Before we share some specific information about Medicaid and your home, we have to set the stage with some necessary background information.
You earn retirement credits when you make payroll or self-employment tax contributions. Most people easily accumulate the maximum four credits each year. After you have at least 40 credits, you will qualify for Medicare coverage when you reach the age of 65.
This will safety net will serve as a foundation, but you have to understand the limitations of the program.
First off, there are out-of-pocket expenses that come into play, even if you have Medicare coverage. You have to pay a deductible for inpatient hospitalization, and there can also be co-payments.
In addition to this, there is a monthly premium for Medicare Part B, which is the portion of the program that pays for outpatient care and visits to doctors.
Most people pay $144.60 per month at the present time, and this is typically deducted from your Social Security direct deposit once you become eligible for your benefit.
The prescription drug program also comes with out-of-pocket expenses in the form of deductibles, co-payments, and premiums.
The Big Gap
You should definitely budget for the out-of-pocket expenses that we have touched upon above when you are devising your retirement budget. Plus, there is another very big gap that you must account for as well.
Medicare does not pay for long-term care, and this is a huge issue within the elder law community.
If you are not especially concerned because you are healthy and you feel as though you will never need help with your activities of daily living, you should know that the United States Department of Health and Human Services tells us that seven out of every ten seniors will need long-term care eventually.
Paying out-of-pocket is not a very pleasant prospect. We have offices in Kentucky and North Carolina. According to Genworth Financial, the median annual charge for a private room in a Kentucky nursing home was $91,250 in 2019, and the figure in North Carolina was $91,980.
Medicaid will pay for long-term care, and this is why it is relevant, even if you will qualify for Medicare. Since it is a need-based program, generally speaking, you cannot qualify if you have significant assets in your name, but there are some exceptions.
Medicaid Eligibility and Your Home
The asset limit for an individual is just $2000, but some things do not count, including your home up to a certain equity limit. In both of our states, the limit is $595,000 in 2020.
If a healthy spouse is remaining in the family home while his or her spouse enters a long-term care facility, there is no equity limit at all.
The states are required to seek recovery from the estates of people who were using Medicaid to pay for long-term care. If your home was part of your estate at the time of your passing, technically speaking, it could be targeted.
However, this is a grey area, and some states are more aggressive than others when it comes to Medicaid recovery efforts. Plus, if your spouse will remain in the home after you die, there would be no immediate worries (though there could be issues after the surviving spouse dies).
To account for the possibility of the home being absorbed if you do not have a living spouse, you could give it to a loved one. That being said, there is a five-year look back period. Most gifts given less than five years before you apply for Medicaid coverage will result in penalties, with a few caveats.
If you have an adult child living with you as a primary caregiver for at least two years before you enter a nursing home, you may be able to qualify for the Caregiver Child Exemption under the right circumstances. If you are approved for this exemption, you could transfer your home to your child, and the five-year look back period would not apply. Be careful not to create other issues by transferring your house to the caregiver child, though — make sure to talk with an elder law attorney before taking this step to avoid unintended consequences.
Attend a Free Seminar!
Our attorneys are holding a series of seminars over the coming weeks, and they are going to be chock full of useful information. As the icing on the cake, there is no admission charge, so there is no reason to take pause. To see the schedule and obtain registration information, visit our seminar schedule page and click on the specific date that works for you.