If you have worked and paid taxes for at least 10 years, or if your spouse has done this, you will qualify for Medicare when you reach the age of 65. This program will provide a health care insurance underpinning, but there is one huge gap.
Medicare will pay for convalescent care after an injury or illness when recovery is anticipated. However, it will not pay for long-term custodial care. This is the type of assistance that you would receive in a nursing home.
Nursing homes are extremely expensive all around the country, and the costs here in our area are a bit higher than the national averages. Genworth Financial is a company that sells products that are relevant to elders, so they keep a finger on the pulse of nursing home costs. According to their website, the median charge for a year in a private room in a Cincinnati area nursing home in 2019 was $117,348.
That is a lot of money in and of itself, and you can double it for a married couple that will eventually need nursing home care. Of course, some people are in nursing homes for more than a year, and in other cases, they enter nursing homes after residing in pricey assisted living communities.
To compound these disturbing facts of life, nursing home costs have been rising year-by-year. In fact, the survey showed that there was a 19% increase in the charge for a private room last year over 2018. Clearly, you can expect to pay considerably more if you need custodial care 20 years from now.
The Medicaid Solution
Medicaid is a jointly administered federal/state government health insurance program that will pay for a stay in a nursing home if you can gain eligibility. You are probably aware of the fact that this is a need-based program, so you cannot qualify if you have a reasonable store of assets in your own name. The limit in Ohio and most other states is just $2,000.
There are some things that do not count when Medicaid is determining your eligibility status. If you have a prepaid burial plot, it is not considered to be a countable asset, and you can have as much as $1500 set aside for final expenses. Unlimited term life insurance is allowed, and you can have up to $1500 worth of whole life insurance and still qualify for Medicaid to pay for long-term care.
A Medicaid applicant can maintain ownership of one vehicle that is used as a primary source of transportation. If you apply for Medicaid, you can retain your furniture and the things that you have around the house, along with your personal possessions. Wedding rings, engagement rings, and heirloom jewelry are not considered to be countable assets.
Now that we have set the stage, we can hone in on a very important aspect of this post. Your home is not considered to be a countable asset for Medicaid eligibility purposes, but there is a limit on equity. In Ohio during the current calendar year, the home equity limit is $595,000. If you are married, and your spouse is remaining in the home, there is no equity limit at all.
If you qualify for Medicaid to pay for nursing home care, after you pass away, the program is required by law to seek reimbursement from the assets that may remain in your estate. Your home could be attached if it was in your direct personal possession and your spouse was not residing in it.
However, to qualify for Medicaid in the first place, you would have to divest yourself of direct ownership of assets. You could give the home to a loved one or convey it into a trust. A caveat would be that you would have to relinquish ownership at least five years before you apply for Medicaid.
Should you fail to do this, your eligibility would be delayed, and you would have to pay out-of-pocket for a prescribed period of time. The length of the penalty would be based on the amount that you gave away as it compares to the cost for nursing home care in Ohio. For example, if the state determines that the average cost for a year a nursing home is $100,000, and you give away $200,000, your eligibility would be delayed by two years.
One way to get around this five-year look back period is through the Caregiver Child Exemption. You can give your home to a child that has been your primary caregiver in the home for at least two years, and this five-year rule would not be applicable.
Attend a Free Seminar!
Our elder law attorneys are holding a number seminars in the near future, and you can learn a lot if you attend one of these sessions. There is no charge, but we do ask that you register in advance so that we can save your seat. To get all the details, visit our seminar page.