When you are going to qualify for Medicare when you reach the age of 65, it can seem as though Medicaid is completely irrelevant to you. After all, Medicaid is for financially needy individuals, and you intend to retire with a reasonable store of resources to draw from during your senior years.
This make sense on the surface, and Medicare will provide a solid health insurance underpinning when you become eligible. However, it is important to understand the fact that the program does not pay for all covered services in full. There is a per benefit period deductible for the hospitalization portion, and there can be very hefty coinsurance payments for particularly long stays.
You have to pay a monthly premium for Medicare Part B, which is the portion of the program the pays for visits to doctors and outpatient care. In addition to this, you are required to cover 20% of the bills yourself after you pay a very modest annual deductible.
To provide a bit more clarity, during the current calendar year, most people pay $135.50 per month for their Part B premiums, and the deductible is $185. There are also deductibles, copayments, and premiums for the prescription drug portion of the program.
Though these expenses are manageable for many people, in other instances, they can be considerable over the course of a lifetime. This is something to consider when you are budgeting for your retirement years.
In addition to the above, there is a Grand Canyon-sized gap in Medicare coverage that impacts a very significant percentage of American senior citizens. This program does not pay for custodial care, which is the type of assistance you would receive in a nursing home or assisted living facility.
Here in the Cincinnati area where we practice law, the median charge for a private room in a nursing home in 2018 was right around $100,000, and costs are expected to rise over the coming years.
Medicaid will pay for nursing home care, and this is why it can be very relevant for folks that are enrolled in the Medicare program.
Medicaid Eligibility Parameters
Since Medicaid is in fact intended for people with very limited resources, there is an income limit of just $2000. This can make it seem as though you could never qualify, but some things that you own do not count, including your home with an equity limit of $585,000. When a healthy spouse is remaining in the home, there is no equity limit at all.
Applicants can retain ownership of wedding rings, engagement rings, heirloom jewelry, personal effects, household items, and one motor vehicle. Unlimited term life insurance is allowed, along with up to $1500 worth of whole life insurance and the same amount set aside for final expenses.
A healthy spouse that will continue to live independently while their spouse enters a nursing home would be entitled to a Community Spouse Resource Allowance (CSRA). This equates to half of the total shared assets that are considered to be countable by the Medicaid program, but there is a limit. This year, the limit is $126,420, and there is a minimum CSRA of $25,284.
Medicaid Spend Down
When it comes to resources that are unprotected, you could give them to loved ones before you apply for Medicaid, but you have to act in light of the five-year look back period.
Your eligibility is delayed if you give away assets within 60 months of the submission of your application for Medicaid coverage. The length of the delay is determined based on the amount of the divestitures and the cost of long-term care in the state of Ohio.
For example, let’s say that the state has determined that the average cost for a year in a nursing home is $90,000. You gave away $180,000 within this five-year window. That amount would have paid for two years of nursing home care, so under these circumstances, your eligibility would be delayed by two years.
Schedule a Consultation!
Our doors are open if you would like to discuss nursing home asset protection with a licensed elder law attorney. You can schedule a consultation right now if you give us a call at 513-721-1513, and there is a contact form on this website that you can use to send us a message.