Calvert CountyEstates & ProbateMedicaid Planning and Long Term Care for St. Leonard Families: Protecting Assets and Ensuring Quality Care

St. Leonard has grown into one of Calvert County’s steadier residential communities, home to retirees from the Calvert Cliffs Nuclear Power Plant, federal workers from Lusby and across Southern Maryland, and multi-generational families who have lived in the area for decades. For many of these families, the question that sits in the background is the same: what happens if Mom or Dad needs nursing home care? And will the care they need consume everything they have built?

The answer is that it does not have to. At The Law Offices of Haskell and Dyer, we work with St. Leonard families to address these concerns honestly and practically through Medicaid planning. Here is what you should know.

The Real Cost of Long-Term Care

A private room in a Maryland nursing home now costs, on average, between $12,000 and $16,000 per month. Assisted living runs between $5,000 and $9,000 per month, depending on the facility and the level of services. In-home care, particularly around-the-clock care, can cost even more than a nursing home.

Medicare does not cover long-term custodial care. It covers short-term rehabilitation, typically up to 100 days, and some of those days require coinsurance. After Medicare runs out, the family is paying privately until either assets are depleted or Medicaid eligibility is established.

Private long-term care insurance helps, but relatively few Calvert County families carry enough coverage to fully offset these costs. For families without insurance, the two options are private pay (until funds run out) or Medicaid.

How Maryland Medicaid Works for Long-Term Care

Maryland Medicaid provides long-term care coverage in nursing facilities for eligible residents. Eligibility depends on both income and assets:

• Monthly income must be below the Medicaid income limit (with specific rules for the “Medically Needy” program that allows higher incomes with a spend down of medical expenses)
• Countable assets must be below $2,500 for a single applicant (2024 figures; subject to change)
• The primary residence is generally exempt while the applicant lives there or intends to return, though lien rules can apply later
• One vehicle is exempt
• Personal property, household goods, and limited burial funds are exempt
• Retirement accounts are generally countable, though different rules apply to accounts in required minimum distribution status

When one spouse needs long-term care, and the other does not, special “community spouse” rules protect a portion of the couple’s assets for the spouse remaining at home. These rules are complex but significant, and they are one of the reasons professional advice matters.

The Five-Year Lookback

When a Medicaid application is filed, the state reviews asset transfers made during the previous five years. Transfers made during this period without receiving fair market value in return can create a penalty period, during which the applicant is not eligible for Medicaid even if they otherwise qualify.

This five-year lookback is the single most important reason to start planning early. Transfers made more than 5 years before a Medicaid application are not subject to the look-back period. Transfers made within the lookback window can significantly delay Medicaid eligibility.

Protecting the Home

For St. Leonard families, the family home is often the most significant asset. Several strategies can protect the home from long-term care costs:

Irrevocable Medicaid Asset Protection Trust

The home can be transferred to an irrevocable trust that is outside the reach of Medicaid for eligibility purposes, subject to the five-year look-back. The current owner can retain the right to live in the home, receive rental income, and change beneficiaries within the trust. After five years from the transfer, the home is fully protected.

Life Estate Deed

A life estate allows the owner to retain the right to live in the home for their lifetime while transferring the remainder interest to children or other beneficiaries. The remainder transfer is subject to the five-year lookback. Life estate deeds have tax benefits under current rules, particularly for the capital gains step up.

Caregiver Child Exemption

If an adult child has lived with and cared for a parent for at least two years before the parent enters a nursing home, the home can often be transferred to that child without creating a Medicaid penalty. This exemption helps families where one child has taken on the primary caregiving role.

Protecting Retirement Accounts

Retirement accounts are typically countable for Medicaid, but several strategies can help. Converting an IRA to a Medicaid-compliant annuity can transform countable assets into an income stream that does not disqualify the applicant. Spending down retirement funds on exempt items (home improvements, medical equipment, prepaid burial arrangements) can reduce countable resources while benefiting the applicant.

The Caregiver Agreement

Family members who provide caregiving services can be compensated through a properly drafted caregiver agreement. These agreements transfer money to a family caregiver while simultaneously providing legitimate services in return, which avoids the five-year lookback penalty. Caregiver agreements need to be carefully drafted with clear documentation to withstand Medicaid review.

Planning for Couples

When one spouse needs care and the other does not, Maryland’s community spouse rules protect the spouse remaining at home. The protected amount includes a portion of the couple’s assets (up to a federally set maximum) and a monthly income allowance. Planning can maximize the community spouse’s resources while still qualifying the institutionalized spouse for Medicaid.

For a broader framework on how estate planning fits with Medicaid planning, see our full guide: Calvert County Estates and Probate: A Complete Guide.

Advance Directives and Healthcare Powers of Attorney

Medicaid and long term care planning are incomplete without the documents that allow your family to act when you cannot. Every St. Leonard family planning for aging parents should have:

• A healthcare power of attorney naming a trusted person to make medical decisions
• A living will or advance directive addressing end of life care preferences
• A financial power of attorney for bill paying, account management, and benefit applications
• HIPAA authorizations allowing access to medical information

These documents cost little to prepare and prevent enormous difficulties if a family member is incapacitated without them.

When to Start

The best Medicaid plans are made while the person is healthy and has time for the five year lookback to run. Waiting until a crisis limits options significantly. We recommend that families start the conversation at age 65, or earlier if there is a family history of Alzheimer’s, Parkinson’s, or other conditions likely to require long term care.

This article is for general information only and does not constitute legal advice. Contacting our firm does not create an attorney-client relationship until a formal agreement is signed.