Medicaid is a need-based, state run program that provides health care benefits for those who cannot afford them. Normally, Medicaid is available to those eligible for Supplementary Security Income or other forms of public assistance. In New York, there is a program available to those with higher incomes that normally disqualifies them for public assistance, but it is available to the elderly or disabled who spend down what Medicaid terms their ‘excess’ income on medical care until they reach the Medicaid income level for eligibility. A person with monthly income in excess of the income limitations can still qualify in any month in which medical expenses are large enough so that their remaining income is below the Medicaid income limits.
Example: Henry H. receives $1,200 per month in Social Security benefits, which is his only income. If the Medicaid eligibility amount is $767 per month, the difference of $433 is considered “Medicaid Surplus.” If Henry H. incurs over $433 in prescription or other covered costs, he is eligible for Medicaid to cover the remaining expenses for the month.
When it comes to nursing home costs and the Medicaid Surplus Program, the income eligibility limit for Medicaid is just $50 per month for 2010. Any income above that amount must go to cover nursing home costs, with Medicaid covering the difference. There is an exception if a spouse is still living independently, and the spouse may retain up to $2,739 from their combined income for Medicaid eligibility.
As you can see, the costs of long term care can quickly use up a family’s assets. Estate planning accounts not only for Medicaid planning and asset structures, but provides a plan for incapacitation in later years. Consulting with an estate planning attorney in your early years helps you prepare to meet the challenges of paying for your needs in your later years.