already under a tremendous amount of stress in making this decision, but then also having to navigate the complex rules and regulations of Medicaid eligibility (with the ultimate goal of preserving some of Mom and Dad’s assets) can be overwhelming.  Ultimately the questions are, “What is Medicaid?” and “Is there anything that can be done now?

Medicaid is primarily a “safety net,” state-run program, which can help people of low assets and low income qualify for and receive medical care.  This can include payment assistance for nursing home care.  Medicaid eligibility guidelines show that to be eligible an applicant must have less than $2,000 in “countable assets” and less than approximately $2200 in monthly income.  Nursing home care can be quite expensive as you may know, with some current average estimates being around $70,000 per year.  It can be quite unsettling for the family to know that just a few years of nursing home care can wipe out a lifetime of saving.

The asset-preservation strategies that are available in the above scenario greatly depend on timing.  Iowa, like many other states, has what is called a “5-year lookback” period.  The goal of this “lookback period” is to prevent a person from transferring  assets for less than fair market value to their children, and then applying for Medicaid benefits shortly thereafter.  This article is nowhere near long enough to go into very much depth on strategies that may be implemented.  It is a good idea to consult an estate planning attorney knowledgeable in Medicaid law if this situation arises in your family, or even better, before it arises before certain planning options are eliminated.