Moving assets to kids to be eligible for Medicaid

[foxfirev5]

I certainly hope there aren't too many 30 somethings FIREing with the intentions of ACA subsidies providing relief. First, most would need to be on HDHP plan which could quickly deplete any reserve funds. End result medicaid and/or bankruptcy. Not much different than the old days before ACA.

 

[pb4uski]

Lots of blogs by thirty something retires prove me right including one by one of our members .

No, they don't prove you right at all.

Lots of blogs by 30 something retirees only proves that there are some... perhaps even many.... but I already conceded that there were some.

The follow-up question is whether there are so many that they are relevant to the question, which was an objection to wealthy people managing their income to get ACA subsidies.

We can agree to disagree on that but my guess is that the vast majority of wealthy people who manage their income for ACA subsidies are 50+ and those 30 something retirees managing their income for ACA subsidies is less than 2% of all retirees on ACA.

 

[ownyourfuture]

I think he meant the 15K gift tax exclusion per person. Any amount over this exclusion will have to be reported to the IRS by the donor using form 709.

That's exactly what I meant, I just had the amount wrong.
Thanks for the correction.

 

[RunningBum]

I certainly hope there aren't too many 30 somethings FIREing with the intentions of ACA subsidies providing relief. First, most would need to be on HDHP plan which could quickly deplete any reserve funds. End result medicaid and/or bankruptcy. Not much different than the old days before ACA.

Not that it's pertinent to the OP's point, but you can get an ACA subsidy on any plan. An HDHP plan is only needed for HSA eligibility. Also, I checked back the last two years, and while the bronze HSA eligible plan I was on had a higher deductible than many other plans (not all), it had a lower Max Out Of Pocket limit than gold plans that I considered, through the same insurer.

You're right that high medical costs could endanger any ER plan, especially with so many years from your 30s, but hopefully they are budgeting for at least some years where they hit their max OOP. I know I did, starting in my late 40s.

 

[athena53]

Now both go into nursing care. Is it fair that Couple A's assets are depleted while Couple B immediately goes on governmental assistance? Is Couple A's ethical decision now to protect their assets any different than Couple B's ethical decision which was to not save for their retirement?

My guess is that Couple A will have choices Couple B does not. Even now, nursing homes are struggling to provide decent care with what Medicaid gives them. A recent Boston Globe article told the story of one that just plain closed down. Another LTC home operator took in a few of the residents but admitted he was losing money on each one. From anecdotal evidence on these and other sites, I see some people who are able to get indigent elderly relatives into nice places that accept Medicaid, and others who are finding long waiting lists, not-so-great conditions, or only facilities far from family that will take them.

I dread the idea of living in a LTC facility but as long as I have my mental faculties I want to be in a decent place with a library, activities, Wi-Fi, good meals, etc. and not warehoused someplace where I'm strapped into a wheelchair and stuck in front of the TV all day.

 

[pb4uski]

Good point. As with many things, wealth gives one choices... if you're poor you have to accept what society gives you but have fewer and often less attractive choices.

 

[Letj]

My parents could be considering this too and I also struggle with whether there is an ethical issue. As others said, doing ACA subsidies and aggressive tax planning is okay with most.

The other scenario that I think is relevant.

Couple A - Lives modestly their whole life and saves a pile of money hoping to give it to kids upon death.

Couple B - Lives high on the hog spending their money lavishly on travel and toys all through life without saving much.

In retirement they both live modestly. Couple A because that's what they've always done and Couple B because they are forced to by necessity.

Now both go into nursing care. Is it fair that Couple A's assets are depleted while Couple B immediately goes on governmental assistance? Is Couple A's ethical decision now to protect their assets any different than Couple B's ethical decision which was to not save for their retirement?

Good point. I find it laughable that some people think that the government paying for nursing home care, healthcare, etc for well-off people is some home unethical because it’s stealing tax payers’ money. May I point out that in just about about every other developed nation the government provides extensive social programs including health care and nursing homes using tax payers’ money and they don’t just go toward the needy ones. Of course, having enough money gives you more choices and it’s why in many of those countries a private system exists alongside the government one.

 

[travelover]

Good point. I find it laughable that some people think that the government paying for nursing home care, healthcare, etc for well-off people is some how unethical because it’s stealing tax payers’ money. May I point out that in just about about every other developed nation the government provides extensive social programs including health care and nursing homes using tax payers’ money and they don’t just go toward the needy ones. Of course, having enough money gives you more choices and it’s why in many of those countries a private system exists alongside the government one.

True, but in those countries, the taxes reflect those benefits. We want low comparative taxes and freebies.

 

[athena53]

True, but in those countries, the taxes reflect those benefits. We want low comparative taxes and freebies.

And "Free" means, "I want it at no cost to me and someone else paying the bill".

 

[MichaelB]

Hi there-
Planning ahead for my mom and figured I could get some insight here.


My mom will be 81 in February and I would describe her as someone who is in "okay" health.
As we know health can deteriorate sometimes quickly, sometimes slowly does it make sense to move her assets ( all liquid now) into one or more of her kids accounts?
The logic being that if she ever has to go into a nursing home or even assisted living that all her money won't evaporate and she can just have Medicaid pay for it?


Any thoughts or concrete knowledge on this situation would be greatly appreciated. Thank you.

Lots of responses, and opinions, but not all directed to your questions in the OP. Getting back on topic, one question I would ask is what does your Dear Mother want, and expect? After all, it’s her money.

 

[Doribe]

When poor people work the system they are scoundrels. When rich people work the system, they are just getting their fair share.

+1

 

[Walt34]

Lots of mis-information here. Talk to an elder law attorney in your state. Different states are different even though it's a federal program. This is not an area to get free answers on the net. Nor is it an area you want to go to a general practitioner. Find an EXPERT!

What he said.

We went through the wringer with this several years ago with FIL. Actually it was the elder law attorney who suggested structuring assets to have Medicaid kick in earlier than it otherwise would have and preserve half of his assets. We had to think about this too, but concluded it was no different than those who structure their assets for the lowest tax bill or to qualify for ACA subsidies, actions that few on this board have any issue with. I fail to see the distinction. The issue turned out to be moot anyway, as he passed about a month before Medicaid would have kicked in.

But state laws vary widely, and as CaliKid notes you need to talk to an elder law attorney (not just any attorney - this is a specialty) who practices in the state where the person lives. There are lots of "gotchas" in this so don't even think about trying to DIY.

 

[euro]

I have problems with this. If your mother has money saved up for her old age, why should tax payers pay for her care? So, no, I don't think it's an OK thing to do. When our mother began declining in her later years, we considered the same thing. We even went to an elder care attorney and discussed the ins and out with him. But in the long run, we knew it was morally wrong and didn't do it. Our parents had saved that money all their lives. It should be used to provide them the best care possible when they need it without expecting others to pick up the tab.

Thank You! Thank You! I'm late to the thread but I'm sad it took 9 replies for someone to point this out.

 

[euro]

When poor people work the system they are scoundrels. When rich people work the system, they are just getting their fair share.

That's about as poor an excuse as I have heard for doing the wrong thing

 

[travelover]

That's about as poor an excuse as I have heard for doing the wrong thing

.