When you hear the term “Medicaid planning,” you may scratch your head for a moment. Why would anyone plan ahead to be able to qualify for a health care program that is only available to people with limited resources? The financial goal of life is something very different, right?
All of the above is completely understandable, but there is a good reason why Medicaid is quite relevant to people that were never financially needy throughout their lives. This program will pay for a stay in a nursing home, but Medicare will not assist with custodial care costs.
Since nursing home care is very expensive, the gap in the coverage can have a very serious impact on the legacy that you would like to leave behind to your loved ones.
Medicaid is intended for people with a significant level of financial need so there are strict parameters that govern eligibility. Let’s look at some of the important facts and figures to give you a basic understanding of the ground rules.
According to the United States Department of Health and Human Services, 35% of senior citizens will eventually require nursing home care. We are sharing this statistic so you understand that there is a very significant chance that you will indeed spend your final days in a nursing home.
The average length of stay is 12 months, and at the present time the average cost is $200 a day in Kentucky and $227 daily in North Carolina. You can double these potential expenses if you are married.
There is a limit of $2000 on countable assets that is used to determine Medicaid eligibility. However, some things do not count when your eligibility to status is being determined.
The most significant piece of property that does not count is your home, but there is an equity limit. This figure is adjusted annually to account for inflation, but at the time of this writing in 2019, it is $585,000. (Keep in mind, though, that Medicaid estate recovery may apply to the home after you pass.) In addition to your home, household goods, personal effects, one vehicle, and up to $1500 set aside for final expenses would be exempt.
In many cases, a person will require nursing home care, and their spouse will still be able to live independently. Under these circumstances, there is no home equity limit at all, and the healthy spouse is entitled to other property rights.
Medicaid uses the term “community spouse” to describe the individual who is not institutionalized. There is a Community Spouse Resource Allowance that allows the healthy spouse to keep half of the shared resources that are countable, but there is a maximum. In 2019, the limit is $126,420, and there is a minimum allowance of $25,284.
People that are using Medicaid to pay for long-term care must contribute almost all their income to defray the costs, with one exception. If you are applying for coverage as a married person, your spouse could continue to use your income to maintain a minimum standard of living.
This is called the Medicaid Monthly Maintenance Needs Allowance. The maximum allowance during the current calendar year is $3161, and the minimum is $2058 a month.
You can give assets that are countable to loved ones in an effort to gain Medicaid eligibility. However, you have to do this in light of the five-year look back period. If you give significant gifts within 60 months of the day that you submit your application, it may be denied.
It would still be possible for you to get delayed eligibility, but you would have to pay out-of-pocket while you wait out a penalty period. To explain through a simple example, if you gave away enough to pay for two years of nursing home care, your eligibility would be delayed by 24 months. With proper Medicaid planning, you may be able to preserve assets even within the five year period though.
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We are here to help if you would like to discuss Medicaid planning with a licensed elder law attorney. To request a consultation in North Carolina, you can give us a call at 704-944-3245 (Charlotte, NC or Huntersville, NC), and the number in Ashland, Kentucky is 606-324-5516, or 859-372-6655 for Florence, KY. There is also a contact form on this website that you can use to send us a message