People sometimes absorb information that is incomplete, and they come away with false impressions. This definitely applies to certain estate planning and elder care details.
With this in mind, we will share some information about an important Medicaid rule in this post. Before we focus on this particular subject, we will provide a bit of an overview for people that do not understand why Medicaid is relevant to seniors that will qualify for Medicare.
If you were developing a health insurance program for senior citizens, and you knew that 70 percent of elders would need living assistance, would your plan cover it? Almost everyone would say yes, but the only relevant entity says no.
That’s right, Medicare will not pay for the long-term custodial care that nursing homes provide, and it does not cover in-home care that is provided by professional caregivers.
You can expect pay about $100,000 for a year in a private room in a Cincinnati area nursing home, and the costs may be higher ten or twenty years from now.
The median cost for a home health aide was just under $60,000 last year, so any way you slice it, long-term care is very expensive.
According to the United States Department of Health and Human Services, 21 percent of people that need paid care receive it for between two and five years, and 13 percent require assistance for more than five years.
The reason why Medicaid should be on your radar even if you are going to qualify for Medicare as a senior is because Medicaid will pay for long-term care. Since it is a need-based program, you cannot qualify if you have more than $2000 in your own name.
Medicaid and Home Ownership
Now that we have shared the necessary background information, we can get to the question that serves as the title of this post. People sometimes hear that you lose your home if you qualify for Medicaid because the program will put a lien on your property.
Even though there is a $2000 limit on assets, the home is not counted. There is an equity limit, but it is higher than the median cost of residential property in our area. In 2021, the equity limit is $603,000, so most Cincinnati area homes would fall under this limit.
We should point out the fact that there is no limit at all if a healthy spouse is going to continue residing in the home when their spouse is receiving nursing home care.
Medicaid is required to seek reimbursement from the estates of people that were enrolled in the program while they were living. Since you could qualify while you are in direct personal possession of a home, it is true that Medicaid could put a lien on the home after your death.
However, there is no reason to maintain possession of the home. You could convey your residence into an irrevocable trust and continue to live in it as usual until and unless you apply for Medicaid.
Timing is the key to the successful execution of this strategy, because there is a five-year look-back period. The home must be conveyed into the trust at least five years before you apply for Medicaid coverage.
There is another detail that applies to home transfers and the look-back. If an adult child has been living with you in the home acting as your caregiver for at least two years, you can transfer ownership to the caregiver child.
The look-back would not apply, and the property would be protected during the estate recovery phase.
Take Action Today!
If you take the right steps in advance, you can live comfortably and preserve your legacy for the benefit of your loved ones.
The exact way to proceed will depend upon the circumstances, so we can gain an understanding of your situation and advise you accordingly. At the end of the process, you will go forward with a custom crafted plan that ideally suits your needs.
You can schedule a consultation at our Cincinnati elder care planning office if you call us at 513-721-1513, and you can fill out our contact form if you would prefer to send us a message.
- What You Need to Know about Planning for Elder Care - March 21, 2023
- Can a Trust Be Contested? - March 16, 2023
- Ohio Medicaid Limits for 2023 - March 14, 2023