If you or an elderly loved one has an IRA you might be wondering if the amount in the IRA counts as an asset when considering eligibility for Medicaid. The answer can depend on a few factors, as well as what state you reside in.

IRA Payout Status

When you reach the age of 70 you must begin taking payouts from your IRA. You may begin taking payouts from your IRA as early as age 59 ½ if you like. Regardless of when you began your IRA payout, the amount that you receive from your IRA is counted as income when it comes to Medicaid. Some states will allow you to have a small income from a source like an IRA for personal items, but typically the amount of the IRA payout will go to the nursing home in full.

IRA Not in Payout Status

If your IRA is not in payout status, things could be a bit more complicated. In this case, Medicaid will count the entire IRA as a non-exempt asset. This means that the total amount of the IRA will go towards counting your assets and will likely need to be cashed and spent down before you can apply for Medicaid.

You may transfer the money to someone else, but depending on the state you reside in, this could count against your gift penalty. There would likely be income tax implications as well.

For legal assistance with Medicaid or other elder law issues, contact Stano Law group.