You may wonder why the Medicaid program would be relevant to someone that is going to qualify for Medicare coverage. The reason why it should be on your radar is because Medicare does not pay for long-term care, but Medicaid will cover these expenses.
Long-Term Care Costs
According to the U.S. Department of Health and Human Services, 70 percent of seniors will need living assistance, and more than one third of them will require nursing home care.
In our area, you are looking at somewhere in the vicinity of $100,000 for a year in a private room in a quality nursing home. The average length of stay is one year, and married couples should brace themselves for two potential rounds of nursing home expenses.
Clearly, it is not easy to get out a checkbook and pay for nursing home care with no outside assistance, and this is why Medicaid eligibility is so important.
2021 Medicaid Parameters
There is a $2000 Medicaid asset limit, but there are various different exemptions and allowances. The figures are updated each year to account for inflation, and the 2021 numbers are now available.
Before we share that information, we will look at some of the generalities that remain constant. One motor vehicle is not counted, and Medicaid does not consider household items and personal belongings. Wedding rings, engagement rings, and heirloom jewelry are exempt as well.
Up to $1500 can be set aside for final expenses, and an applicant can have the same amount of whole life insurance. Prepaid burial plots are not counted, and there is no limit to the amount of term life insurance that can be carried, because this type of insurance has no cash value.
Your home is not a countable asset, but there is an equity limit. This year, it has been $595,000 in Ohio, and in 2021, it will go up to $603,000.
Allowances for the Healthy Spouse
In many instances, a person will apply for Medicaid when their spouse is still capable of independent living. Under these circumstances, the healthy spouse (or “community spouse” in Medicaid lingo) is entitled to a couple of allowances.
There is a Community Spouse Resource Allowance that gives the healthy spouse the ability to keep half of the shared countable assets up to a certain limit. This year, the limit is $128,640, and it will go up to $130,380 next year.
We should point out the fact that this increase is not going to go into effect until July 1, 2021, but they announce the updated figures just prior to the new year.
With the exception of a $50 per month personal needs allowance, a Medicaid recipient is required to contribute their income toward the cost of the care that is being received. However, if a healthy spouse is relying on the income, they can qualify for a Monthly Maintenance Needs Allowance.
The maximum allowance this year is $3216 per month, and the minimum is $2113.75. As of July 1, 2021, the max allowance will be $3259.50 a month, and the minimum will be increased to $2155 monthly.
Five-Year Look Back Period
You can divest yourself of countable assets to qualify for Medicaid. Direct gift giving is a possibility, and you can alternately convey assets into an irrevocable trust.
If you establish this type of trust, you can still receive distributions of the trust’s earnings, so this is an appealing option.
You have to act in light of the five-year look back period. The divestitures must be completed at least 60 months before you submit your application for Medicaid coverage.
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