You should be concerned about potential long-term care costs when you are evaluating your future expenses. The majority of elders in the United States will need some type of living assistance, and 35 percent of American seniors will eventually require nursing home care.
Since Medicare exists in large part as a form of health insurance for seniors, it is logical to assume that it would cover long-term care. In fact, Medicare does not pay for the custodial care that many seniors will need late in their lives.
The widely embraced solution is Medicaid. This jointly administered federal/state government program will cover long-term care if you can gain eligibility. Since it is a need-based benefit, you cannot qualify if you have more than $2000 in countable assets in your name.
The qualifier “countable” is quite relevant, because your home is not considered to be a countable asset. However, there is an equity limit that stands at $603,000 in Michigan in 2021.
If a healthy spouse is remaining in the home while their spouse is in a long-term care facility, there is no equity limit at all.
Other Non-Countable Assets
There are some other assets that are not counted for Medicaid eligibility purposes. Your wedding ring, engagement ring, and heirloom jewelry are not counted, and you can have one motor vehicle.
Personal items and household items are not counted, and prepaid burial plots are exempt. You can have unlimited term life insurance, $1500 of whole life insurance, and the same amount saved for final expenses.
A healthy spouse that is remaining at home while their spouse is residing in a nursing facility is entitled to a Community Spouse Resource Allowance. This is half of the shared assets, but there is a $130,380 limit in 2021.
There is also a minimum amount that a spouse can retain even if it is more than half of the assets. During the current calendar year, the minimum allowance is $26,076.
Income that is brought in by the Medicaid recipient must go toward the costs that are being incurred unless a healthy spouse is relying on the income. Under those circumstances, they can keep all or some of the income in the form of a Monthly Maintenance Needs Allowance.
There is a maximum limit of $3259.50 a month, and the minimum monthly allowance is $2155 a month.
Five-Year Look Back Period
You can convey countable assets into an irrevocable Medicaid trust to move them out of your name in a legal sense, and you could give direct gifts to your loved ones.
This takes careful planning, because you cannot find out that you need long-term care today, fund the trust tomorrow, and gain eligibility next week.
There is a five-year look back period, so all divestitures must be completed at least five years before you submit your application for Medicaid coverage.
Medicaid Estate Recovery
You may breathe a sigh relief when you find out that you can potentially qualify for Medicaid as a homeowner, but there is an added dimension that will dampen the optimism.
The program is required to seek reimbursement from the estates of deceased beneficiaries. Medicaid would put a lien on your home if it is in your possession at the time of your passing, but there is an exception to the rule
Let’s say that your daughter moved in with you to provide a level of care that has allowed you to stay out of a nursing home. After 26 months, this is no longer an option, and you have to move into a nursing home.
At that point, you could give the home to the child, and it would be protected during the Medicaid estate recovery phase. The 26 month example is key, because this exemption kicks in after a child has been providing care for at least two years.
Schedule a Consultation Today!
If you are ready to work with a Troy, Michigan elder law attorney to develop a plan for aging, we are here to help. We can gain an understanding of your situation, provide recommendations, and help you create a plan that provides you with total peace of mind.
You can set the wheels in motion if you call us at 248-251-1001, you can use our contact form if you would prefer to send us a message.