Would you work the system? Medicare for Millionaires?

People can protect their assets, millions of dollars, big time real estate, etc by making those assets ineligible to be counted as assets and qualify for Medicare – Medi-Cal (the government funds for paying for nursing homes). There are two tests, an income test and an assets test which a person must pass in order to qualify. If a wealthy person gifts away money (to heirs, friends, children, whatever) soon enough (typically five years) those aren’t counted as assets. A primary residence isn’t counted either (though there’s a risk a lien could be placed on it after death).

By obtaining a long term care policy a person can pick the nursing home they want to be in and when that policy expires (if it expires) then medi-cal picks up the rest of the tab. Not sure if a person would be forced to move to a cheaper SNF at that point as long as the initial home was a medi-cal home.

So, a realistic scenario in a nursing home is, one guy who has a net worth of $600K including a $250K home has to spend down almost $350K to the nursing home because he doesn’t have LTC insurance and he didn’t do any medi-cal planning. Meanwhile, the guy in the next room over has [had] a net worth of $3.8M including a $1.9M home but the government is paying his nursing home costs because he maneuvered his assets in such a way as to not make them countable and his home is not in his name [anymore] so it is protected from liens.