The United States Department of Health and Human Services maintains a very useful website called longtermcare.gov. There are many interesting statistics on the site, but one of them gets your attention from the start: Seven out of every 10 people that are turning 65 on any given day are going to need help with their activities of daily living at some point in time.
Clearly, many of these individuals will ultimately reside in nursing homes. Here in the Rochester area, the median annual charge for a private room in a nursing home is in excess of $150,000. Costs have been rising, so if you need nursing home care a number of years from now, you can expect the figure to be considerably higher.
If you are thinking that you are not worried about long term care expenses because you will qualify for Medicare when you reach the age of 65, we have some bad news to pass along. The Medicare program will pay for convalescent care when you are recovering from some type of illness or injury, but it does not pay for custodial care. This is the form of assistance that you would receive in a nursing home.
Need-Based Program
What do you do if you need long term care as an elder given these unpleasant realities? That is a very good question, and the solution for most people is Medicaid. This jointly administered federal/state government health insurance program will pay for custodial care, but it is a need-based resource. If you are a New York resident, you cannot qualify if you have more than $15,150 in your own name.
There are some assets that do not count when you are applying for Medicaid. Your home is not a countable asset, but the equity limit is $858,000. You can maintain possession of your passenger car or truck that you use for transportation, and heirloom jewelry, your engagement ring, your and wedding ring not considered to be countable assets.
A person that is applying for Medicaid to pay for long-term care can have unlimited term life insurance, and $1500 worth whole life insurance is permissible. The same amount of money can be set aside for final expenses, and prepaid burial plots are not counted against you when your assets are being tallied. Your personal effects and household items are not countable assets for Medicaid eligibility purposes either.
The Healthy Spouse
In many cases, someone that is married will need long-term care while his or her spouse is still capable of living independently. Under these circumstances, the healthy spouse is considered to be the “community spouse” in Medicaid parlance.
As we touched upon above, the family home is not a countable asset, but there is an equity limit. When a married person is applying for Medicaid and there is a healthy spouse that is remaining in the home, there is no equity limit at all.
The spouse that is still capable of independent living is entitled to a Community Spouse Resource Allowance. This is equal to half of the shared assets that are countable under Medicaid regulations. However, there is a limit that stands at $123,600 in 2018. Next year, you may see a slightly larger number after an inflation adjustment is applied.
If you were to qualify for Medicaid to pay for nursing home care, almost all of your income would have to be used to defray the costs. However, there is an exception made if your spouse is relying on all or some of this income to maintain a reasonable standard of living.
There is a Monthly Maintenance Allowance provision in the Medicaid guidelines, so your spouse would be able to continue to receive your income, but there is a limit. At the time of this writing, the maximum Medicaid Monthly Maintenance Needs Allowance is $3090.
Attend a Free Estate Planning Workshop!
We shared some useful information about nursing home asset protection in this relatively brief blog post. If you would like to build on your knowledge, there are some fantastic opportunities coming up in the near future. Our elder law and estate planning attorneys are holding a number of workshops over the coming weeks, and you can learn a great deal if you attend one of the sessions.
These workshops are absolutely free to attend, but we do ask that you register in advance, because the seats fill up quickly. To check out the schedule and obtain registration information, visit our workshop page and click on the date that works for you.
Michael Robinson, Estate Planning Attorney
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