Long Island Elder Law & Estate Planning

medicaid planningThe concept of “Medicaid planning” can see seem a bit strange at first until you understand the context.

Why would you want to implement a plan to qualify for a benefit that is only available to people with very limited resources? After all, the goal of life is to steer clear of difficult financial circumstances.

This is a logical line of thinking on the surface, but there is a very good reason why many people with resources seek Medicaid eligibility late in their lives. Medicare does not pay for long-term care, and most seniors will need it some point in time.

Medicaid does cover nursing home costs, and this is why it should be on your radar even if you are a Medicare-eligible senior with resources. In this post, we will share five important facts you should understand about Medicaid planning.

There is a low asset limit.

Medicaid is a need-based program, so there is a low asset limit. In just about every other state the limit is $2000, but here in New York where we practice, the limit is $15,900 in 2021.

Some assets are not considered to be countable.

Everything that you own does not count for Medicaid eligibility purposes. The most valuable non-countable asset is your home, but there is a $906,000 equity limit this year.

One motor vehicle is not counted, and wedding rings, engagement rings, and heirloom jewelry are exempt. Your furniture and other household items are not a factor, and Medicaid does not care about your personal belongings.

You can have $1500 saved for final expenses and the same amount of whole life insurance. Unlimited term life insurance is permitted, and prepaid burial plots are exempt.

There are allowances for the healthy spouse.

If you can continue to live independently when your spouse is entering a nursing home, you are entitled to a Community Spouse Resource Allowance. This is half of your countable assets up to a limit that stands at $130,380 this year.

There is also a minimum allowance of $74,820. A healthy spouse can keep this much even if it is more than half of the countable assets.

The income that is brought in by the spouse that is using Medicaid to pay for long-term care must go toward the cost of the care that is being received with the exception of a $50 monthly personal needs allowance.

However, if a healthy spouse is relying on the income, they can continue to receive it in the form of a Monthly Maintenance Needs Allowance. The monthly allowance in our state this year is $3259.50.

Medicaid can place a lien on your home.

The fact that you can qualify for Medicaid as a homeowner is encouraging on the one hand, but the program would be required to seek reimbursement from your estate after your death. If your home is in your personal possession at that time, they could place a lien on the property.

You can fund an irrevocable trust to qualify for Medicaid.

The last thing you should know about the program is the fact that you can implement an effective nursing home asset protection strategy. It will revolve around the utilization of an irrevocable, income only Medicaid trust.

You convey your home and other assets into the trust, and you could continue to live in the home as usual. While you are living independently, you would be able to receive income that that is generated by the trust’s earnings but you would have no access to the principal.

After your death, the assets would not count as long as you fund the trust at least five years before you apply for Medicaid coverage.

Schedule a Consultation Today!

We are here to help if you are ready to work with a Smithtown, New York elder law attorney to develop a nursing home asset protection plan. You can send us a message to set up a consultation appointment, and we can be reached by phone at 631-265-0599.

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About Eghrari Wealth Training Law Firm

Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill.