Medicaid is an important part of the elder law equation because it covers the custodial care that nursing homes provide, and Medicare will not pay for long-term care.
Most seniors will need help with their activities of daily living, and 35 percent of elders will eventually reside in nursing homes. These facilities come with some hefty price tags so it is impossible for most people to pay for them out of pocket comfortably.
Qualifying for Medicaid
Since Medicaid is only available to people with sparse resources, there is a $2000 limit on countable assets. You usually cannot give gifts to your loved ones in an effort to qualify after you find out that you need nursing home care because there is a five-year look back period.
With limited exceptions, all gift-giving must be completed at least 60 months before the application is submitted. If you violate this look-back rule, you will be ineligible for a period of time that is based on the amount that you gave away.
Let’s say that the state determines that the average cost for a year in a nursing home is $75,000, and you give away this amount a year before you apply for Medicaid. The money would have paid for one year of nursing home care so you would be ineligible for 12 months.
There are some things that are not countable during your lifetime (but may be subject to repaying Medicaid after you pass), including your home with a $595,000 equity limit in 2020. We will get into the other non-countable assets in a different post, but for the most part, they are not items of especially great value.
Allowances for the Healthy Spouse
When a married person with a healthy spouse is applying for Medicaid to pay for long-term care, the spouse who can live independently is called the “community spouse.” This partner is entitled to a Community Spouse Resource Allowance, which is generally equal to half of the shared countable assets.
There is a limit of $128,640 this year in Kentucky and North Carolina. These two states that we practice in also have a minimum allowance of $25,728.
When a person who is single is using Medicaid to pay for nursing home care, almost all of the person’s income would go toward paying for care. This requirement may be waived if a healthy spouse is relying on the income.
The community spouse can continue to utilize the income, and this is called a Monthly Maintenance Needs Allowance. The limit this year is $3216, and the minimum that a healthy spouse can receive is $2113.75 a month.
Child Caregiver Exemption
One particular exception to the five-year look back rule applies to caregiver children. You can give your house to a child who has been caring for you in the home for at least two years without being penalized. It should be noted that the level of care that you have received from the child must be quite significant.
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