You will become eligible for Medicare when you reach the age of 65 if you have worked and paid taxes for at least 10 years. Medicaid on the other hand is a government health insurance program that is available to people with significant financial need.
The United States Department of Health and Human Services tells us that seven out of every 10 seniors will eventually need living assistance. About 35 percent of them will eventually reside in nursing homes.
Since Medicare was established to provide health insurance for seniors for the most part, and most elders will need long-term care, you would assume Medicare will cover it. In fact, Medicare will not pay for a stay in a nursing home, and it does not cover in-home custodial care.
Medicaid does pay for this type of assistance. Since over one-third of us will experience a nursing home stay, and because the cost of long-term health care is rapidly rising, understanding Medicaid programs and how to qualify is relevant to anyone over 60.
The guidelines can vary a bit depending on the state that you live in, but they are consistent for the most part. We have offices in Kansas and Oklahoma, and the rules in these states are almost identical.
To qualify for Medicaid, one cannot have assets that exceed $2,000. That’s the bad news. The good news is that some assets are exempt and will not be countable against the $2,000 limit. For example, if you own a home, it is not a countable asset for Medicaid eligibility purposes, unless the equity value (after subtracting debt) exceeds $595,000.
One vehicle that is used as a primary source of transportation is not counted, and your household items and personal belongings are exempt. Wedding rings, engagement rings, and heirloom jewelry are permissible, along with prepaid burial plots.
In some states, an applicant can be approved with unlimited term life insurance and as much as $1,500 in cash value in a whole life insurance policy. The same amount of money can be set aside for final expenses. States have different rules regarding the exemption on life insurance.
Rights of the Healthy Spouse
In many cases, a married person will enter a nursing home when their spouse is still capable of independent living. Under these circumstances, the healthy spouse would be entitled to a Community Spouse Resource Allowance (“CRSA”).
The CRSA available to the at-home spouse is equal to one-half of the shared assets that are considered to be countable, but there is a limit. These limits are updated each year to account for inflation, but right now, it is $128,640. The minimum is $25,728.
When a single person attempts to qualify for Medicaid to pay for long-term care, they have to contribute almost all of their income toward the cost of the care. This requirement is waived when a healthy spouse needs the money to maintain a minimal standard of living.
In that case, the healthy spouse would be entitled to a Maximum Monthly Maintenance Needs Allowance (“MMMNA”). During the current calendar year, the MMMNA allowance is $3,216 per month.
Five-Year Look Back Period
After you digest all this information, you may come to a logical conclusion. If you find out that you need to move into a nursing home, you could give assets to your loved ones to rid yourself of countable resources. You would essentially be giving them their inheritances in advance.
This may seem appealing on the surface but there are major stumbling blocks. Congress has established a five-year look-back period. All gift-giving must be completed at least five years before you submit your application for Medicaid coverage.
A much better pre-planning option is to utilize a Medicaid Asset Protection Trust.
A penalty is imposed if you violate this rule. To explain the penalty through the use of a simple example, if you gave away enough to pay for one year of care within this five year period, your eligibility would be delayed by one year.
We Are Here to Help!
As you can see, it takes careful, informed advance planning to be able to qualify for Medicaid at the right time. If you are ready to get ahead of this situation and learn more about qualifying for Medicaid in general and the Medicaid Asset Protection Trust in particular, our doors are open.
You can send us a message to request a consultation appointment, and we can be reached by phone in Oklahoma City at 405-843-6100. We also have an office in Overland Park, Kansas, and the number there is 913-385-9400.
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