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A Medicaid professional consultant helping an elderly woman to protect her assets and money from the nursing home spend down.

Medicaid Serial Divestment

Medicaid serial divestment ratio of 2:1 to gift assets for good Medicaid planning

Serial Divestment in Medicaid Preplanning

In some cases, when in the Medicaid preplanning stages, the divisor can be used to reduce the amount that must be spent down. This is done through a process that is known as serial divestment. This means that a patient can start to divest assets on a monthly basis until they are able to qualify for Medicaid. If there is a month while eligibility is not desired, the individual can give a monthly amount that is less that the penalty divisor. If a patient has $15,000 in extra resources, they may give away $5,000 a month. This means that in three months, that person would be eligible for Medicaid.

How the Divestment Ratio can be used to Gift Assets in Medicaid planning

In some states, calculations may differ. Basically, if an individual does not wish to be considered for Medicaid during any given month, they are allowed to gift an amount that is one dollar less than double the amount of the divestment penalty divisor. In these cases, the penalty would only be for one month. These divestment rules can be applied even if the individual is a private-pay patient. They can gift the assets at one dollar less and only have to pay for their nursing services for one month. This type of plan is useful for those who are trying to determining how much they can pay for private care without having to deplete all of their assets. By using this strategy, many patients are able to preserve almost 2/3 of their estate. This is because the divestment ratio is 2:1, meaning that for every two dollars that are given away, one is spent on care.

Divestment of a Jointly Held Account to Qualify for Medicaid

The money that is gifted, especially if gifted to a child, can later be used to help the patient with the cost of care. It simple removes the amount from the individual’s accountable assets and places that money in the hands of another person. That person can then decide to use the money for care. This is a common strategy. Many people will divest an account that is jointly held by the children of the patient. The patient would still be able to control the checkbook under a power-of-attorney while they are alive. What this does is allow the patient to use and control the money in the account, but they would still be able to qualify for Medicaid. It also allows for simple distribution of the resources when that money is no longer needed to pay for care.
Call us toll-free for advanced asset protection and Medicaid planning at 1 (877) 216-3342 1 (877) 21-Medicaid.
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