SuziQ Asked March 2013
If you have an IRA, can Medicare access it if you're in a nursing home?
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I heard that if you have an IRA Medicare can not touch it if your in a NH facility. Does anyone know if this is true?
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I'm afraid your mom received poor advice. There were ways that the bulk of her assets, including IRA principal, could have been preserved for her benefit while qualifying for Medicaid. I believe "spending down" is the worst advice simply because Medicaid beneficiaries have needs beyond those satisfied by Medicaid.
I say this only for the benefit of others who may read this.
I’m sure your question was about Medicaid, not Medicare and the answer depends on the state in which you live. It appears you are in California and the rule there is the same as in the other two largest retiree states: New York, and where I practice, Florida.
In these states, and others, the answer is that IRA principal is an exempt asset as long as the IRA is in distribution and the distribution is going towards “cost of care’ or “patient responsibility” if in a nursing home.
By law, an IRA owner must begin taking "Required Minimum Distributions" (RMD) by April 1 of the year after turning age 70 1/2. Chances are, then, that your loved one's IRA is already in distribution but perhaps not being distributed monthly which will be a requirement.
Although the Medicaid applicant may have been taking more than the required minimum prior to application it will make sense to reduce the distribution to the required minimum prior to applying since any residual remaining in the IRA at the demise of the Medicaid recipient is not required to be paid to the state but can, rather, be distributed to heirs.
Some states are not so generous with respect to the treatment of IRA’s and the solutions can be cumbersome and complicated so I will not address them here unless there is a request regarding a specific scenario in a specific state.
Carol