When you think about health insurance for senior citizens, Medicare is probably going to come to mind first. You pay into the Medicare program when you are working and paying taxes. You can accumulate as many as 4 retirement credits per year. Once you have 40 credits, you will qualify for Medicare when you reach the age of 65.
Medicaid is a need-based health insurance program for people of all ages. Most seniors are not going to need Medicaid coverage when they reach the age of 65, because they will qualify for Medicare. However, Medicaid becomes quite relevant for many elders.
Long-Term Care Costs
Medicaid is important for many elders because Medicare will not pay for assistance with your activities of daily living. Most of the senior citizens in the United States will someday need help with their day-to-day needs, so this is a very noticeable gap.
While Medicaid will pay for long-term care, you must stay within the asset and income limits if you want to qualify. In most states there is a $2,000 limit on countable assets. However, when you are evaluating your position, you should understand the difference between countable and non-countable assets.
The vehicle that you typically use for transportation would not be countable, and your home is not considered to be a countable asset. There is, however, an upper equity limit that stands at $543,000 in Oklahoma and Kansas in 2014. Each state has the ability to raise the upper equity limit to as much as $814,000 in 2014, but these two states have opted for the $543,000 upper equity limit.
The Medicaid program will not count the value of your wedding ring, your engagement ring, and your heirloom jewelry. Your personal effects and household items would not be counted, and you can retain ownership of a life insurance policy with a value of $1,500. You could also have $1,500 set aside for burial or cremation expenses.
Medicaid Spend Down
People typically qualify for Medicaid through a process called a Medicaid spend down. The term is pretty much self-explanatory: you spend or give away assets so that you can meet the Medicaid eligibility requirements.
There is a five-year look back period to contend with when you are engaging in a spend down. You must complete your divestitures at least five years prior to submitting your application. If you give away assets within five years of applying, your eligibility will be delayed.
Special Report on Medicaid Planning
In this post we have provided a bit of basic information. If you would like to learn more about Medicaid planning, download our special report on the subject.
This report will answer all of your questions and provide you with a solid foundation of information. To obtain access, click the following link: Free Medicaid Planning Report.
Parman & Easterday