Before we answer the question that serves as the title of this blog post, we should explain why Medicaid may be relevant to you at some point in your life. Most people are aware of the fact that Medicaid is a jointly administered federal/state government program that provides health insurance for financially needy individuals.
If you have never had the need to enroll in the program because you have always had resources, and you are going to qualify for Medicare when you are 65, it would seem as though Medicaid is really not something that you have to think about.
This makes sense on the surface, but there is a major gap in Medicare coverage. Most people are going to need some form of living assistance eventually, and many will receive skilled nursing care. This type of care is considered to be custodial care, because there is no path to total recovery.
The Medicare program does not pay for custodial care, and it is not easy to get out a checkbook to pay the bills out of your own pocket. We practice in the Cincinnati area, and the median cost for a year in a private room in a nursing home in our state is more than $117,000.
Medicaid will pay for nursing home care, and this is why it should be on your radar.
Medicaid Eligibility Guidelines
With regard to the matter of financial need, you cannot qualify for Medicaid coverage if you have more than $2000 in countable assets. However, some things that you may own are not considered to be countable.
Your home is not a countable asset, but there is an equity limit. It is adjusted year-by-year to account for inflation, but at the time of this writing in 2020, the home equity limit is $595,000 in the state of Ohio.
One vehicle that is used as a primary form of transportation is not counted, and your household items are not countable assets. Personal effects would not count against you, and if you have a wedding ring, engagement ring, and/or some heirloom jewelry, they items would not be counted.
A prepaid burial plot is allowed, and you can have up to $1500 of whole life insurance and unlimited term life.
You may digest all of these facts and simply resolve to give assets that are countable to loved ones if and when you find out that you need skilled nursing care. Unfortunately, this would be contrary to the spirit of the Medicaid program, so there is a rule in place to prevent reactive divestitures.
If you give away assets within five years of the submission of your application, your eligibility will be delayed.
The length of the penalty would depend on the amount that you gave away as it compares to the cost of skilled nursing care in our state. To explain by way of example, let’s say that the state determines that average charge for a year in a nursing home is $115,000. You gave away $130,000 a couple of years before you applied for Medicaid. This is enough to pay for two years in a nursing home, so your eligibility for Medicaid coverage would be delayed by two years.
Because of this five-year look back period, it takes careful advance planning to give gifts or establish and fund an irrevocable Medicaid trust at the right time.
Half of Shared Countable Assets
Now that we have provided the necessary background information, we can explain the spousal benefits. In some cases, a person that is married will apply for Medicaid to pay for long-term care. The individual’s spouse will still be able to live independently. Under these circumstances, the healthy person is referred to as the community spouse in Medicaid parlance.
The Medicaid Community Spouse Resource Allowance is the amount of the shared assets that can be retained by the healthy spouse without impacting the eligibility status of the spouse that is going to receive nursing home care. It is equal to half the shared assets, but there is a limit.
This figure fluctuates to account for inflation like the home equity limit, but at the present time, the maximum Community Spouse Resource Allowance in Ohio is $128,640. There is a minimum of $25,728.
There is also a Monthly Maintenance Needs Allowance that can be allotted to a healthy spouse that is relying on income that is brought in by the Medicaid recipient. The maximum is $3216, and the minimum is $2113.75 per month.
Attend a Free Seminar!
Our elder law attorneys are holding a number of free seminars over the coming weeks, and you can learn a lot if you attend one of the sessions. To look at the schedule and obtain registration information, visit our seminar page.