Every year, government agencies that provide benefits for seniors update some of their limits to account for the impact of inflation. This certainly applies to Medicaid, and we will look at the 2022 spousal impoverishment standards in this post.
Why Is Medicaid Relevant?
Before we focus on the provisions that are made for a healthy spouse, we should provide context. Nearly all seniors will qualify for Medicare, and the coverage can be augmented by Medigap insurance.
This will cover your basic bases, but there is another element that many people are not aware of until it is too late. Medicare will not pay for long-term care, and most seniors will need custodial care at some point in their lives.
You are looking at over $150,000 for a year in a Manhattan nursing home, and 13 percent of people that need paid living assistance receive the care for more than five years. Married people may see these numbers doubled, so the numbers can get very large.
Medicaid does pay for long-term custodial care, and this is why it should be on your radar even if you are going to qualify for Medicare.
Since Medicaid is for people with sparse resources, there is a $16,800 asset limit in New York in 2022. This seems like a paltry sum, but it is actually $2000 in almost every other state, so we get somewhat of a break here in the Empire State.
This figure is for countable assets, but one motor vehicle and the things that you have around your house that you cannot sell for a significant amount of money are not counted. Your home is another non-countable asset, but that is not as significant as it may appear to be on the surface.
There is a Medicaid estate recovery requirement. If you are a Medicaid beneficiary and you own a home at the time of your death, they would place a lien on the property. However, if a healthy spouse is living in the home, it would be protected.
When a married person applies for Medicaid to pay for long-term care and their spouse is still living independently, the spouse can keep half of the countable assets. This is formally called the Community Spouse Resource Allowance, but there is a limit.
The maximum is $137,400 this year, and there is a $27,480 minimum allowance. A healthy spouse can keep $27,480 even if this is more than half of the total assets that are countable.
Income that is supposed to go to the spouse that is in a nursing home will be diverted toward the cost of the care that is being provided, but there is an exception. If a healthy spouse needs the money, they can receive it in the form of a Monthly Maintenance Needs Allowance.
There is a limit to this is well, and it is $3435 this year. The minimum allowance in 2022 is $2177.50.
Everything would be easier if you could give assets to your children when you find out that you need long-term care. This is not possible because there is a five-year look back period. If you give gifts right now, you have to wait for at least five years before you can be eligible for Medicaid.
Many if not most seniors rely on income that they get from their investments to live comfortably during retirement. If you are one of them, you cannot give the cash cow to your children years before you may need living assistance.
Fortunately, there is a solution. You can convey assets into an income only Medicaid trust. The principal would be out of reach, but you would not be spending it anyway. While you are living independently, you can accept distributions of the trust’s earnings.
You can also transfer your home into the trust to make sure that it is protected when Medicaid is trying to collect from your estate after your death.
Schedule a Consultation Today!
If you do not have a plan for aging to protect your legacy, action is required. You can schedule a consultation at our Manhattan elder care planning office if you call us at 212-973-0100. There is also a contact form on this site you can fill out if you would rather send us a message.