Medicaid is a federal/state government program that is in place to provide health insurance for financially needy individuals. Because of this, there is a $2,000 limit on countable assets.
Medicare is also a government health insurance program. Unlike Medicaid, eligibility is not based on financial need. You become eligible for Medicare by earning retirement credits while you are working and paying your taxes.
It is possible to earn as many as four retirement credits each year. Once you have accumulated 40 credits, you will qualify for Medicare. The age of eligibility is 65 at the present time.
Why would Medicaid be relevant to people who are going to qualify for Medicare coverage? For the most part, the answer can be reduced to three words: assisted living costs.
The majority of senior citizens will eventually need help with their activities of daily living. This type of assistance is looked upon as custodial care rather than medical or convalescent care. Medicare will not pay for custodial care, but Medicaid will assist with custodial care expenses.
Healthy Spouse Parameters for 2019
If you were to require long-term care while your spouse was capable of handling his or her own activities of daily living, your spouse would be referred to as the healthy or community spouse. Under Medicaid regulations, there are certain assets that the healthy spouse can keep that would not be countable under the $2,000 limit.
There is a Community Spouse Resource Allowance. This allows the community spouse to keep half of the shared property up to a certain limit. The maximum Community Spouse Resource Allowance in the state of Ohio in 2019 is $126,420. The minimum stands at $25,284 during the current calendar year.
Let’s explain the minimum allowance by way of an example. The community spouse can keep half of the shared countable assets. Let’s say that the couple has $30,000 in shared resources. Half of that is $15,000. However, because of the minimum Community Spouse Resource Allowance, under these circumstances, the community spouse would be able to retain $25,284.
If you qualify for Medicaid to pay for long-term care, most of the income that you receive must go toward the cost of the care. However, this requirement is waived if the healthy spouse is relying on all or part of this income to maintain a minimum standard of living.
He or she can continue to draw a Monthly Maintenance Needs Allowance. In Ohio, the max Monthly Maintenance Needs Allowance is $3,161, and the minimum is $2,057.50.
When it comes to home ownership, the community spouse may remain in the home without impacting Medicaid eligibility. There is no equity limit at all, but if there was no healthy spouse continuing to reside in the home, there would be a limit of $585,000.
Qualifying for Medicaid is typically going to involve a spend down of the assets that are not retained by the healthy spouse are countable. You could literally spend all of your assets so that you have very little left if and when you apply for Medicaid, but many people will give assets to loved ones would have otherwise been inheriting them.
There is a five-year look back period to consider if you are going to spend down. You must complete the divestitures at least five years before you apply for coverage, or your application will be denied.
You could give direct gifts, but you could alternately convey assets into a Medicaid trust. Assets that have been conveyed into the trust would not be counted if and when you apply for Medicaid coverage.
However, a Medicaid trust is an irrevocable trust. As the name would indicate, you cannot revoke or dissolve this type of trust. This is why the assets in the trust are not counted by the Medicaid program. If you had a revocable trust, the assets would be countable.
Since you cannot revoke the trust, you can’t take the assets back once you create the Medicaid trust.
However, you could potentially create an income only Medicaid trust. The principal that is contributed into the trust would not be counted by Medicaid evaluators, but you could receive income from the trust’s earnings. This way you would enjoy some financial benefits if you never need long-term care.
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