I recently worked with an elder law attorney, who had a client who was adamant about not selling any of her stock portfolio in order to qualify her husband for Medicaid benefits. She was spending $7,000 per month on her husband's nursing home care, and was obtaining the bulk of the money from selling small portions of her stock portfolio. Her long standing financial adviser had convinced her not to qualify her husband for Medicaid benefits, because in order to do so, she would have to sell-off the majority of her stock portfolio. It was his opinion that such a sale would subject her to outrageous income tax liabilities, both state and federal.
In order to better understand the situation, I asked the client if I could complete an independent review of her stock portfolio. Reluctantly, she told me, "yes". I completed my review and learned that with the significant downturns in the stock market, in the month before, she had realized a loss $40,000. I also learned that with the majority of her stocks well off their annual highs, most were trading around their original cost basis. After performing some taxable gain calculations, I determined that it would be in her best interest to: retain $100,000 of stock portfolio as her CSRA amount, liquidate the balance of her stock portfolio, purchase a Medicaid Compliant Annuity with the stock sale proceeds, and immediately qualify her husband for Medicaid benefits. With the Medicaid benefits in place, his monthly payment to the nursing home was going to drop from $7,000 per month to $1243.00 per month, for a monthly saving of $5,757.
When the Medicaid Plan was finished, the client told me that she had never realized that she was spending $47,000 per month on her husband's nursing home care.
