Long-term care costs are exorbitant, and they are going up all the time. At present, the national average cost for a year in a nursing home is more than $90,000, so the thought of ever-increasing costs is not a very pleasant one as you are looking ahead toward the future. For this, and many other reasons, Medicaid planning is very important. When it comes to Medicaid eligibility, there are limitations on financial resources, as well as how and when you can transfer assets out of your estate. Let our Charlotte elder law attorneys explain the five-year Medicaid look-back period and how it will affect your Medicaid planning.
How Medicaid determines countable assets and resource allowances
There is a $2000 limit on countable assets for an individual, but some things are not countable, including your home (with an equity limit of $572,000). Plus, if you are married and you apply for Medicaid while your spouse is still capable of independent living, your spouse could keep half of the assets that are considered to be countable. This is called the Community Spouse Resource Allowance. The maximum Community Spouse Resource Allowance in North Carolina for 2018 is $123,600, and the minimum is $ 24,730.
When it comes to the assets that you have that are countable, you could give them to your loved ones before you apply for Medicaid coverage.
You cannot overlook the future costs of health care
When you have health insurance all of your life, you become accustomed to the fact that huge medical expenses will be significantly defrayed by your health insurance coverage. The out-of-pocket costs are there, but they are often minimal.
Unfortunately, this mentality cannot be applied to long-term care for seniors who will be relying on Medicare for health insurance. This program does not pay for custodial care. This is the definition of the type of care that you would receive in a nursing home or assisted living community.
The Medicaid Look-Back Period
The Medicaid program is the solution for most elders who require living assistance. This need-based government health insurance program does pay for custodial care. However, since it is a need-based program, there is a $2000 limit on countable assets.
This makes sense on the surface, but it is complicated because in your application for the program includes a five-year Medicaid look-back at all of your assets. Your eligibility is delayed if you give away assets within five years of submitting your application. To explain by way of example, if you give away enough pay for 18 months of nursing home care, your eligibility would be delayed by 18 months. You would be forced to pay out-of-pocket during this interim.
How Medicaid determines countable assets and resource allowances
To qualify for Medicaid coverage there is a $2000 limit on countable assets for an individual, but some things are not countable, including your home (with an equity limit of $572,000). Plus, if you are married and you apply for Medicaid while your spouse is still capable of independent living, your spouse could keep half of the assets that are considered to be countable. This is called the Community Spouse Resource Allowance.
The maximum Community Spouse Resource Allowance in North Carolina for 2018 is $123,600, and the minimum is $ 24,730. When it comes to the assets that you have that are countable, you may be able give them to your loved ones before you apply for Medicaid coverage. The rules are complex and you should consult with a Medicaid attorney before moving any assets.
Let our Medicaid attorneys help you find an exception
However, there are a few exceptions to the Medicaid look-back rule. For example, if you have an adult child who has been living in your home with you providing the care that you need, for at least two years, before you apply for Medicaid to pay for a nursing home, you could give the child the home without violating the five-year look-back.
The fact that your caregiver-child could assume ownership of your home without violating the look-back is a positive, but comprehensive advance planning is the best way to proceed if you want to qualify for Medicaid at the ideal time. If you take the right steps, you can preserve a maximum store of resources for your loved ones to draw from after you are gone.
Charlotte elder law attorneys suggest using Medicaid trusts
Though assets that have been conveyed into a living trust would be countable for Medicaid purposes, there is another type of trust that you could utilize if you want to get assets out of your own name. In addition to revocable trusts, there are also irrevocable trusts that you cannot rescind or dissolve. Assets that have been conveyed into an irrevocable Medicaid trust would not be countable.
Plus, if you have income producing assets, you could create an income only Medicaid trust. The principal would not be counted, but you could continue to receive income from the earnings of the trust before you apply for Medicaid. However, there are asset limits that you must stay within to qualify for Medicaid, so that income may be absorbed by the program if you do eventually qualify for Medicaid to pay for living assistance.
Join us for a free seminar today! If you have questions regarding Medicaid eligibility or any other Medicaid planning matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us at (704) 944-3245 in Charlotte, NC or in Kentucky (606) 324-5516 in the Ashland area and (859) 372-6655 in Northern Kentucky. We are here to help!
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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