You are probably aware of the fact that Medicaid is a need-based government health insurance program that is potentially available to people of all ages. Medicare is a separate program that provides health insurance for senior citizens.
If you are going to qualify for Medicare and you retired with resources, you would logically assume that you will never be interested in Medicaid coverage. This makes sense on the surface, but many elders do rely on Medicaid to pay for long-term care.
That’s right, Medicare does not pay for the custodial care that nursing homes provide, and these facilities are very expensive.
To provide clarity, we are going to take a look at the Medicaid eligibility guidelines in this post with an emphasis on the 2022 Medicaid spouse allowances.
Limit on Countable Assets
Broadly speaking, there is a $2000 limit on assets, but there are some things that you probably have in your possession that do not count. The home is not a countable asset, but there is an equity limit of $636,000 in Oklahoma this year.
One motor vehicle, furniture, appliances, and other household items are not looked upon as countable assets. Other non-countable assets include your personal effects, wedding and engagement rings, and heirloom jewelry.
You can have up to $1500 of whole life insurance, and this amount can be saved for final expenses. Unlimited term life insurance is permitted, and prepaid burial plots are exempt.
Allowances for the Healthy Spouse
In many cases, a married person will enter a nursing home while their spouse is still capable of living at home. The Medicaid program refers to the healthy spouse as the “community spouse.”
There is a Medicaid Community Spouse Resource Allowance (CSRA) that gives the independent spouse the ability to keep half of the couple’s assets. However, there is a limit that stands at $137,400 next year. The minimum amount that a spouse can keep even if it is more than half of the assets is $27,480.
The healthy spouse can potentially continue to receive income that is brought in by the spouse that is residing in a nursing home. If there is no community spouse, almost all of the income would be used to defray the nursing home costs.
This benefit is called the Monthly Maintenance Needs Allowance (MMNA). In 2022, the maximum is $3,435.
Medicaid Spend Down
You can divest yourself of countable assets to create a financial profile that will lead to Medicaid eligibility. If you were to fund an irrevocable Medicaid trust, you could continue to accept distributions of income from the trust’s earnings before you apply for Medicaid.
The assets in the trust will not count if you seek Medicaid eligibility, but there is a caveat to this statement. You have to fund the trust at least five years before you submit your application for coverage.
If you violate this rule, a penalty is imposed, and your eligibility is delayed. The length of the penalty would depend on the amount of the divestitures as they compare to the cost of nursing home care in Oklahoma.
For example, the state has determined that the average cost of nursing home care is about $65,000 annually. If you gave away $130,000 within this five-year period, you could have used it to pay for two years of nursing home care. As a result, your eligibility would be delayed 24 months.
Schedule a Consultation Today!
You can protect your legacy from devastating nursing home costs if you take the right steps in advance. If you are ready to take the first one, you can call us at 405-843-6100 to schedule a consultation or Oklahoma City estate planning office, and you can use our contact form to send us a message.
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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