People that will qualify for Medicare should understand the Medicaid parameters because of an inconvenient truth.
More than one third of elders will reside in nursing homes eventually, and Medicare does not pay for the custodial care that they provide. These facilities are very expensive, and married couples can be inundated with two different sets of nursing home bills.
Medicare does cover nursing home care, and this is why it is relevant to seniors who will be enrolled in the Medicare program.
Medicaid Eligibility Criteria
Since Medicaid is a need-based program, you cannot qualify if you have more than $2000 in countable assets in your own name. Your home is not a countable asset, but there is an equity limit of $595,000 in 2020.
This figure and the spousal allowances that we are going to look at are adjusted annually to account for the cost of living. In 2021, the Medicaid home equity limit in North Carolina and Kentucky will be $603,000.
One motor vehicle is not counted, and wedding and engagement rings are exempt. If you have heirloom jewelry, it would not be considered, and Medicaid is not concerned about your personal belongings and household items.
Up to $1500 set aside for final expenses is permitted, and you can have this much whole life insurance in most places. (North Carolina allows up to $10,000 in face value.) Unlimited term life is allowed because this insurance has no cash value.
Allowances for the Healthy Spouse
When a married person is applying for Medicaid to pay for long-term care and the spouse can still live at home, there is no equity limit at all. The healthy spouse is also entitled to two important allowances.
One of them is the Community Spouse Resource Allowance (CSRA), which is equal to half of the shared countable assets in Kentucky and North Carolina. There is a limit on the high-end, and there is also a minimum CSRA.
During the current calendar year, the maximum CSRA is $128,640, and the minimum is $25,728. In 2021, the minimum will be $26,076, and the maximum Community Spouse Resource Allowance will go up to $130,380.
The healthy or community spouse can also be entitled to a Monthly Maintenance Needs Allowance. This gives the independent spouse the ability to continue to keep income that is brought in by the spouse who is residing in a nursing home.
In 2020, the maximum allowance is $3216, and the minimum is $2113.75 a month. When the new year rolls around, the minimum allowance will be $2155, and the maximum will go up to $3259.50.
You can fund an irrevocable Medicaid trust to remove countable assets from your name to qualify for Medicaid to pay for long-term care. However, you have to act well in advance because the funding must be completed five years before you apply.
If you break this rule, you have to wait out a period of ineligibility. The length of the penalty would depend on the amount that you conveyed into the trust.
For example, if you funded the trust with enough to pay for a year in a nursing home care, you would be ineligible for a year.
Access Our Free Worksheet
We have some great resources that you can access free of charge on this website, and one of them is our estate planning worksheet. If you take the time to go through it, you will come away with a more thorough understanding of this important process.
You can get your copy if you head over to our worksheet page and follow the simple instructions.
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