When you hear the term “Medicaid planning” without looking into it at all, it can seem like a rather inane idea. In a perfect world, no one wants to qualify for Medicaid, because you have to be in a bad financial situation to gain eligibility.
This makes sense on the surface, but there is a very good reason why senior citizens that were never financially needy seek Medicaid eligibility.
Medicare and Long-Term Care
The United States Department of Health and Human Services tells us that 52 percent of seniors will need paid long-term care eventually. Over one third of elders will ultimately reside in nursing homes, and the average length of stay is one year.
This is the average, but 13 percent of people that need paid care require the assistance for more than five years. When you digest the statistics, you can see that there is a good chance that long-term care is in your future.
If you have paid FICA or self-employment taxes for at least 10 years, you will qualify for Medicare when you are 65. Since so many seniors need long-term care, and Medicare is a health insurance program for seniors, you would assume that it would be covered.
A lot of people would say that it is not fair, but in fact, Medicare does not pay for the custodial care that nursing homes provide, and it doesn’t cover in-home care.
Medicaid Eligibility Parameters
Medicaid does pay for long-term care, and this is why it is relevant seniors that qualify for Medicare. Since it is a need-based program, there is a $2000 asset limit.
That’s the bad news, but the good news is that all of your assets are not countable, and there are allowances for a healthy spouse that is living independently.
When it comes to the spouse allowances, one of them is the Community Spouse Resource Allowance. This equates to half of the shared countable assets up to a limit that stands at $130,380 this year.
There is also a minimum allowance of $26,076. The healthy spouse can keep no less than this amount, even if it is more than half of the shared countable assets.
The income that is brought in by a Medicaid beneficiary must go for 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 are entitled to a Monthly Maintenance Needs Allowance (MMNA), and in Michigan in 2021, the maximum MMNA is $3259.50, and the minimum is $2155.
Getting back to the non-countable assets, your home is not counted, but there is an equity limit of $603,000 this year. There is no equity limit at all if a healthy spouse is remaining in the home.
However, Medicaid is required to seek reimbursement from the estates of beneficiaries after they die. If you qualify for Medicaid while you are in direct possession of a home, a lien could be placed on the property after your death.
One vehicle, wedding rings, engagement rings, and heirloom jewelry are not counted, and you can maintain possession of personal effects and household items. Prepaid burial plots are exempt along with unlimited term life insurance.
You can have as much $1500 saved for burial or cremation expenses, and you can have the same amount of whole life insurance.
Irrevocable Medicaid Trust
Countable assets can be conveyed into an irrevocable Medicaid trust, but you cannot fund the trust today and qualify for Medicaid next week. There is a five-year look back period, so divestitures must be completed at least five years before you apply for Medicaid coverage.
Schedule a Consultation Today!
When you take the right steps at the right times, you can live in comfort during your golden years and develop a financial profile that will lead to Medicaid eligibility.
If you are ready to work with a Troy, Michigan elder law attorney to put a nursing home asset protection plan in place, we are here to help. You can send us a message to request a consultation appointment, and we can be reached by phone at 248-251-1001.