We are going to answer a common question about one aspect of the Medicaid guidelines in this post. However, before we focus on this particular subject, we should provide an overview so you understand why many people seek Medicaid eligibility late in their lives.
Most senior citizens will need help with their activities of daily living, and 35 percent of elders will eventually reside in nursing homes. You can expect to pay over $70,000 for a year in a nursing home in Kentucky or North Carolina, and the average length of stay is 12 months.
This is a lot of money to come up with when you have been retired for years, and a married couple may eventually receive two different sets of nursing home bills. Unfortunately, Medicare does not pay for the custodial care that nursing facilities provide.
Medicaid will cover long-term care if you can become eligible, and this is why it is relevant to Medicare beneficiaries and people who will qualify for Medicare when they are 65.
Monthly Maintenance Needs Allowance
When a married person is a Medicaid beneficiary, his or her income must be contributed toward the cost of the care the beneficiary is receiving. There is a monthly personal needs allowance of $40 in Kentucky, and $30 in North Carolina, but the remainder must be used to defray the costs.
However, there is an exception to the rule when a healthy spouse is relying on the income to maintain a reasonable standard of living. The healthy spouse can receive a Monthly Maintenance Needs Allowance.
There are minimum and maximum allowances, and the figures are indexed annually to account for inflation. At the time of this writing, the maximum allowance is $3259.50 in our states, and the minimum allowance is $2155. The exact amount of the allowance depends on the beneficiary’s income for Medicaid purposes, the healthy spouse’s income, and household expenses.
Community Spouse Resource Allowance
In addition to the Monthly Maintenance Needs Allowance, the healthy spouse is also entitled to a Community Spouse Resource Allowance. This is half of the couple’s assets up to a limit that stands at $130,380 during the current calendar year.
There is also a minimum amount a healthy spouse can retain, and the figure is $26,076 this year. To be clear, the community spouse can keep this much even if it is more than half of the assets.
It is important to point out that your home is not considered to be a countable asset for Medicaid eligibility purposes, but there is an equity limit. This is another number that is adjusted annually, and it stands at $603,000 this year.
If a healthy spouse is going to be remaining in the home while their spouse is in a nursing facility, there is no equity limit at all.
Medicaid Estate Recovery
You can potentially qualify for Medicaid if you are still the legal owner of your home, but this is a situation that you should be careful about. If you qualify as a homeowner, the program could place a lien on your home after you pass away because there is an estate recovery mandate.
There is an exception if one of your adult children has been acting as an in-home caregiver for at least two years. Under these circumstances, you can give the home to the child, and it would be protected after you pass away if done properly. There is also an exception for some transfers to siblings or disabled children. Other exceptions may be available under state law depending on the state and the circumstances.
A nursing home asset protection strategy can revolve around the use of a Medicaid trust. This would be an irrevocable trust so you would not be able to access the principal or dissolve the trust.
You would be able to accept distributions of the trust’s income while you are still living independently. If you fund the trust at least 60 months before you submit your application for Medicaid coverage, the principal would not count.
And of course, the assets in the trust would not be in your possession at the time of your passing so they would be protected during the recovery phase.
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If you have already decided that it is time for you to work with an Ashland, Kentucky estate planning lawyer to put a plan in place, we are here to help. You can schedule a consultation if you call us at 606-324-5516. The number for our Florence, Kentucky office is 859-372-6655.
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