You are probably aware of the fact that Medicaid is a government health insurance program for people with very limited financial resources. If you know you are going to qualify for Medicare when you reach the age of 65, you may wonder why Medicaid would ever be relevant to you.
Many people would say that it is not fair, but Medicare does not pay for a stay in a nursing home or assisted living facility. It won’t pay for in-home custodial care either, and this is a problem, because the vast majority of senior citizens will eventually need living assistance.
Medicaid does cover custodial care, and this is why it is important to a significant percentage of seniors. In fact, most of the seniors in nursing homes are enrolled in the program, and the majority of them were never financially needy.
Countable vs. Non-Countable Assets
How can you qualify for Medicaid if you have resources? The first thing to understand is the fact that there are some assets that you probably have in your possession that are not counted.
Under some circumstances, your home may not be a countable asset. However, there are limitations, and even if your home is not counted during your lifetime the Medicaid agency has a “right of recovery” against your home when you die, so the home and its value eventually will be lost.
Household items and personal belongings are not counted, and this would include wedding rings, engagement rings, and heirloom jewelry. One motor vehicle that is used as a primary source of transportation is allowed.
You can have unlimited term life insurance and as much is $1500 worth of whole life insurance. The same amount can be set aside for final expenses, and prepaid burial plots are not counted.
In many cases, a person will enter a long-term care facility while their spouse is still capable of living independently. Under these circumstances, the healthy spouse would be entitled to a Community Spouse Resource Allowance.
This is equal to half of the shared assets that are considered to be countable by the Medicaid program. During the current calendar year, the maximum allowance in New York is $128,640.
There is also a minimum that stands at $74,820. The healthy spouse could keep this amount, even if it is more than half of the shared assets.
Generally speaking, almost all of the income that is brought in by the institutionalized spouse must be used to defray the cost of the care that is being received. However, this requirement is waived when a healthy spouse needs all or some of the income to maintain a minimal standard of living.
This is called the Medicaid Monthly Maintenance Needs Allowance, and the maximum allowance in New York this year is $3,216.
Medicaid Five-Year Look Back Period
When it comes to the assets that are countable, you can give them to loved ones that would be inheriting them eventually anyway, but you have to act in advance. There is a five year Medicaid look back period. Your eligibility is delayed if you give away assets within five years of the submission of your application for coverage.
The amount the delay is tied to the amount that you gave away as it compares to the cost of long-term care. For example, if you gave away enough to pay for two years of nursing home care (the state determines the average charge), your eligibility would be delayed by two years.
There is one exception to this rule. If an adult child of yours has been caring for you in your home for at least two years prior to your entrance into a nursing facility, you could give the home to your child without violating the look back.
The rules described above are the default rules that apply if you have not done a Medicaid eligibility plan. When you create a Medicaid eligibility plan, you can protect considerably more, even all, of your hard earned assets from long term care expense.
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