Most people look forward to retirement, and they project expenses they expect to have when they put their careers behind them. This is an imperfect science, and there is a factor that some people completely overlook.
This is not a subject that anyone is especially anxious to think about, but most senior citizens will need paid long-term care. According to the state, the average daily cost for a room in a nursing home in Oklahoma is just under $180 a day, and in-home care is also expensive.
A married couple may accumulate two different piles of nursing home bills late in their lives, so the expenses can be devastating. Medicare is not the answer, because it does not cover custodial care, and this is why this matter should be on your radar.
Medicaid is an alternative federal/state funded health insurance program for people of all ages that have limited resources. It does pay for long-term custodial care, so Medicaid eligibility is the key to keeping assets in your family if you need living assistance.
Medicaid Asset Limit
The Medicaid asset limit is just $2000, and this may sound like a dealbreaker, but everything that you own does not count. Your car or truck and your household items are not counted along with your personal belongings. Wedding rings and engagement rings are not countable assets.
A home is not counted, but there is a $636,000 equity limit in Oklahoma this year. Though you can qualify as a homeowner, Medicaid can put a lien on the property after your death if it is part of your estate at the time of your passing.
If you are married and you will be living independently while your spouse enters a nursing home, you are entitled to some allowances. One of them is the Monthly Maintenance Needs Allowance.
This gives you the ability to continue to accept income that is earmarked for your spouse. The maximum amount that is permissible is $3435 in 2022. There is a minimum allowance in some states, but Oklahoma does not have a minimum.
The healthy spouse can maintain ownership of half of the couple’s assets up to a limit that stands at $137,400 this year. This is formally called the Community Spouse Resource Allowance, and the minimum allowance in our state is $27,480 in 2022.
We touched upon the fact that there is a $636,000 equity limit on home ownership. There is no limit at all if a healthy spouse is going to remain in the home. Plus, it would be protected during the Medicaid estate recovery phase if a healthy spouse is residing in it.
Five-Year Look Back Period
You can transfer assets to an irrevocable trust to create a financial profile that would lead to Medicaid eligibility. If you can transfer your home into the trust, Medicaid would not be able to touch it after your passing, and this is one benefit.
Plus, while you are living, you will be able to accept distributions from the trust’s earnings. The principal will be out of reach, but you can maintain your lifestyle with the income that you receive from the invested assets.
This is a very effective solution, but timing is important. There is a five-year look back period, so you have to fund the trust at least five years before you apply for Medicaid coverage.
Schedule an Oklahoma City Nursing Home Asset Protection Consultation!
You can get ahead of this eventuality to preserve your legacy for the benefit of your loved ones, and it starts with a phone call. We can be reached at 405-843-6100, and you can use our contact form if you would rather send us a message.
- Digital Estate Planning Overview - March 23, 2023
- Five Thoughts About Estate Planning for Blended Families - March 21, 2023
- The Pros and Cons of Long-Term Care Insurance - March 16, 2023