Our Clinton Township Medicaid planning attorneys help clients prepare for potential long-term care costs. The majority of senior citizens will eventually need help with their activities of daily living, and Medicare does not pay for long-term care or in-home assistance. This is a major problem, because nursing homes and assisted living communities are extremely expensive, and home health aides are also costly. Fortunately, there is a solution in the form of the Medicaid program. This government health insurance does pay for long-term custodial care, but it takes careful planning to gain eligibility. In this blog post, we will look at three things that you should know about the process of Medicaid planning.
Since Medicaid is intended for people with a significant level of financial need, there is an asset limit. At the time of this writing in 2018, the limit on assets is just $2000. That’s the bad news, but the good news is that there are a number of things that you may own that are not considered to be countable assets for Medicaid eligibility purposes.
If you own a home, it would not be counted, but there is an equity limit. This figure is adjusted annually to account for inflation, but right now, in the state of Michigan where we practice law, it is $572,000. One vehicle that is used as a primary form of transportation is not a countable asset. You are allowed to maintain possession of a burial plot and up to $1500 to cover final expenses. Unlimited term life insurance is allowed, and you can have $1500 or less of whole life insurance coverage.
Household belongings are not counted when Medicaid is tallying your assets to determine your eligibility status. Personal effects are not countable assets, and if you have a wedding ring, an engagement ring, or heirloom jewelry, you can retain ownership and still qualify for Medicaid coverage to pay for long-term care.
In many instances, an individual that is married will require long-term care while their spouse is still capable of independent living. Under these circumstances, in Medicaid parlance, the healthy spouse is called the community spouse. The community spouse is entitled to certain property rights when his or her spouse is applying for Medicaid.
As we have mentioned above, the home is exempt, but there is an equity limit. When a married couple jointly owns a home, there is no equity limit at all if the healthy spouse is remaining in the place of residence. There is also a community spouse resource allowance that you should be aware of if you are planning ahead with Medicaid eligibility in mind. This allows the healthy spouse to keep half of the shared assets that are considered to be countable under Medicaid regulations. However, there is a limit that stands at $123,600 for the rest of this calendar year.
In addition to this maximum limit, there is also a minimum community spouse resource allowance of $24,720. To explain the minimum by way of example, let’s say that a couple has $36,000 in shared countable assets. Half of this would be $18,000. However, because of this minimum community spouse resource allowance, the healthy spouse would be allowed to keep $24,720.
Under Medicaid rules, the person that is entering a long-term care facility must contribute most of his or her income to defray the cost of the care that is being received. However, there is an exception if the healthy spouse is relying on this income to maintain a reasonable standard of living. The independent spouse is entitled to a Monthly Maintenance Needs Allowance that gives the healthy spouse the right to continue to receive all or some of this income. In Michigan in 2018, the maximum Medicaid Monthly Maintenance Needs Allowance is $3090 per month, and the minimum is $2030 a month.
Medicaid Look-Back Period
When it comes to the resources that are countable, it would be logical to consider giving assets to your loved ones, and this is what people typically do. This being stated, you have to plan ahead very carefully, because there is a five-year look back period. If you give away assets within 60 months of submitting your application for Medicaid coverage, you will be denied, and you will be penalized. The length of the penalty will depend upon the amount of the divestitures.
Attend a Free Seminar!
If you would like to learn more about Clinton Township Medicaid planning and other important subjects, attend one of our upcoming seminars. They are free, you can visit this page to check out the schedule and obtain registration information.