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First, I may be a stickler, but I’d like to clarify that the state doesn’t “take” anything. It simply doesn’t pay for nursing home care until the resident qualifies for Medicaid which can involve spending down assets. That said, your sister needs to consult with a local elder law attorney. States differ in their treatment of IRAs and, even if the money does have to be spent down, there are many strategies for protecting the assets of spouses of nursing home residents. (Fortunately, the IRA is in her name and not her husband’s.)
For more on how IRAs affect Medicaid eligibility, click here.