There is a very significant gap when it comes to Medicare coverage. Most seniors will qualify for Medicare when they reach the age of 65, but Medicare will not pay for long-term care. This is the type of care that you would receive if you eventually need help with your activities of daily living.
Long-term care is looked upon as custodial care rather than medical or convalescent care, so Medicare will not cover these expenses.
What is the solution? For many people, the long-term care solution is Medicaid. In fact, most of the long-term care that seniors are receiving in the United States is being paid for by the Medicaid program.
Medicaid is a program that is only available to people who can demonstrate significant financial need. There are income and asset limits that you must stay within to qualify for Medicaid.
In most states, the asset limit for a single individual is just $2000. This may sound like a miniscule amount of money, but everything that you own is not counted.
You can retain ownership of your home and still qualify for Medicaid, but there is an upper equity limit. Medicaid is a jointly run federal/state government program, and each state has some leeway with regard to the way that the program is administered. In New York, the asset limit is $814,000 in 2014. In some states it is as low as $543,000.
When you look at these figures, you should be aware of the fact that they are typically adjusted upward periodically to account for inflation.
There are some other things that are not counted when Medicaid is determining your eligibility status. One vehicle that is used for transportation is not counted, and your wedding rings, engagement rings, and heirloom jewelry would not count.
You may retain ownership of a life insurance policy valued at up to $1500, and you can have the same amount put away for burial or cremation expenses.
Your personal effects and household goods would not be counted by Medicaid evaluators.
If you are married and your spouse is in need of long-term care, you could keep half of the shared the assets up to a limit of $117,240 in 2014. When it comes to home ownership, there is no upper equity limit at all if a healthy spouse is remaining in the home.
Free Special Report on Medicaid Planning
Medicaid coverage is very important to a significant percentage of seniors, because long-term care is extremely expensive. In the greater New York City area, the average cost for a year in a private room in a nursing home exceeds $100,000.
If you would like to learn more about Medicaid planning, our firm can help. We have prepared a free special report that takes in-depth look at Medicaid planning strategies.
To obtain your copy of the report, click this link: Long Island Medicaid Planning Report.