Unfortunately, the Medicare program will not pay for custodial care. This is the type of assistance that you would receive in a nursing home or assisted living community, and some people receive custodial care in their homes. This is a huge gap that presents a serious problem, because long-term care is extremely expensive.
We practice law in Cincinnati. According to Genworth Financial, the median monthly cost for a private room in a nursing home was $8213 in 2018. For a one bedroom unit in an assisted living community, the median charge was right around $5000 a month. As you can see, an extended stay could have a serious impact on your legacy, and these costs have been rising year-by-year.
When we discuss the situation with our clients, we explain the fact that Medicaid is another government health insurance program that will pay for long-term care if you can gain eligibility. Since it is a need-based program, there is a low asset limit of just $2000. The good news is that everything that you own is not counted when Medicaid is evaluating your eligibility status.
The most significant piece of property that does not count is your home, but there is an equity limit. Each state has some latitude with regard to the equity limit. In Ohio, the minimum figure is utilized, and in 2019 it is $585,000. However, if you apply for Medicaid as a married person, and your spouse is going to remain in your home, there is no equity limit at all.
Another non-countable assets is your motor vehicle, and household items and your personal belongings are not counted. If you have a wedding ring and an engagement ring, they would not be countable assets, and you can maintain possession of heirloom jewelry.
Unlimited term life insurance is allowed, and an applicant can have as much as $1500 of whole life insurance. The same amount can be set aside for final expenses, and prepaid burial plots are not counted by Medicaid.
In addition to the waiver of the equity limit, there are other benefits that are afforded to the healthy spouse. There is a Medicaid Community Spouse Resource allowance that equates to half of the shared assets that are considered to be countable, but there are limits. The maximum community spouse resource allowance in Ohio in 2019 is $126,420.
There is also a minimum community spouse resource allowance that stands at $25,284. To explain this allowance by way of example, let’s say that you and your spouse have $40,000 in countable assets. Half of that is $20,000, but because there is a minimum allowance, the healthy spouse would be able to keep $25,204.
Another spousal benefit is the Medicaid Monthly Maintenance Needs. When a single person is using Medicaid to pay for long-term care, almost all of this individual’s income must be contributed toward the cost of the care that is being received. Things are different for married couples.
There is a Medicaid Monthly Maintenance Needs Allowance that allows the healthy spouse to continue to receive income that is brought in by the institutionalized spouse. During the current calendar year, the maximum allowance is $3160.50, and the minimum is $2057.
When it comes to assets that are going to be counted, you could engage in a process called a Medicaid spend down. This can be done in a couple of different ways. You could choose to give direct gifts to loved ones that would be inheriting the assets anyway. Another option would be to convey resources into an income only Medicaid trust.
The trust would be irrevocable, and you would not be able to touch the principal, so those assets would not count when Medicaid was determining your eligibility status. You could continue to receive income from the earnings of the trust corpus until and unless you apply for Medicaid.
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It takes careful planning to obtain Medicaid eligibility at the right time, because you have to complete the divestitures at least five years before you apply for coverage. We would be glad to help if you would like to discuss the details with a licensed elder law attorney. You can send us a message to request a consultation appointment, and we can be reached by phone at 513-721-1513.