Plus, since Medicaid is only available to people that are financially needy, folks that retire with some resources wouldn’t qualify anyway.
All of this make sense on the surface. However, there is a compelling reason why a significant percent of elders can benefit from Medicaid coverage.
The United States Department of Health and Human Services maintains a very useful website called LongTermCare.gov. There are a lot of eye-opening statistics on the site, and one of them gets your attention right away.
Seven out of every 10 people that are turning 65 today will eventually need some form of help with their activities of daily living. Right around 35 percent of these folks will ultimately reside in nursing homes.
Medicare covers some people that are not senior citizens, but for the most part, it is designed to meet the health care needs of elder Americans. Since most seniors will need living assistance, you would assume that Medicare would cover custodial care.
It is hard to come up with an argument that would justify this gap in the coverage, but in fact, Medicare does not pay for long-term care. Medicaid will pick up the tab, and that is why it should be on your radar.
Medicaid Estate Recovery
Now that we have explained why elder law attorneys help people qualify for Medicaid, we can get to the specific point of this post. Since Medicaid is a need-based program, there is a very low asset limit. In the vast majority of other states, it is $2000, but in New York, the limit is $15,750 in 2020.
Some things do not count, including your home with an equity limit of $893,000 this year. There are other assets that don’t count, but their value is relatively minimal. Plus, the healthy spouse that can live independently is entitled to keep half of the shared countable assets up to a certain limit.
These details are very important, and we will look at them in another post, but in this one, we are focusing on the matter of estate recovery.
The program is required to seek reimbursement from your estate if Medicaid paid your nursing home expenses. Because of the asset limits, the home is usually the only thing of great value that they could attach.
If a healthy spouse is still living in the home, it would be protected. Otherwise, if you are in direct possession of the home at the time of your death, the home would be in play during Medicaid recovery efforts.
There is one exception to this rule in the form of the child caregiver exemption.
You have to complete all gift giving at least five years before you apply for Medicaid. If you violate this rule, your application would be denied.
However, if an adult child has been living with you in your home providing you with a level of care that has enabled you to stay out of a nursing home, the rule is waived. You would be able to give the home to your child without violating the five-year look back period.
Medicaid would not be able to go after the home after your death, so this is very useful provision.
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We are here to help if you would like to discuss nursing home asset protection with a licensed elder law attorney. You can send us a message to request a consultation appointment, and we can be reached by phone at 631-265-0599.