As elder law attorneys, we are often asked why anyone should care about Medicaid when they will qualify for Medicare when they reach the age of 65. This is a logical question, but there is a very good answer, and it comes as an unpleasant surprise to many people.
The United States Department of Health and Human Services maintains a very useful website called longtermcare.gov. There are some interesting statistics on the site, and one of them grabs your attention right away: seven out of every 10 senior citizens will someday need help with their activities of daily living.
Clearly, many elders will eventually require nursing home care. To put this into perspective, the Alzheimer’s Association tells us that 40% of people that are 85 years of age and older have contracted the disease. Once you reach the age of Social Security eligibility, your life expectancy is at least 87 years.
Alzheimer’s alone is enough to make you sit up and take notice, but there are other reasons why people spend the latter portion of their lives in nursing homes.
Since Medicare is a health insurance program that was designed to satisfy the needs of senior citizens, and most elders will need living assistance, you would think that Medicare would cover long term care. Many people would say that it does not make sense, but in fact, Medicare does not pay for the custodial care that you would receive in a nursing home.
Medicaid will pay for long term care, and this is why it is quite relevant for people that will be enrolled in the Medicare program when they are senior citizens.
Medicaid Eligibility Requirements
You are probably aware of the fact that Medicaid is intended for individuals with very limited financial resources. As a result, there is a low asset limit that you must stay within to obtain eligibility. In most parts of the country, it is just $2000, but here in New York, it is $15,450 in 2019.
This sounds like a miniscule number when you are talking about everything that you have accumulated throughout your life, and it is, but there are some things that do not count. If you own a home, its value is not counted toward this $15,450 limit, but the maximum equity is $878,000.
One motor vehicle that is used as a primary source of transportation is exempt for Medicaid eligibility purposes. If you have a wedding ring, an engagement ring, and/or heirloom jewelry, you can retain ownership without impacting eligibility for Medicaid coverage.
Up to $1500 worth of whole life insurance is allowed, and you can have the same amount set aside for burial expenses. Prepaid burial plots are not counted, and you can have unlimited term life insurance.
In many instances, a person that is married will have to enter a nursing home while his or her spouse can continue to live independently. Under these circumstances, the healthy spouse is entitled to certain property rights.
As we mentioned above, a home is not a countable asset, but there is an equity limit. When a healthy spouse is remaining in the place of residence, there is no limit on equity.
When it comes to the assets that are countable, the healthy spouse is allotted a Community Spouse Resource Allowance. This is essentially half of the countable assets that are shared by the couple, but there is a limit that stands at $126,420 during the current calendar year. There is also a $74,820 minimum Community Spouse Resource Allowance.
If a single person is using Medicaid to pay for nursing home care, almost all of the income that is brought in by the recipient must be surrendered to help pay for the care. However, this requirement is waived if a married person is using Medicaid to pay for long-term care.
In cases where there is enough financial need, the healthy spouse would be entitled to a Monthly Maintenance Needs Allowance. This would allow the healthy spouse to continue to receive income that is earmarked for the institutionalized spouse. In New York in 2019, the allowance is $3160.50 per month.
Schedule a Consultation Today!
Now that you know some of the facts about the Medicaid eligibility rules, it is time to take the next step. We would be glad to discuss Medicaid planning strategies with you in person. To schedule a consultation appointment, send us a message or give us a call at 631-265-0599.
Mark S. Eghrari, Estate Planning Attorney
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