We are going to focus on the Medicaid look-back period in this post, but first, we should explain why this program is relevant to many senior citizens who will qualify for Medicare.
Most people will need living assistance eventually, and nursing homes are extremely expensive. Medicare will not pay for this type of care, but Medicaid will cover these costs if you become eligible. You are probably aware that this program is only available to people with sparse financial resources so there is a low asset limit of just $2000.
It should be noted that there are a number of things that you probably own that do not count in a Medicaid eligibility context. We will look at these details in another section.
When people realize they will need nursing home care, especially if they never expect to leave a nursing home, and they find out that Medicaid will pay for long-term care, they start thinking about saving assets for their families. Many people think you can simply give your assets to loved ones that would be inheriting them anyway and apply for Medicaid with no resources in your own name.
But the Medicaid program does not want people to be able to go this route so they have taken steps to prevent last-minute gifts. They have installed a five-year Medicaid look-back rule. If you give away assets to qualify for Medicaid, all of the gift giving (with limited exceptions) must be completed at least 60 months before you apply for eligibility.
What happens if you violate this provision? You are not permanently barred from eligibility, but you can’t qualify until you wait out a penalty period. The length of the penalty period is calculated based on the amount of the gifts compared to the average cost of nursing home care in the state of North Carolina.
To explain through a simple example, let’s say that the state determines that the average cost for a year in a nursing home is $85,000. You gave away $170,000 two years before you applied for Medicaid. Under these circumstances, you would not be eligible for two years.
Emergency Medicaid Planning
If you were to find out suddenly that you need nursing home care and have not made any plans ahead of time, all is not lost. With the assistance of an elder law attorney from our firm, you could do everything possible to mitigate the impact.
As we stated previously, there are assets that are not considered to be countable for Medicaid purposes. Your home is not counted but there is an equity limit. At the time of this writing in 2019 it stands at $585,000. There are typically annual adjustments to account for inflation.
So, if you are a homeowner, you can become eligible for Medicaid without losing your home in spite of the five-year look back period (but watch out for estate recovery). When it comes to the equity limit, if you are married, there is no equity limit at all. One vehicle that is used as a source of transportation is not counted, and your personal belongings and household items are exempt.
Engagement rings, wedding rings, and heirloom jewelry are not looked upon as countable assets, and you can have up to a face value of $10,000 in life insurance (at least in North Carolina).
A spouse that is still capable of independent living can keep half of the assets that are countable, but there is $126,420 limit in our state. This is called the Community Spouse Resource Allowance, and there is a minimum of $25,284. The healthy spouse could keep this much, even if it is more than half of the total countable shared assets.
But there are additional steps you can take to preserve assets for a healthy spouse, disabled child, caregiver child, and in other situations.
As you can see, even if you are forced to seek Medicaid eligibility without any advance planning, your family can still retain a reasonable store of resources. The key is to learn about your options and make a plan before you have spent the assets down.
Attend a Free Seminar
Our Charlotte Medicaid attorney is holding a number of seminars over the coming weeks. You can come away with a great deal of very valuable information if you attend one of the sessions, and there is no admission charge. Visit our seminar schedule page to check out the dates, and click on the one that works for you to obtain registration information.
Schedule a Consultation
If you are ready to discuss Medicaid planning with an elder law attorney, you can send us a message to request a consultation appointment or call us at 704-944-3245 (Charlotte, NC or Huntersville, NC). For individuals in Kentucky, our Kentucky offices can be reached at (606) 324-5516 (Ashland, KY) or (859) 372-6655 (Florence, KY).