The Medicaid program may never cross your mind as it applies to you personally, but it may in fact be quite relevant at some point.
This jointly administered federal/state government health insurance benefit will cover long-term care for senior citizens. Medicare does not pay for custodial care, and since nursing homes are extremely expensive, Medicaid coverage is the key to legacy preservation.
Because it is a need-based program, you cannot qualify if you have significant assets in your name. However, a healthy spouse that can still live independently is entitled to some allowances, and we will provide the details here.
Monthly Maintenance Needs Allowance
The institutionalized spouse’s income must be contributed toward the nursing home costs, but they can receive a $50 a month personal needs allowance. When a healthy spouse is relying on this income and they meet to eligibility requirements, this mandate is set aside.
A healthy spouse can receive the income in the form of a Monthly Maintenance Needs Allowance, and the maximum in New York during the current year is $3435.
Community Spouse Resource Allowance
The spouse that can continue to live at home is called the “community spouse” in Medicaid lingo. They can receive a Community Spouse Resource Allowance, which is equal to half of the couple’s assets up to a certain limit.
This limit is indexed annually for inflation, and in 2022, it stands at $137,400 in our state. There is also a minimum allowance of $74,820 this year. A healthy spouse can keep this much even if it is more than half of the resources.
Every asset that you own is not considered to be a countable resource for Medicaid eligibility purposes. The most significant piece of property that is not counted is your home, but there is a $955,000 equity limit.
If a healthy spouse is remaining in the home, there is no equity limit, and this would also apply if a minor child or a blind or disabled adult child is living in the home.
In addition to the place of residence, other non-countable items include household goods, personal belongings, one motor vehicle, wedding rings, engagement rings, and heirloom jewelry.
Medicaid Estate Recovery
While you can maintain possession of a home and still become eligible for Medicaid, this is not an ideal situation. Medicaid would be required to seek reimbursement from your estate after your passing if you were an enrollee. As a result, they can place a lien on your home.
There is an exception to the rule for caregiver children. If one of your adult children lived in the home with you to provide care for at least two years, you can give the home to the child, and it would be protected during the estate recovery phase.
The caregiver child exemption also extends to the five-year look back period, but there is a key consideration. This exemption only applies if the level of care that was provided enabled the elder to live at home instead of moving into a nursing facility.
Irrevocable, Income Only Medicaid Trust
A nursing home asset protection strategy can revolve around an income only, irrevocable Medicaid trust. As the name would indicate, you could accept distributions of the trust’s income, but you would no longer have access to the principal.
After you pass away, the resources in the trust would not count when Medicaid is evaluating your financial position. This being stated, advance planning is necessary, because there is a five-year look back period.
The trust must be funded at least five years before you apply for Medicaid. If you violate this rule, your eligibility is delayed.
To calculate the duration of the period of ineligibility, Medicaid compares the divestitures to the cost of long-term care in New York.
For example, if you divest yourself of enough to pay for one year in a nursing home within this look back, your eligibility would be delayed by a year.
The exception to this rule in New York is community Medicaid. If you qualify for this type of long-term care, Medicaid will provide and pay for aides to care for you in your home. Under current law, you may transfer your assets into the trust and still qualify immediately. There is no look-back period. However, a new law will create a 2 1/2 year look back period. Immediate action is necessary to qualify for and receive community Medicaid benefits.
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