Medicaid places certain limitations on the amount of financial resources you own, as well as how and when you can transfer assets from your estate to someone else. Long-term care costs are often too expensive for most people and they are continuing to increase every year. Currently, the national average cost, for a year of nursing home care, exceeds $90,000. For this, and many other reasons, Medicaid planning is important for everyone. Our Ashland Medicaid attorneys can advise you regarding the various eligibility requirements, including the five-year Medicaid look-back period and the effect it will have on your Medicaid planning.
Medicaid determination of resource allowances and countable assets
When assessing eligibility for Medicaid, there is a $2000 limit on countable assets for an individual. Some assets are not included in the $2000 limit, including your home (but there is 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 Kentucky for 2018 is $123,600, and the minimum is $24,720.
You cannot overlook the future costs of healthcare
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. Medicare does not pay for custodial care. The term custodial care refers 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 custodial care. 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.
When applying for Medicaid, the government will not only look at your current assets, they will also want to see your financial records for the last five years. The Medicaid program wants to make sure that you did not give away all your assets, to relatives and friends, in the hopes that the government will pay for your care. Your eligibility will be 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.
Let our Ashland 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 more resources for your loved ones to draw, from after you are gone.
Ashland Medicaid 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 since you do not have control of the asset, the trustee does.
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. We are here to help!