Medicaid long-term care eligibility and IRA distributions

If I have an IRA with named beneficiaries, how is that account used in determining my eligibility for Medicaid long-term care assistance?

If your IRA is “in pay status” — i.e., you’re taking annual distributions based on your life expectancy — the IRA principal doesn’t affect your Medicaid eligibility. But the distributions are deemed available to pay for your care.

After you’re 70 1⁄2 years old, you’re required to take yearly distributions, so your IRA is already in pay status. Younger people can opt into that status by agreeing to take substantially equal lifetime distributions based on an Internal Revenue Service actuarial formula, says Sharon Kovacs Gruer, a Great Neck elder law attorney.

If you’re in a nursing home, your spouse might receive some or all of your IRA distributions, depending on his or her income. Otherwise, they are your copay to the nursing home, says Gruer. If you receive “community care” — i.e. Medicaid help in your own home — your income (excluding medical insurance premiums) is limited to $825 a month.

You can use “excess income” as your copay for Medicaid-eligible charges, with Medicaid paying the rest of their cost. Or you can put your excess income into a pooled trust maintained by a nonprofit organization like NYSARC, which offers programs to assist individuals with any type of disability. The trust then pays your household bills, and Medicaid pays 100 percent of the cost of Medicaid-eligible home care. The second option is almost always the better choice, says Gruer. “It helps people stay in their homes.”

After your death, Medicaid can seek to recover what it spent on your care — but only from your probate estate, which doesn’t include IRAs with named beneficiaries.

THE BOTTOM LINE A Medicaid recipient’s IRA distributions are deemed available to pay for his or her care. The principal often is not.

WEBSITES WITH MORE INFORMATION

trustservices.nysarc.org/

nwsdy.li/disabilityfactsheet