The Listen to Lawrence Letter: Does Medicaid require me to pay 10 years of RMDs up front before I enter a nursing home?

CLIENT QUESTION:

I’m 78 and my life expectancy is 10 years according to the chart. I take my RMDs yearly. Does Medicaid require me to pay 10 years of RMDs up front before I go into a nursing home or do I turn over my checks to them yearly as long as I’m in the nursing home? How is this computed?

MY RESPONSE:

Great question! Remember, we must look at your life expectancy from the Medicaid chart, not the IRS chart, to determine required minimum distributions (RMDs) when applying for Medicaid. The Medicaid chart will always require a higher RMD.

For a 78-year-old male, the life expectancy would be 8.77 years. Assuming he has $100,000 in the IRA, then the RMD for this year would be ($100,000 divided by 8.77) $11,403. You would then divide that by 12 to get the monthly income figure of $950.21. Medicaid will budget you to spend this income down each month. They do not hit you up for all 8.77 years upfront. The same analysis for a female, except the life expectancy is 10.31 years for a 78-year-old.

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