Before you look into the subject very deeply, it is natural to wonder why you would ever need to know about Medicaid if you are going to qualify for Medicare as a senior. This is understandable, and it is one of the core issues in the elder law arena.
Medicaid is important for seniors because Medicare will not pay for a long-term stay in a nursing home. Medicaid will pick up the tab if you can qualify. This is why Medicaid planning should be on your radar.
These facilities are extremely expensive so your legacy could potentially be consumed by devastating nursing home costs. You also have to consider that a married couple may face two different rounds of nursing home bills.
If you are thinking that you will never need to reside in a nursing home, you should understand a few unpleasant realities. The “oldest old” is a term that is used in the elder law community to describe people that are 85 years of age and older. Researchers have found that about 40% of individuals in this age group have contracted Alzheimer’s disease. This should be a concern for most seniors because the life expectancy of an individual who is currently 65 extends past age 85.
Obviously, many people with dementia will require a level of care that only a nursing home can provide. When you add in the fact that there are other reasons why people enter nursing homes, you can see why this is something that impacts all of us.
In this blog post, we will provide definitions to some of the most commonly utilized Medicaid planning terms so you can “understand the language” when you are conducting research into the matter. We are presenting them in no particular order.
Medicaid Asset Limit
Since Medicaid is intended for people with sparse financial resources, there is a low asset limit that governs eligibility. It currently stands at just $2000 for an individual.
Not all of the property you own countable for Medicaid purposes. Your home is not countable, but there is an equity limit of $585,000 in North Carolina in 2019. Other non-countable assets would include your vehicle, wedding and jewelry rings, heirloom jewelry, household items, and personal effects.
Community Spouse Resource Allowance
When a healthy spouse is still living independently while their spouse is using Medicaid to pay for long-term care, the individual who is not in the nursing home on Medicaid is called the community spouse.
Under program rules, half of the shared countable assets can be retained by the healthy spouse when his or her spouse is applying for Medicaid, but there is a limit.
In North Carolina during the current calendar year, the maximum Community Spouse Resource Allowance is $126,420. The least a healthy spouse is allowed to keep is $25,284, even if this is more than half of the shared countable assets.
Monthly Maintenance Needs Allowance
You have to contribute almost all of your income toward the cost of your care if you are enrolled in the Medicaid program to pay for your stay in a nursing home, with one caveat. If you are married, and your spouse needs some or all this income to maintain a reasonable standard of living, a monthly Maintenance Needs Allowance may be approved.
This would allow your spouse to continue to receive income that you generate, but once again, there is a limit. The maximum monthly maintenance needs allowance in North Carolina in 2019 is $3160.50. There is a minimum as well, and this stands at $2057.50.
Medicaid Spend Down
In order to qualify for Medicaid, when you have countable assets in excess of the limits, Medicaid also expects you to “spend down” the excess assets. But the Medicaid rules also allow people who plan to save additional assets for the community spouse or family members in appropriate situations. In some cases, an individual may also plan well in advance by creating an irrevocable trust.
It is best to think ahead if you are going to engage in Medicaid planning. If you give away assets within five years of applying for coverage, a penalty period may be imposed; and your eligibility could be denied. This is called the look-back” period. The duration of the penalty would depend upon the amount of the divestitures. Even if you have not planned five years ahead of time, the Medicaid rules may still permit you to preserve additional assets.
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We offer periodic seminars to provide education on these topics, and we urge you to register for the session that fits into your schedule. There is no charge at all, and you can visit our seminar page to register for the date that works for you.