The United States Department of Health and Human Services tells us that 70 percent of people who are turning 65 on this day will eventually require assistance with their day-to-day needs. If you were to reside in a nursing home or assisted living community, you are looking at some significant expenses late in your life.
Nationally the average annual cost for a private room in a nursing home exceeds $90,000. If you were to enter a nursing home in 20 or 30 years, the figure is probably going to be significantly higher than it is right now.
As you are working and paying taxes throughout your life you are paying into the Medicare program. Medicare provides health insurance for those who are eligible once they reach the age of 65. Unfortunately, Medicare will not pay for long-term care.
Most of the long-term care that is received in the United States is paid for by the Medicaid program. It is a need-based program. You must stay within strict asset and income limits to qualify.
People who were never poor often qualify for Medicaid late in their lives through a process called a Medicaid spend down. You spend or give away assets in advance of applying for the program so that you can meet the eligibility requirements.
Healthy or Community Spouse
Let’s say that you are married and you need long-term care, but your spouse does not. Under Medicaid regulations, the healthy or community spouse is entitled to something called a monthly maintenance needs allowance.
If you enter a long-term care facility and you have income coming in, you are required to contribute a significant percentage of the income toward the cost of the care. However, if your spouse is relying on some or all of your income to maintain his or her standard of living, he or she can draw a monthly maintenance needs allowance. Income that would have otherwise gone toward the long-term care costs can go to your spouse instead.
Medicaid is a jointly run federal/state government program. Each state has some latitude with regard to the exact parameters, but there are federally mandated guidelines. The maximum monthly maintenance needs allowance that a state may allow in 2014 is $2,931. The minimum amount that is allowable is $1,938.75 in every state except Alaska and Hawaii through the end of June of this year.
Free Report on Medicaid Planning
Medicaid rules can be complicated, and there is a great deal to take into consideration if you want to implement a Medicaid plan. Our firm has prepared a free special report that examines Medicaid planning in-depth. To access your copy of the report, click this link and follow the simple instructions: Set the Stage for Medicaid Eligibility.
Parman & Easterday