You may prefer not to dwell on it; however, there is a very good chance you will need to qualify for Medicaid during your retirement years. If that does indeed come to pass, you may find that the combined value of your non-exempt assets is a potential bar to eligibility. Looking ahead, it helps to know what assets are considered disqualifiable assets for Medicaid and which assets are not considered countable resources for the purpose of determining eligibility for Medicaid in Oklahoma.
Why Would I Need Medicaid?
The first question you may ask is “Why would I need Medicaid?” If you have never before relied on Medicaid, you are undoubtedly wondering why you would need to plan for the need to qualify for Medicaid in the future. The need for Medicaid may arise from the need for long-term care (LTC) – nursing home, at-home care, assisted living or skilled care – at some point during your later years. Nationwide, the average cost of a year in LTC was around $100,000 for 2018. Oklahoma residents are fortunate in that the same year of LTC ran them around $65,000 – considerably less than the national average. Nevertheless, the average person cannot afford to cover that cost out of pocket. Although Medicare will likely cover most of your healthcare costs as a senior, it will not pay for LTC, nor will most basic health insurance plans unless you purchased a separate LTC plan. Because Medicaid does cover LTC expenses, over half of all seniors needing LTC turn to Medicaid for help with the cost of that care.
How Is Eligibility for Medicaid Determined?
The good news is that Medicaid will help cover long-term care expenses. But that’s true only if you qualify for Medicaid. Because Medicaid is a needs-based program, an applicant must demonstrate financial need to be approved. To do that, you must have income and “countable resources” below the current threshold. The “countable resources” limit is very low in most states, including Oklahoma. An individual applicant cannot have countable resources worth more than $2,000. If you do have excess assets at the time you apply, your application will be denied and you will have to “spend-down” your assets before applying again. Fortunately, some assets are exempt, meaning they do not count toward your “countable resources,” including:
- Your home, up to an equity limit of $572,000 if you are planning to return or you have a spouse, a child under 21, or a disabled person residing in it. Keep in mind, however, that in Oklahoma, the home loses its exempt status after the nursing home resident has been in the nursing home for a period of one full year. After one year, the state can then make a claim against it for Medicaid costs spent on the owner’s behalf.
- Your automobile with no equity limit.
- A burial fund for an applicant and spouse with a value of $1,500 or less, each. If the money is placed in an irrevocable burial trust then $7,500 is exempt.
- Household furnishings, furniture, clothing, jewelry, and other personal effects.
- Value of life insurance if face value is $1,500 or less. If it exceeds $1,500 in total face amount, then the cash value in these policies is countable.
Do I Need a Medicaid Planning Component in My Estate Plan?
At one time, an applicant was allowed to transfer assets to an adult child or other loved one in anticipation of the need to qualify for Medicaid. Transfers such as those, however, are no longer allowed. Medicaid now uses a five-year “look-back” period that prevents transfers of assets for less than fair market value for the 60 month period prior to an application for Medicaid. A review of your finances will be conducted when you apply for Medicaid and if any such transfers are uncovered, Medicaid will likely impose a waiting period. The length of the waiting period will depend on the value of the assets transferred and the average cost of LTC in your area. During that waiting period, you will be forced to cover the cost of LTC on your own. However, by incorporating Medicaid planning into your comprehensive estate plan ahead of time you can avoid the possibility of incurring a waiting period if you find that you need to qualify for Medicaid down the road.
Contact Oklahoma City Medicaid Planning Lawyers
For additional information, please join us for an upcoming FREE seminar. If you have additional questions about Medicaid planning, contact the experienced Oklahoma City Medicaid planning lawyers at Parman & Easterday by calling 405-843-6100 to schedule your appointment today.