Until you understand some facts about long-term care, you may assume that Medicaid will never be relevant to you because you will qualify for Medicare. Plus, since Medicaid is a need-based program, you wouldn’t qualify anyway, because you are going to retire with some resources.
This make sense on the surface, but the reason why Medicaid is relevant is because Medicare does not pay for custodial care. This is the type of assistance that you would receive in a nursing home, and some people receive custodial care in their own homes.
It is true that there is a low asset limit that you must stay within to become eligible for Medicaid coverage. In most states, it is just $2000, but we get somewhat of a break in New York, because the asset limit is $15,750 in 2020.
When it comes to assets that you have in your possession that exceed this amount, there is some positive news to pass along. Your home is not considered to be a countable asset under some circumstances, but there is an equity limit. During the current calendar year, it is $893,000 in our state.
Other assets that are not counted include one vehicle, prepaid burial plots, personal belongings and household items, unlimited term life insurance, and $1500 worth of whole life insurance. The same amount can be set aside for final expenses, and wedding rings, engagement rings, and heirloom jewelry are not counted.
If you can stay at home while your spouse is entering a long-term care facility, you would be entitled to a Community Spouse Resource Allowance. This is half of the shared countable assets up to a certain limit, and it stands at $128,640. There is a minimum allowance of $74,820, so you can keep this much even if it is more than half of the shared assets that are countable.
While we are on the subject of healthy spouses, the spouse that can continue to live independently can receive all or some of the income that is generated by the institutionalized spouse. This is called the Monthly Maintenance Needs Allowance, and in New York it is $3216.
Spending Down
People often divest themselves of assets to qualify for Medicaid coverage. However, this must be done in light of the five-year look back period. You are penalized and your eligibility is delayed if you give away assets within five years of the submission of your application.
As a result, you have to plan ahead in a measured, informed manner to give gifts in the right way and at the right time as you aim toward future Medicaid eligibility.
Medicaid Estate Recovery
Now that we have set the stage appropriately, we can dig a little deeper and get into the matter of estate recovery. Under Medicaid regulations, the program is required to seek reimbursement from the estates of people that used Medicaid to pay for long-term care.
Since you cannot qualify for Medicaid if you have significant assets in your own name, the cupboard would typically be bare, and there be nothing for them to take. However, your home would be an exception since it is not a countable asset.
If you gave the home away at least five years before you started to use Medicaid to pay for your care, the home would no longer be yours, and Medicaid could not touch it. Otherwise, it could potentially be attached.
There is an exception to this rule in the form of the caregiver child exemption. You can give the home to a child that acted as your caregiver in the property for at least two years before you applied for Medicaid. You would have to prove that you would have been forced to reside in a nursing home if your child did not provide the care.
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We are still here to help if you would like to discuss Medicaid planning or any other elder law or estate planning matter with a licensed attorney. You can schedule a remote consultation if you give us a call at 585-374-5210, and there is a contact form on this site that you can use to send us a message.
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