As elder law attorneys, we educate people about long-term care and the financial implications that go along with it. Once they understand the reason why action is required, we help our clients implement nursing home asset protection plans. With this in mind, we will provide some important information in this post.
Medicare and Medicaid
To get right to the point, Medicare does not pay for long-term care. Whether it is in your place of residence or a nursing home, Medicare doesn’t cover custodial care. This is a major issue because the majority of American seniors will incur assisted living costs.
Nursing homes are very expensive, and in-home care comes with a hefty price tag as well. There is a solution in the form of Medicaid eligibility. This program does extend to long-term care, but it is a need-based program. As a result, you cannot qualify if you have more than $2,000 in countable assets in your name.
Non-Countable Assets
There are some assets that don’t count toward Medicaid eligibility parameters. Your motor vehicle is one of them, as long as it is used for transportation. Wedding and engagement rings are not counted along with heirloom jewelry.
The program is not concerned about your personal effects and household items, and you can have unlimited term life insurance. Up to $1,500 in whole life insurance is allowed, and you can have the same amount saved for final expenses. If you have a prepaid burial plot, it does not count against you.
Your home is not a countable asset with a $680,000 equity limit in Oklahoma in 2023. However, Medicaid could place a lien on your property if it is in your possession at the time of your death.
Community Spouse Allowances
Now that we have provided the necessary background information, we can address the specific purpose of this post. Let’s say that you are entering a nursing facility, and you want to qualify for Medicaid. Your spouse is still going to be living independently under our hypothetical scenario.
When these circumstances exist, the healthy spouse is referred to as the “community spouse” in Medicaid lingo. They would be entitled to a Medicaid Community Spouse Resource Allowance. This is half of the assets that are countable for Medicaid purposes, but there is a limit.
The limit is adjusted each year to account for inflation. In 2023, the maximum Community Spouse Resource Allowance is $148,620. The minimum in Oklahoma is $29,724.
Income that is brought in by the spouse that is a Medicaid beneficiary must be contributed toward the cost of the care. However, this requirement is not enforced if a healthy spouse needs the income.
The independent spouse would be entitled to a Monthly Maintenance Needs Allowance. Once again, there is a limit, and it stands at $3715.50 this year.
Medicaid Trust
What do you do about the assets that you have that are countable, and is there a way to protect your home from Medicaid estate recovery? You can address these issues if you utilize a Medicaid trust as the centerpiece of your asset protection plan.
Your home and income-producing assets can be conveyed into the trust. At that point, you would no longer own the resources. As a result, if you apply for Medicaid, the principal would not count. Plus your home would be protected if you become a Medicaid beneficiary.
However, there is a caveat to these statements. 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. For this reason, advance planning is the key to the successful execution of the strategy.
Schedule a Consultation Today!
If you are ready to put a nursing home asset protection plan in place, there is no time like the present. You can schedule a consultation at our Tulsa elder law office if you call us at 918-615-2700, and our Oklahoma City location can be reached at 405-843-6100. There is also a contact form on this site you use to send a message to either location.
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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