You may wonder why you should have any interest in the Medicaid parameters if you are going to qualify for Medicare when you reach the age of 65. The reason why elder law attorneys educate people about the intricacies of the Medicaid program is because it will cover nursing home care. Medicare does not pay for long-term custodial care.
If you are thinking that you will probably be able to take care of your own needs for the rest of your life, you should understand some relevant statistics. Approximately 70 percent of senior citizens will eventually require help with their activities of daily living. Many will ultimately reside in nursing homes.
It is not easy to pay for a stay in a nursing home out of your own pocket. At the time of this writing in 2019, you can expect to pay at least $150,000 for a year in a private room in a nursing home in the Rochester area, and many area nursing homes cost over $170,000 per year. Married couples may be faced with two rounds of long-term care bills, and these costs have been rising steadily year by year.
The Medicaid Solution
After you digest the information above, you can see why Medicaid is ultimately relied upon by many seniors that were never financially needy. Since this program is in place to help people at very sparse resources, there is a low asset limit. In most states in the union, the limit is just $2000, but here in New York the limit is $15,450 during the current calendar year.
There are assets that you may have in your possession that are not countable for Medicaid eligibility purposes. If you own a home, it may be excluded as a countable asset, but that exclusion is not automatic and may not be available without advance planning.
In addition to your home, one vehicle may sometimes be excluded, and your wedding ring, engagement ring, and any heirloom jewelry that you may have are not countable assets. You may also be able to exclude prepaid funeral expenses, and $1500 can be set aside for final expenses.
Unlimited term life insurance is allowed, and you can have as much is $1500 worth of whole or variable life insurance. Household items are not countable assets, and your personal belongings would not preclude you from eligibility.
If you are married and you apply for Medicaid to pay for long-term care, the healthy spouse would also be entitled to a Community Spouse Resource Allowance, which is half of the combined countable assets. There is a maximum allowance of $126,420, and the minimum is $74,820.
To explain the minimum through the use of a simple example, let’s say that you apply for Medicaid, and you and your spouse have $100,000 in shared countable assets. Half of that is $50,000, but because there is a minimum allowance, your spouse would be able to keep $74,840.
The healthy spouse could also be eligible to receive a Monthly Maintenance Needs Allowance. This would permit the independent spouse to continue to receive income that is brought in by the institutionalized spouse. If there is no financial need, or if a person entering a long-term care facility is single, almost all of the income would be used to defray the cost of the care that is being received.
To get countable assets out of your name to qualify for Medicaid, you could give gifts to your loved ones or fund an irrevocable Medicaid trust. However, any such asset transfers should be done only with the help of an experienced Medicaid planning attorney, as any missteps could cause you to lose most of your assets.
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If you would like to learn more about Medicaid planning and other important estate planning and elder law topics, attend one of our upcoming workshops. They are free, and you can visit our workshop schedule page to get all the details.