There are many limitations imposed by Medicaid on the financial resources of applicants. If you wish to protect your eligibility for Medicaid benefits in the future, it is important to discuss your options with our Charlotte Medicaid planning attorney. Issues to consider during your Charlotte Medicaid planning should also include how and when you can transfer assets out of your estate.
The cost of long-term care is extremely high and continues to rise. According to some reports, the national average cost for nursing home care is upwards of $90,000, but the actual expense differs from state to state and nursing home to nursing home. In order to be prepared to cover these costs, you must consider Medicaid planning. Another important issue to consider is the five-year Medicaid look-back period. Our Charlotte Medicaid planning attorney can explain how it can affect you.
How Does Medicaid Determine Countable Assets and Resource Allowances?
Medicaid imposes a limit on countable assets of $2,000 per individual. Before you can determine whether you meet this limitation on eligibility, you must first understand which assets are “countable” under Medicaid’s rules. For example, homes with an equity limit of $552,000 are not countable. Also, if you have a spouse that is still capable of living independently, then your spouse can retain half of all countable assets up to $126,420 (in 2019). This is referred to as the Community Spouse Resource Allowance.
Overlooking the Future Costs of Health Care is a Mistake
Most clients are used to having health insurance and often take that for granted. Unfortunately, if you become accustomed to your health insurance defraying substantial medical expenses you will not be prepared for the more substantial costs of long-term care. It is also a mistake to rely on Medicare benefits to cover these costs because Medicare does not cover custodial or residential health care, in other words, nursing home care or living assistance.
What is the Medicaid Look-Back Period?
The reality is, the Medicaid program is the best option for most seniors who need living assistance or nursing home services. Medicaid is a need-based government health insurance program that can cover this type of custodial care. However, because it is a needs-based, there is a limitation on countable assets.
The five-year Medicaid look-back period means that your eligibility may be delayed if you simply give away your assets within five years of submitting your application for Medicaid benefits. Basically, the value of the assets you give away that could have been used to pay for your nursing home care will be used to delay your actual benefits. In other words, if you give away assets that would have paid for 12 months of nursing home care, then your eligibility would be delayed by 12 months. Consequently, you would be forced to pay for your care for that 12-month period out of your own pocket.
Let our Charlotte Medicaid Lawyer Look for Exceptions That May Apply
The good news is, there are some exceptions to the Medicaid look-back rule that may apply to you. For instance, 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 may be able to give the child the home without violating the five-year look-back.
The fact that your caregiver could assume ownership of your home without violating the look-back is helpful, but there are other options as well. Comprehensive Charlotte Medicaid planning is the best way to proceed if you want to qualify for Medicaid when the time comes. If you take the appropriate steps, you can protect your assets for your loved ones after you are gone.
Charlotte Medicaid Attorney Recommends Medicaid Trusts
Although the assets that have been conveyed into a revocable living trust are still countable for the purposes of Medicaid eligibility, there is another type of trust you can consider. Irrevocable trusts cannot be rescinded or dissolved. Assets that have been conveyed into an irrevocable Medicaid trust are not countable when it comes to eligibility after the look-back period.
Furthermore, any income-producing assets can be transferred to an income-only Medicaid trust. The principal would not be counted towards eligibility, but you can still receive income from the earnings of the trust before you apply for Medicaid. However, the income may be absorbed by nursing home costs 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 (Charlotte, NC or Huntersville, NC), or for individuals in Kentucky at (606) 324-5516 (Ashland, KY) or (859) 372-6655 (Florence, KY). 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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