You may not think much about Medicaid if you have resources and health insurance, and this is understandable. Once you reach the age of 65, you will qualify for Medicare. So Medicaid is simply not on your radar in any real sense.
However, when you are developing a plan for aging, you will find that Medicaid may be quite relevant when you are an elder. Why is this the case? This program will pay for long-term care, and Medicare does not cover custodial care.
Don’t Be Overconfident
Of course, you may be able to handle all of your own day-to-day needs yourself. You might need only a little help from family members. Hopefully, this will be true. It is, however, impossible to envision how you will feel when you are in your 80s.
The life expectancy for someone that is old enough to collect Social Security is into the mid-80s, so you should take the possibility quite seriously. According to the United States Department of Health and Human Services, 52 percent of Americans will need paid long-term care eventually.
Medicaid Eligibility Parameters
Now that you know why Medicaid can be important, we can provide some facts and figures. Since this program is intended for people with financial need, there is a $2,000 limit on countable assets. Your home is not counted, but there is a Medicaid estate recovery mandate.
If you gain eligibility as a homeowner, the program will put a lien on your home after your death unless certain extenuating circumstances exist. It would be protected if a surviving spouse and/or dependent children are still living in the home.
There is also a caregiver child exemption. If you have been receiving care from one of your children that is living in the home for at least two years before you apply for Medicaid, you can transfer ownership to the child. The property would not be subject to Medicaid estate recovery.
Healthy Spouse Allowances
When a married person applies for Medicaid to pay for long-term care, the healthy spouse can keep half of the assets that are countable. This is called the Community Spouse Resource Allowance, but there is a limit that stands at $148,620 in Oklahoma in 2023. There is also a minimum allowance of $29,724 this year.
All income that is due to the institutionalized spouse is used to offset the cost of the care that is being received with the exception of a $75 a month personal needs allowance. This is the way it works for a single person, but it is different for a married person.
If a healthy spouse can prove that they need the income to maintain an acceptable standard of living as it is defined by the state, they can accept all or part of the income. This is called the Monthly Maintenance Needs Allowance, and the maximum this year is $3,716. There is a minimum in some states, but there is no minimum in Oklahoma.
A Medicaid trust can provide a pathway to future eligibility. You can divest yourself of assets in an effort to qualify for Medicaid, but you are ineligible for five years after you transfer assets out of your name.
If you fund an irrevocable trust with income-producing assets, you would be able to accept distributions as long as you are living independently. This is key for people that rely on the income that is generated by their savings.
With the Medicaid estate recovery mandate in mind, you can transfer your home into the trust as well. This would not impact your ability to live in the home rent-free as usual. After five years have passed, the assets in the trust will not count if you apply for Medicaid.
Schedule a Consultation Today!
If you take the right steps in advance, you can enjoy your retirement years in comfort. You’ll know that you will be able to qualify for Medicaid if necessary. Ultimately, your plan will culminate in the effective passing of your legacy.
You can schedule a consultation at our estate planning office in Oklahoma City if you call us at 405-843-6100. We also have an office in Tulsa, and you can reach that location at 918-615-2700. If you would like to send us a message, fill out our contact form. We will be back in touch with you ASAP.
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