I'm planning to meet with an elder law attorney to discuss this, but wanted to get my thoughts together first. In the event my wife or I require nursing home care, I'm trying to navigate Medicaid without leaving the other spouse in poverty. Our combined assets are exempt/below threshold, but my 401k ($500k) pre-tax is the issue. Should I do Roth conversions in my wife's name? Or, do withdrawals and pay off our home? Other options? TIA.
My brother and I got one parent on Medicaid for assisted living earlier this year. She's in a good place, unlike some Medicaid only facilities in her area, but to get her in she had to have enough assets to pay for the first year.
To qualify they had to get their combined assets, including his IRA, down to about $141K, in their state. There was a 5 year look back to make sure they didn't give away any assets to reach that level. We got the IRA money out before reach $141K so that the $141K limit did not included a deferred tax liability.
At that point Medicaid covers her assisted living and other medical expenses. She has a savings account with no more than $4K allowed at the end of any month. He has the other $137K solely in his name. He also gets both SS checks.
They did not look into any trusts or other ways to try to keep their money. Methods vary by state so the elder law attorney should know the rules and options in your state.
I know that you cannot convert your IRA into a Roth for your wife, and it doesn't matter anyway. They consider all of your assets as joint for these purposes, and Roth and tIRA/401K money are included in the Medicaid asset limit.
I think your home is exempt but check with your attorney. It would make sense to me to pay off the mortgage before reaching the Medicaid asset limit so that the "community spouse" (the one not on Medicaid) does not have mortgage payments to make with the other assets they are allowed to have.
It's good to know your options but some of those may be extreme for a situation that may or may not happen.