You may not think about this program when you are planning for retirement, but in reality, Medicaid is very important for a significant percentage of senior citizens.
Yes, Medicaid is a program that is in place to help people with very limited resources. And yes, you will qualify for Medicare at the age of 65 if you have paid taxes on your income throughout your life.
However, Medicare will not pay for living assistance. Help with your activities of daily living is looked upon as custodial care rather than medical care. Medicare will help with medical expenses, and it will pay for up to 100 days of convalescent care, but it won’t pay for custodial care.
There are some myths that circulate with regard to Medicaid rules and regulations, and we will look at one of these misconceptions here.
If you want to qualify for Medicaid to pay for long-term care, you must prove that you have significant financial need. The upper asset limit for an individual is just $2000 in most states.
You could spend assets (or give away assets in some circumstances) before you apply for Medicaid so that you do not have more than $2000 in your own name. This is called a Medicaid spend down.
When you are divesting yourself of assets, you don’t have to spend or give away everything, because everything that you own is not countable. Your home, up to $543,000 in equity in 2014, is not countable, and one vehicle is not countable either.
You can hold on to your household goods and personal effects. Your wedding ring, your engagement ring, and any heirloom jewelry that you own would not be counted.
If you were to apply for Medicaid while you were still in possession of countable property that was valued in excess of $2000, the state would not take your property. Your application would be denied, and that would be it.
There is also the matter of the five-year look-back. In most cases, you are penalized if you give away assets within five years of applying for Medicaid. What you are permitted to do depends on your particular circumstances. However, this penalty would not involve a seizure of assets.
Your eligibility would simply be delayed for a period of time that would be tied to the amount of the divestitures as they compare to the cost of long-term care in your state.
For example, if you gave away enough to pay for two years of long-term care, your eligibility would be delayed by two years.
The Medicaid program can seek recovery from your estate after you pass away. However, if you plan ahead properly, there will be nothing left in your estate to attach.
Medicaid Planning Report
To learn more about Medicaid planning, download our special report. This in-depth report is being offered free of charge, and you can access your copy through this page: Charlotte NC Medicaid Planning.
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