Medicaid is a government program that may be quite relevant to you when you are a senior citizen, even if you will qualify for Medicare.
Seven out of every 10 seniors will need some help with their activities of daily living, and 52 percent will require paid care at some point. These are some telling statistics, and Medicare does not cover the custodial care that nursing homes and paid caregivers provide.
According to the state of Oklahoma, the average cost for nursing home care is about $180 a day. The average length of stay is one year, and if you do the math, that equates to $65,700.
If you are married, you and your spouse may eventually face two different sets of nursing home bills, so the numbers can get rather large. Medicaid will pay for long-term care, and this is why you should understand the program parameters.
2021 Oklahoma Medicaid Asset Limit
To qualify for Medicaid, you can only have assets in your name that do not exceed $2,000. However, there are a few assets that are exempt from this limitation. For example, there is a $603,000 equity limit with your home in 2021. That makes the home exempt for many people.
In addition, one motor vehicle is not counted. Wedding rings, engagement rings, and heirloom jewelry would also fit into this category. Your personal belongings are not countable assets, and your furniture, appliances, and other household items are not considered by Medicaid.
The program will allow unlimited term life insurance. The face value of whole life policies cannot exceed $1,500. If the face value exceeds $1,500, the cash value is a countable asset. You can have $1,500 saved for final expenses, and if you have a prepaid burial plot, it is not a problem.
Medicaid Estate Recovery
Before you jump to any conclusions about homeownership, you should understand the Medicaid estate recovery mandate. If you gain eligibility as a homeowner, and the home was titled in your name, thereby requiring a probate, Medicaid can place a lien on the property and will likely take most if not all of the proceeds required to repay the cost of care they provided. Using a trust to own the home, a beneficiary deed, or titling the home in joint tenancy with rights of survivorship will avoid probate and protect the value of this exempt asset in Oklahoma.
There is also an exception to the recovery threat for child caregivers. If one of your children has been helping you live independently and living with you to provide care, you can give the home to the child.
The home is protected during the Medicaid recovery phase as long as the child was living in the home providing care for at least two years.
Spousal Allowances
When a healthy spouse remains in the home while their spouse is entering a long-term care facility, they can keep half of the countable assets up to a maximum amount. This is called the Community Spouse Resource Allowance. In 2021, the CSRA allowance is $130,308.
At the other end of the spectrum, there is also a minimum allowance that stands at $26,076 this year. The at-home spouse can keep this much even if it is more than half the assets.
Aside from a $75 a month personal needs allowance, income that is brought in by the beneficiary must be contributed toward the cost of the care that is being received. This requirement is waived if a healthy spouse needs the income to maintain a reasonable standard of living.
They can receive a Monthly Maintenance Needs Allowance, but there is a limit to the amount that they can continue to receive. During the current calendar year, the maximum allowance is $3,260 per month.
Medicaid Trusts and the Five-Year Look-Back Period
You can convey assets into an irrevocable Medicaid trust to develop a financial profile that will lead to Medicaid eligibility. The principal is no longer accessible to you, but you could receive income from the trust’s earnings until you apply for Medicaid.
This strategy requires precise timing because there is a five-year look-back period. Divestitures must be completed at least five years before you apply for Medicaid coverage.
Schedule a Nursing Home Asset Protection Consultation!
Our doors are open if you are ready to work with an Oklahoma City elder law attorney to develop a nursing home asset protection strategy. You can send us a message to request a consultation appointment, and we can be reached by phone at 405-843-6100.
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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