Many half-truths circulate about nursing home asset protection that can cause misunderstandings. We will clear up one of them here. First, we need to provide you with some background information about Medicaid and long-term care.
You qualify for Medicare when you reach the age of 65 if you worked and paid taxes for at least 10 years. Even if you did not meet this work requirement, you could become eligible based on your spouse’s record if you are married.
Medicare provides a solid health insurance underpinning, but there is one enormous hole in the coverage. Medicare will not pay for custodial care in a nursing home, or for in-home custodial care provided by a professional caregiver.
Nursing homes are very expensive, and the same can be said for assisted living communities and in-home health aides. Most people simply are not able to pay these expenses out of pocket comfortably.
So what is Medicaid? Medicaid pays for long-term care in certain instances. Since it is a needs-based program, there are income and asset limits. Elder law attorneys help people position their assets with future Medicaid eligibility in mind.
The limit on countable assets is $2000. You can still qualify if you own your own home, but there is an equity limit of $595,000 in Oklahoma and Kansas at this time. And after 12 months, the home is no longer a protected asset and the state can compel its sale.
This equity limit does not apply when a Medicaid applicant is married and the spouse will remain in the home, but if the spouse vacates the home, the protection is lost.
Other non-countable assets include wedding and engagement rings and heirloom jewelry, one motor vehicle, the items you have around the house, and your personal belongings.
Medicaid Estate Recovery
Now that we have provided the necessary background information, we can get to the point of this post. Medicaid is required to seek reimbursement from the estates of people that were using the benefit to pay for long-term care.
As we have explained, you cannot qualify if you have significant assets with the exception of your home. For this reason, a home would typically be the only piece of property that can be in play if you pass away and the States initiates recovery efforts.
If you pass away while owning a piece of residential property, Medicaid will put a lien on the home. This being said, there are ways to transfer ownership of the property to a loved one before you apply for Medicaid to avoid this fate.
You must act in advance if you make gifts, because the divestitures must be completed at least five years before you apply for coverage.
There are some exceptions to this “five-year look back rule.” For example, if an adult child has been acting as your caregiver in your home for at least two years, you can transfer the home to the child, but it must be done properly to avoid issues later. The look back would not apply, and the home would be protected after your passing.
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This is not a pleasant subject for discussion, but a difficult situation can become much worse if your legacy goes down the drain during your elder years. Fortunately, you can preserve your resources for the benefit of your loved ones if you take the right steps in advance.
One option would be the creation of a Medicaid trust. This is the right choice for many families. We can meet with you, gain an understanding of your situation, explain your options, and help you craft an ideal plan should you decide to move forward.
You can schedule an appointment in Oklahoma City by calling 405-843-6100, or in Overland Park, Kansas by calling 913-385-9400. You can also use our contact form if you would like to send us a message.