Case studies

Case examples

Meet Peter and Alice

Peter is 79 and has just entered a nursing home. His monthly bill will be $8,000 a month. His wife Alice who is also 78 tells us she is worried the nursing home cost will quickly drain their assets.

She was informed that Peter’s income would go to the nursing home and she would have to “spend down” their assets to cover the balance. Once her assets are spent down to meet Medicaid eligibility she could apply for Medicaid for Peter. Alice was in tears when she spoke with us because did not know how she would be able to live on just 1,600 a month.

  • Peter's Income form social security is $2,100 a month
  • Ida’s income from social security is $1,600 a month
  • Assets totaled $400,000

  • Obtain immediate Medicaid eligibility for Walter
  • Increase Alice’s income
  • Preserve their assets

Following a thorough intake and the purchase of two funeral expense trusts equaling $14,000 we were able to determine that based on their states Medicaid eligibility rules they had to spend down $253,000.

Frank’s IRA of $150,000 was put into an MCA -Medicaid compliant annuity with the monthly payment going to Alice utilizing the “name on the check” rule.  The remaining $103,000 was put into another MCA in Alice’s name.

Purchasing the MCA’s eliminates their excess countable assets, and Peter becomes immediately eligible for Medicaid benefits.  With the payments from both MCA’s Alice’s income goes from $1,600 a month to $4,795 a month.  We also took over the whole process of applying for Medicaid so that Alice could focus on everything else that was happing with Peter going into the nursing home.

  • Peter received immediate Medicaid eligibility. His cost of care was now changed to the amount of his social security minus his $50 personal needs allowance.  Making his co-pay is now $2,050 saving the couple $5,950 a month.
  • Alice’s income increased from $1,600 a month to $4,795 a month.

If they chose not to move forward with the plan, they would have exhausted their entire spend down amount of $253,000 in less than 32 months and Alice’s income would have remained at $1,600 a month.

Meet Sally

After being diagnosed with dementia, Sally (82) enters a nursing home that costs $8300 per month. In order to avoid losing her life savings to pay for long term care, she wants to make a wealth transfer to her children. She also owns a piece of rental property with her daughter which they purchased just one year ago. Sally’s daughter was really concerned about what to do. She did not want to sell the rental property.

  • Pauline’s income from social security $1,800 a month
  • Assets $150,000 including the rental property
  • Cost of care $8,300 a month

  • Obtain Medicaid eligibility for Sally as quickly as possible.
  • Preserve her assets
  • Create a wealth transfer to the next generation including the rental property

Following a thorough intake it was determined that after the purchase of a $10,000 funeral trust Sally had to spend-down $138,000.

The first step was to transfer the property with a value of $50,000 to the daughter.  This created a $50,000 gift.

Along with the property an additional $25,000 was gifted to Sally’s children.

With a total gift to her children in the amount of $75,000 that left a balance of $63,000

The $63,000 was put into an MCA for Sally.  The income from the MCA paid the nursing home during the penalty period that we had created by gifting the $75,000.

    • Sally made a wealth transfer to her children of $75,000.
    • The property was transferred to the daughter so that she now had full ownership and did not have to sell it to achieve Medicaid eligibility for her mom.
    • We utilized an MCA with the balance of Sally’s assets to pay the penalty period created by gifting the property and money to her children.
    • Once the penalty period was over Sally’s MCA would be fully paid out and she would qualify for Medicaid.