Before we focus on the subject that serves as the title of this post, we will share some background information to provide context.
Most senior citizens will require living assistance eventually, and the United States Department of Health and Human Services tells us that 35 percent of elders will live in nursing homes.
The state of Oklahoma has determined that the average cost for a year in a nursing home statewide is about $65,000-$80,000. Here in Oklahoma City, the median charge for a private room in 2019 has been $89,425 according to Genworth Financial.
That’s a lot of money to come up with late in your life, and Medicare does not pay for nursing home care. The Medicaid program may cover these expenses, and this is why it is relevant to people who will qualify for Medicare when they reach the age of eligibility.
Medicaid is intended for people with very limited monetary resources. You cannot qualify if you have more than $2000 in your own name, but there are some types of property that are not counted.
Your home fits into this category for twelve months after entering a nursing home, and you can retain ownership of one vehicle. Heirloom jewelry, wedding rings, and engagement rings are exempt, along with household items and personal belongings.
Prepaid burial plots are not counted, and you can have $1500 or less set aside for final expenses. The same amount of whole life insurance is allowed, and you can have unlimited term life.
Home Equity Limit
The home is not considered a countable asset, but there is an equity limit. In 2020, the limit has been $595,000, and it is going up to $603,000 next year. We should point out that there is no limit at all if a healthy spouse is remaining in the home.
Medicaid Community Spouse Allowances
In Medicaid parlance, a healthy spouse who can continue to live independently is referred to as the “community spouse.” The independent spouse is entitled to a Community Spouse Resource Allowance, which is half of the shared countable assets up to a certain limit.
The limit is one-half of countable assets up to $128,640 for 2020, and will rise to $130,380 in 2021.
A single person who is using Medicaid to pay for long-term care is entitled to retain $75 per month as a personal needs allowance. All other income must be contributed toward the cost of the care for which Medicaid is paying.
This dynamic is different when a healthy spouse is relying on the income. A community spouse qualifies for a Monthly Maintenance Needs Allowance which may draw from the spouse’s income if the community spouse’s income is too low.
The maximum Monthly Maintenance Needs Allowance is $3216 for 2020, and will increase to $3259.50 in 2021.
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Our attorneys hold webinars on an ongoing basis, and you will come away with a much more thorough understanding of the estate planning process if you attend one of these sessions. There is no charge, but we ask that you register in advance so we can reserve your spot.
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If you have learned enough to feel it is time for you to work with an attorney to put your estate plan in place, we are here to help. You can schedule a consultation in Oklahoma City by calling 405-843-6100, and in Overland Park by calling 913-385-9400.
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