Medicaid is a program that is theoretically intended to provide medical care for people who don’t have the financial resources to pay for their care. As a result, there is a $2000 asset limit that must be met if you are going to qualify for Medicaid. This can automatically seem like it will preclude you from eligibility, but the fact is that not all of your assets count toward this limit.
Your vehicle, your place of residence, and many of your personal possessions are not countable in a Medicaid eligibility context during your lifetime. The healthy or community spouse is also allowed to keep half of the couple’s assets up to a set limit which is subject to change.
Now, some might wonder why there would be any need for planning if Medicaid can cover those costs. After all, the program was designed to help low-income Americans get health care coverage, right? The problem is that the Medicaid program’s eligibility standards include limits on both assets and income – and many seniors often struggle to meet those limits. Seniors in Kentucky can deal with the income limits by establishing a Qualified Income Trust that applies excess monthly income to the nursing home in a way that enables applicants to meet the eligibility standards. (Qualified Income Trusts are not required in North Carolina.) Assets can be more problematic, though.
The Medicaid program provides long-term care coverage for those who need help meeting the high cost of nursing home care. Since its creation, the program has expanded its coverage to the point where it now serves as the single most important payment source for the country’s nursing homes. Without it, millions of American seniors would be unable to afford the cost of care and would find themselves struggling to cope with their health care and daily living needs.
There is a $2000 limit on countable assets for an individual, but some things are not countable, including your home (with an equity limit of $585,000 in 2019). Plus, if you are married and you apply for Medicaid while your spouse is still capable of independent living, your spouse could keep half of the assets that are considered to be countable. This is called the Community Spouse Resource Allowance.
The maximum Community Spouse Resource Allowance in North Carolina and Kentucky for 2019 is $ $126,420, and the minimum is $25,284. An individual can often engage in Medicaid planning to preserve additional assets under the Medicaid rules, but you usually cannot just give your assets to your loved ones shortly before you apply for Medicaid coverage.
Now that you have the necessary background information, we can look at the Medicaid waiver. Many people can receive the living assistance that they need in their own homes. In-home caregivers are not free by any means, but in-home care can be much less expensive than full-time residence in a long-term care facility.
The government would like to see people receive help in their homes if it is at all possible because it is less expensive. To facilitate this, the Medicaid Home and Community-Based Services waiver program was implemented. This program helps eligible seniors pay for in-home care. It is called a “waiver” program because the asset and income limits are relaxed to allow more people to qualify for coverage.
A revocable living trust can be a good estate planning choice for many people, and you do not have to be extraordinarily wealthy to realize the benefits. However, a living trust will not satisfy all objectives. Many people seek eligibility for Medicaid late in their lives because this government-run health insurance program pays for long-term care. The majority of elders will someday need help with their activities of daily living, and Medicare does not pay for this type of assistance.
If you convey assets into a revocable living trust, they would be counted by the Medicaid program if you needed the program for long-term care assistance. Since this type of trust is revocable, you can take back personal possession of the assets at any time, and you can also act as the trustee and the beneficiary while you are living. Due to the fact that you retain this level of control, the assets would be counted by Medicaid.
Assets in an irrevocable living trust, on the other hand, may not be considered countable assets for Medicaid purposes following the look-back period (discussed below). For that reason, many people concerned about long-term care will consider creating irrevocable living trusts.
The Medicaid program is the solution for most elders who require living assistance. This need-based government health insurance program does pay for custodial care. However, since it is a need-based program, there is a $2000 limit on countable assets. Your eligibility can be delayed if you give away assets within five years of submitting your application. To explain by way of example, if you give away enough money pay for 18 months of nursing home care, your eligibility would be delayed by roughly 18 months. You would be forced to pay out-of-pocket during this interim.
If you have questions regarding Medicaid in general or any Medicaid planning matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us at (704) 944-3245 (Charlotte, NC or Huntersville, NC) or for individuals in Kentucky at (606) 324-5516 (Ashland, KY) or at (859) 372-6655 (Florence, KY).