Elder law attorneys counsel clients who are concerned about potential long-term care costs. Many elders reside in nursing homes toward the end of their lives, and the costs can be devastating.
Medicare will not cover the custodial care that nursing homes and in-home caregivers provide so this is not the solution. Many people need Medicaid assistance because this government program for people with limited resources will pay for long-term care.
The Medicaid asset limit is just $2000, but household items, personal effects, wedding and engagement rings, heirloom jewelry, and one motor vehicle are not counted. In addition to these items, there is a very significant non-countable asset.
If you are a homeowner, your home does not count if you apply for Medicaid coverage to pay for long-term care. However, there is an equity limit of $603,000 in North Carolina and Kentucky for the rest of 2021. We will share the updated number for 2022 when it becomes available.
There is no equity limit if a healthy spouse is going to continue to live in the home after their spouse enters a nursing facility. The healthy spouse can keep half of the assets that are countable up to $130,380, and this is another figure that is indexed for inflation.
A healthy spouse may keep some of the institutionalized spouse’s income if it is needed. This is formally referred to as the Medicaid Monthly Maintenance Needs Allowance, and an allowance can be as high as $3259.50.
With careful Medicaid planning, a healthy spouse may be able to preserve significant additional assets or maximize the allowance Medicaid will allow.
Home Ownership and the Medicaid Estate Recovery Mandate
There is a federal mandate with regard to the estates of deceased Medicaid beneficiaries. The state must try to recover the money that has been spent to provide the care after a beneficiary passes away.
Since a home is the only asset of significant value in the possession of most Medicaid recipients, this is what the program will generally target unless there is still a healthy spouse or a disabled child at the death of the Medicaid recipient. This can strip the family of the only valuable resource that they will have so it is really hard on low-income survivors.
Earlier this year, five different elder advocacy groups petitioned Congress to do away with the Medicaid estate recovery mandate. They pointed out the problem that it poses for family members that would have inherited the home as a financial foundation to build on.
This contention is bolstered by the fact that the deceased person was simply following the rules and trusting the system. They paid their payroll taxes with the understanding that the contributions will lead to Medicare eligibility, and they would safe when they are elders.
Estate recovery also has very little effect on the Medicaid balance sheet. It recoups just 0.55 percent of all the fee-for-service Medicaid spending. The practice is hurting families, but it is not benefiting the program in any meaningful way.
These advocates are calling for the abolition of the Medicaid estate recovery mandate. The next best thing would be to give the states broader latitude to determine their own hardship exemption rules and decision-making processes. For the time-being, though, we have to plan for the reality of estate recovery as part of Medicaid planning.
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You can find many different resources on this website that you can use to gain a more complete understanding of the issues that are impacting senior citizens. In addition to our elder law materials, we also cover every aspect of the estate planning process.
One of the most effective tools is our estate planning worksheet. If you go through this worksheet, you will walk away with a new perspective. This is a free resource, and you can visit our worksheet access page to get your copy.
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Educating yourself is always a good thing, but at some point, it is time to take action. If that time has come, you can schedule a consultation at our Huntersville, NC or Charlotte, NC estate planning office if you call us at 704-944-3245.
You can alternately send us a message to request a consultation, and if you are looking for help in the Ashland, Kentucky area, the number for that location is 606-324-5516; the number for our Florence, Kentucky office is 859-372-6655.
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