Medicaid will require a person to prove what their assets and income are. Assets include but not limited to: vehicle title/registration, providing copies of your bank statements, property tax bill/deed, life insurance, annuities, stocks, bonds, etc. This include the assets that are in your name sole, your name jointly, in your revocable trust, and any assets that your spouse has in their name, even if it is solely in their name. It does not matter if you have signed a prenuptial agreement and you do not own the assets. Medicaid does not care about prenuptial agreement when they are determining what assets you own. If your spouse owns the asset you must list it on the application.
It is very important to remember that the state may ask you for documents from the 5 years previous to you submitting your application and being approved for Medicaid. This is called the 5-year look back period. The state is making sure you did not give away any of your assets or income for less than fair market value. This also includes any assets and income your spouse may have given away. If you did give away assets or income for less than fair market value, then you divested this amount and you will not be qualified for an amount of time. The amount of time that you do not qualify for Medicaid depends on the value of the assets and income you gave away. In addition, if you or your spouse try to avoid receiving assets or income that you or your spouse is entitled to, this would be considered a divestment.
It is very important to save receipts for items that you have paid for in cash. If you take a lump sum from your bank account or other financial investments, Medicaid will want to know what you spent the money on. You will need to prove that you did not give away that lump sum and that you spent it on yourself or your spouse or your dependents. The easiest way is to keep all your receipts in an expandable folder. You might not need them for tax purposes but you will need them for Medicaid. Most likely you will not be the person who is completing the application for yourself. It will be your spouse or your children or your agent. The person completing your application will need to know what you spent the money on. It is hard enough to remember what money was spent on last week much less what it was spent on 5 years ago.
Almost every year Medicaid changes the amount for spousal improvement. For the year 2019, a spouse may keep up to $126,420, but they must have more than double that amount, $252,840 and then spend down to the $126,420. If their combined assets are between $252,840 and $100,000 the spouse may keep half of that amount. If their combined assets are under $100,000 then the spouse may keep $50,000. The spouse that goes into the nursing home may keep $2,000.
There are exempt assets like: house value $750,000 or under, 1 vehicles, personal items, and burial arrangements. The spouse at home may also have an income up to $3,160.50 (2019) after an allocation of income from the spouse in the nursing home. Although the spouse at home may only allocate some of the income from the spouse in the nursing home, if the spouse at home has their own income above $3,160.50, they do not need to give the amount above $3,160.50 to help pay for the cost of the nursing home.
This is just a brief summary of the Medicaid laws. Medicaid laws are very complex. Many times estate planning laws, Medicaid laws, and IRS codes conflict with each other so that if you follow one of the laws you could cause problems for yourself under the other laws. An example is if you were to give away $15,000 under the IRS gift tax you would not pay any taxes, but if you gave away that amount and then applied for Medicaid within 5 years the gift would be a divestment. The gift was fine under IRS code, but not for Medicaid purposes. This is why you should always seek advice from lawyers, accountant, and financial advisors to navigate your way through the estate planning laws, Medicaid laws, and IRS codes.