Medicaid is a jointly run federal-state program that is technically in place to provide insurance for long term nursing care expense for people who cannot afford to pay the costs on their own. How do you determine whether or not someone could afford to pay his or her own way? The Medicaid program has a formula that is designed to accomplish this aim.
On the surface it is simple, but beneath the surface it is rather complex. You cannot have more than $1500 in assets if you are unmarried. If you are married, the healthy spouse can keep 50% of the marital assets up to a ceiling that changes by the year. In 2013 it is $115,900.00. There is a floor also. Some limited assets that you own may be exempt which means they are not counted. Also the value of your home is not counted against you up to a prescribed equity limit if you are married. In 2013 the home equity limit is $536,000.
Since Medicaid is a program for people who cannot afford the costs of nursing care, would it be relevant to senior citizens who have retired with some modicum of comfort? After all, they had savings going in, they receive Social Security, and they qualify for Medicare coverage.
The reason why Medicaid is relevant to seniors who are financially well off is because Medicare and health insurance do not pay for an extended stay in a nursing home or assisted living community. The statistics show that more than half of elderly Americans will need living assistance someday, so this is something that we should all take seriously even if we are financially comfortable right now.
Monthly costs of skilled nursing care can be $9500 or more. Assisted living can run $3000 to $4000 a month. At those rates, it’s easy to see how an elder who requires nursing care or assisted living for even just a few years could go through a lifetime of savings. And the costs are rising every year.
You may wonder if you can give away your assets to your family you hope one day will inherit your wealth so that you can stay within this $1500 asset limit and still receive Medicaid. This is a very good question, and a common one. You can divest yourself of assets as you plan ahead in anticipation of applying for Medicaid coverage. But, you must employ a measured strategy because you are penalized if you give away assets within five years of applying for nursing home Medicaid or home and community based Medicaid.
This is why intelligent and informed Medicaid planning is so important. If you discuss the risks with a qualified Ohio elder law attorney early enough you can put a plan in place to avoid spending most or all of your assets. This has a double benefit.
The obvious benefit is the protection of a legacy for heirs. But more importantly is that there will be some money left once you begin receiving Medicaid that your family can use to improve your quality of life beyond what Medicaid can pay for. That may be the most important reason of all to plan now because Medicaid only lets you keep $40.00 a month of income and $1500.00 of assets.
Because of the 5 year look-back period, timing is a critical factor. It’s never too soon to start.