This is an extremely complicated question. First, as I mentioned previously, it depends on whether we are dealing with a married couple or a single individual. With a married couple, the types of investments can influence Medicaid eligibility more than in a single’s situation.
For example, the retirement accounts of a community spouse are considered “exempt” assets for Medicaid, so in a couple’s situation we would not have to do any planning for the community spouse’s IRAs. In a single’s case, all accounts are considered countable assets, so more complicated planning would have to occur. In both situations, income-producing real estate could be considered an exempt asset, so clients may consider purchasing property as a planning technique. This is why planning in advance becomes some important, as clients can work with a skilled attorney to discuss the various options and the risks and rewards associate with each option.
Tactical use of income-producing property can be a very useful technique in couple’s cases, especially if they have significant assets. Under Indiana Medicaid rules, income-producing property is exempt as an asset for Medicaid eligibility. So, if a couple has to “spend down” assets in order to qualify, they may decide instead to purchase some real estate to complete this spend down. For example, they could buy more farmland or a vacation home. This would allow them to essentially transfer countable assets (cash assets) into an exempt asset which has immediate value to them. Then the community spouse could decide to sell this property in the future without jeopardizing the Medicaid eligibility of the spouse needing those services.
The biggest caveat to this planning option is to understand that even though income-producing real estate is initially exempt from Medicaid eligibility, you still need proper planning as it is still an asset potentially subject to Medicaid estate recovery.