When considering the future, understanding the Medicaid Caregiver Child Exemption is crucial. But before delving into that, let’s highlight an essential background detail about Medicare and long-term care.
Medicare and Long-Term Care Expenses
Once you hit 65, if you’ve worked and paid taxes for at least a decade, you’ll qualify for Medicare. If you’re married, your spouse’s work record can also make you eligible. While Medicare offers a foundational health insurance framework, it does come with additional expenses.
Beyond the premiums and deductibles, a significant care area that Medicare doesn’t cover is long-term custodial care. Thus, many seniors turn to Medicaid for support because this program will cover it.
Why Care About Long-Term Care?
It’s natural to believe you might never require paid living assistance. However, as you age, the need becomes more evident. With life expectancy increasing beyond the overall average after reaching the mid-60s, the reality is that over half of seniors will need some form of paid long-term care, as indicated by the Department of Health and Human Services.
Navigating Medicaid Eligibility
Medicaid, designed as a need-based program, has an asset threshold of $30,182 in New York in 2023. However, some assets like your home aren’t considered. Currently, the home equity limit is $1.033 million in New York, and it is adjusted for inflation yearly.
Other assets exempted from this count include a vehicle, heirlooms, jewelry, and personal belongings. Provisions also exist for a burial plot, life insurance, and $2,000 set aside for final expenses.
The Critical Five-Year Look Back Period
While it may seem simple to transfer your assets to your children to qualify for Medicaid, it’s not that straightforward due to the five-year look-back period. Transferring assets means a wait of five years for Medicaid eligibility. Hence, proactive planning is the cornerstone of an effective asset protection approach.
If you rely on income from your investments, the idea of transferring the principal might be a non-starter. Here’s where an irrevocable, income-only Medicaid trust comes into play. By putting your income-producing assets and other countable assets into this trust five years before you might need long-term care, you can still draw from the trust’s income. As long as the five-year period isn’t breached, the assets that comprise the principal won’t be counted when applying for Medicaid.
The Medicaid Caregiver Child Exemption
With the background set, let’s dive into the caregiver child exemption. If your biological or adopted child has lived with you for at least two years, offering care that has kept you out of a nursing home, you might qualify for this exemption.
In such a case, you can transfer your home’s ownership to the child without triggering the five-year look back. Furthermore, this action safeguards your home from potential Medicaid estate recovery posthumously.
Understanding the Medicaid Caregiver Child Exemption can greatly benefit those on the brink of needing long-term care. Plus, there is a Medicaid Home and Community-Based Services waiver that will cover in-home care, and for a very limited time, there is no look-back period.
Learn More About Medicaid Planning!
We have provided some good information in this blog post, but if you want to come away with a more comprehensive understanding, we have a great learning opportunity for you.
Attorney S.J. Khalsa has recorded an in-depth webinar that will explain everything you need to know about long-term care, Medicaid, and the Medicaid waiver or Community Medicaid. There is no charge to view this webinar, and it is available on demand, so you can watch it at your leisure.
To gain access, simply click the following link, scroll down a bit, and follow the instructions that you see: Manhattan, NY nursing home asset protection.