Are IRAs protected from the cost of a nursing home?

Attorney Tom Olsen: Here's a text from Debbie. Debbie says that she's mom is 72 years old. She needs to go into a nursing home and all she owns is an IRA. She's got money in the IRA. She wants to know, with that IRA money, can it be protected from a nursing home?

Attorney Robert Hidock: Absolutely. When Medicaid looks at asset levels, they will look at countable assets and non-countable assets. In IRA is non-countable, so that would not put her mom over the asset limit. The only requirement with that is that she must take RMD, Required Minimum Distribution, to protect the whole asset itself. Tom, like most people, if they don't need the asset during the year, they will take that RMD in December.

If we know this woman this getting ready to go into a skilled nursing facility, it would be wise for her to take the RMD now, have a little personal services contract, move the RMD to the daughter. Then mom goes into the nursing home, basically only losing her income, and then she will not have to take another RMD until December of 2023. In effect, we have protected the asset itself and the income from it.

Attorney Tom Olsen: RMD, of course, stands for Required Minimum Distribution. Mom might have $500,000 in an IRA. The principle of that IRA is absolutely protected from Medicaid, but whatever she's required to take, her required minimum distribution, that money would be used to apply for her care in a nursing home.

Attorney Robert Hidock: Absolutely.

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