Medicaid and nursing home planning.

The basics.

Medicare covers only short stays in a skilled nursing facility. Long-term nursing home care is paid privately or, for those who qualify, by Medicaid. In New Mexico, Medicaid is delivered largely through managed care under the Turquoise Care program. To qualify, an applicant must meet medical need standards and financial limits.

The financial tests.

• Resources: a single applicant is generally limited to about $2,000 in countable resources. Many assets are exempt, such as a primary home (within a home equity limit), one vehicle, and personal belongings.
• Income: income rules and any need for special trusts depend on the program and the current state rules, so confirm them for your situation.
• Spouses: the spouse at home (the community spouse) can keep a protected share of assets and some income so they are not left destitute.

The five-year look-back.

When you apply, Medicaid reviews financial transactions for the previous 60 months. Gifts or transfers for less than fair value during that period can trigger a penalty period during which Medicaid will not pay for nursing home care. Some transfers are exempt, such as transfers to a spouse or to a disabled child.

Planning tools.

• Medicaid asset protection trust: an irrevocable trust that, after the look-back, can protect assets. See our page on Medicaid asset protection trusts
• Spending on exempt assets: paying debts, repairing a home, or buying exempt items
• Powers of attorney: so someone can apply and manage your affairs if you are incapacitated

Estate recovery.

After a Medicaid recipient dies, New Mexico's Medicaid Estate Recovery Program (MERP) may seek reimbursement for certain costs from the estate, with protections for a surviving spouse and certain dependents. Planning can reduce what is exposed. The rules are technical and change, so get current advice.