Using Medicaid to pay for long term care: Part I

Using Medicaid to pay for long term care: Part I

Using Medicaid to pay for your long term care should be considered a last resort type option. There are, however, a couple of reasons that would require the use of Medicaid to protect your assets. One of these examples is for a married couple, where only one spouse is requiring long term care.

Federal law allows for a married couple to split their assets in half once one spouse enters a nursing home. While you would assume this means that the healthy spouse would be able to keep all of their half of the money, this is incorrect. The healthy spouse will only be able to have a portion of their half while the remaining balance would need to be spent down in order for Medicaid to begin paying.

There is a solution for this problem that allows the couple to not have to spend down all of their assets. The Omnibus Reconciliation Act of 1993, also known as OBRA 93, is a type of annuity that can only be created when you are in a long term care crisis and are attempting to use Medicaid or Veterans Planning in order to pay for your long term care.

In this situation, you will convert your assets to the OBRA 93 compliant annuity which will allow the healthy spouse to maintain all of the assets that were originally being paid down. In order for the annuity to be Medicaid compliant, it must be non-assignable, non-commutable, non-transferable, irrevocable and actuarially sound.