Some people are unpleasantly surprised when they find out that Medicare will not cover nursing home care. If you are not too concerned because you think that you will never need long-term care, you should understand the facts.
The United States Department of Health and Human Services tells us that 35 percent of seniors will require nursing home care, and 52 percent of elders will need some type of paid assistance.
As you might imagine, long-term care is extremely expensive, and it can consume all or most of your legacy depending on your resources and the length of the stay. Fortunately, there is a solution the form of Medicaid coverage.
General Medicaid Eligibility Parameters
Medicaid is only available to people with very sparse resources, so there is a $2000 asset limit. That may sound like a dealbreaker, but some assets do not count, starting with your home, but there is a $603,000 equity ceiling.
Your motor vehicle is not counted along with wedding rings, engagement rings, and any heirloom jewelry that you may have in your possession. Your furniture, appliances, and other household items and personal belongings are not countable assets for Medicaid purposes.
Prepaid burial plots are exempt along with unlimited term life insurance, $1500 saved for final expenses, and the same amount of whole life insurance.
Medicaid Monthly Maintenance Needs Allowance
Now that we have set the stage appropriately, we can hone in on the subject at hand. Income that is brought in by a person that is entering a nursing home must be contributed toward the expenses that are being incurred.
However, there is an exception when the individual in question is married and their spouse can still live independently. If they meet the eligibility requirements with regard to their financial status, the could receive the income in the form of a Monthly Maintenance Needs Allowance.
The maximum allowance this year is $3259.50, and the minimum allowance stands at $2155.
Community Spouse Resource Allowance
The Monthly Maintenance Needs Allowance is not the only provision that is made for a healthy spouse that can still live independently. They can receive a Community Spouse Resource Allowance as well, and this is equal to half of a couple’s countable assets.
Once again, there is a limit, and it is $130,380 in Ohio in 2021. There is also a minimum allowance of $26,076, so this is the least a healthy spouse can retain even if it is more than half of the countable assets.
Five-Year Look Back Period
When you digest all of the above information, a simple idea can pop into your head. If you find out that you need nursing home care, you can give gifts to your loved ones to create a financial profile that will lead to eligibility.
Unfortunately, it is not as simple as this, because there is a five-year look back period. If you give away significant assets within five years of the date of your application submission, it would be denied.
Since you have to plan five years ahead, and you may need the income that is generated by your income-producing assets, you could convey resources into an irrevocable Medicaid trust.
The principal would no longer be accessible to you after you establish and fund the trust, but you could receive distributions of the trust’s income while you are living independently. If and when you apply for Medicaid, the assets in the trust would not count.
Schedule a Nursing Home Asset Protection Consultation Today!
If you want to responsibly protect your legacy for the benefit of your loved ones, nursing home asset protection is a must. We can gain an understanding of your position and help you position your assets ideally with future Medicaid eligibility in mind.
You can schedule a consultation at our Cincinnati elder care planning office if you call us at 513-721-1513, and you can use our contact form to send us a message.