Medicaid planning is important for a high percentage of older Americans. This is because Medicare will not pay for living assistance.
Most seniors will need help with their activities of daily living at some point in time. There are those who will be able to receive assistance in the home, but many will ultimately reside in nursing homes and assisted living communities. Paid in-home caregivers are costly, and full-time residence in an assisted living facility is exorbitantly expensive.
Medicaid will pay for long-term care, it is a need-based program. You must prove that you have significant financial need as it is defined by the Medicaid program to be able to qualify.
Because of this, people will often spend down to qualify for Medicaid. You either spend your money or give it away to those who would otherwise be inheriting it someday. Eventually, you have virtually nothing left that is still in your own name, and you can qualify for Medicaid.
The Healthy or Community Spouse
Questions naturally arise with regard to asset limits. For a single person, the upper asset limit in terms of countable assets is $1500. However, what about the spouse that does not need to enter a long-term care facility? What can he or she keep?
Medicaid is jointly administered by the federal government along with each respective state government. There are federal guidelines that the states must follow, but there can be some flexibility within these guidelines.
The spouse that will remain at home is called the healthy or community spouse. When it comes to countable assets, the maximum that the healthy spouse may retain in 2014 without impacting his or her spouse’s Medicaid eligibility is $117,240.
This is the maximum; the exact amount that can be retained is at the discretion of each state, but there is a minimum threshold that is in place via federal mandate. This minimum is $23,448 in 2014.
When a homeowner is applying for Medicaid to pay for long-term care, the value of the home is not counted, but there is an upper equity limit. In 2014 this equity limit is $543,000. Each state has the ability to raise the limit to $814,000.
There is no equity limit at all when the healthy spouse is going to remain in the home.
The healthy or community spouse may rely on all or part of the institutionalized spouse’s income. To account for this, Medicaid program rules allow for a monthly maintenance needs allowance for the healthy spouse.
In 2014, the maximum monthly maintenance needs allowance is $2931. The minimum amount that a state can allow is $1938.75 per month. (It should be noted that Alaska and Hawaii are allowed to have higher minimums.)