In Rhode Island a person can receive Medicaid to pay for home care as well as assisted living or nursing home care. The person must qualify “medically” which means he or she needs that level of care, as determined by a medical review. The person must also qualify “financially” which means income and resources are within the limits permitted to qualify for Medicaid.

In general a single person can have $4,000 and a married person whose spouse is in a nursing home can have a home, IRA accounts, and other assets with a maximum, in general, of about $119,000.00. These are the general rules and the first step in determining eligibility. In addition, the house and other resources may be exempt in certain situations.

For example the house of a single person can be transferred to a sibling who has had an equity interest in the house; to a disabled child of any age; or to a child who has lived in the house and cared for the parent for at least two years thus delaying the parent’s need for nursing home care. Other assets can also be transferred in somewhat similar situation, according to very specific federal and state rules.

If the person is already in the nursing home, it is NOT TOO LATE to implement assets preservation planning. Once the person is in a nursing home, they can transfer most of their assets to an other person, usually to a child, who then will pay back about one-half of the amount transferred, according to the terms of a “Promissory Note”. After the term of the Note is over, the adult child (or other person signing the Promissory Note, will be able to keep the rest of the funds as their own – or to share with their siblings. The details of such an arrangement depend on the individual circumstances, and is commonly referred to as “reverse half a loaf” planning.

In general Medicaid will “look back” five years to identify any transfers or gifts for “less than full value”. Such gifts are calculated and can result in a “penalty period” based on the amount of the transfers. Such penalty periods can sometimes be partially “cured” by using the Promissory Note planning techniques.