The most pressing matter that elder law attorneys address is the senior long-term care situation. If you visit the website longtermcare.gov, you will see some eye-opening statistics that shed light on the subject.
This site is maintained by the United States Department of Health and Human Services, and their research has found that seven out of every 10 seniors will need help with their activities of daily living. More than one-third of these folks will eventually reside in nursing homes.
Medicare does not cover the custodial care that nursing facilities provide, and it does not pay for in-home care that is provided by a professional home health aide.
According to Genworth Financial, the median cost for a year in a private room in a Manhattan, NY area nursing home is about $170,000. For a home health aide, you are looking at a median cost of just over $80,000 a year.
Medicaid Eligibility
There is a solution in the form of Medicaid eligibility. This jointly administered federal/state government health insurance program will pay for a stay in a nursing home, and there is a Community Medicaid waiver that will cover in-home care.
Since it is a need-based program, there is a $30,182 limit on assets in New York, but there are some resources that do not count for Medicaid eligibility purposes. Your home is one of them, but there is an equity limit of $1.071 million in 2024.
These are the other nonaccountable assets:
- Heirloom jewelry
- Wedding and engagement rings
- Household items
- Personal effects
- Unlimited term life insurance
- $1,500 of whole life insurance
- $1,500 for final expenses
- Prepaid burial plots
Community Spouse Allowances
If you can continue to live independently while your spouse is entering a nursing facility, you would be entitled to a couple of allowances. One of them is the Community Spouse Resource Allowance, which is equal to half of the assets.
There is a limit that is updated each year to account for the cost of living, and in 2024, it is $154,140. The minimum allowance in New York is $74,820.
With the exception of a $50-a-month personal needs allowance, the institutionalized spouse’s income must be used to defray the cost of the care that is being received. This requirement is waived if a healthy spouse needs the income to maintain an acceptable standard of living.
They can receive a Monthly Maintenance Needs Allowance, and in our state, the limit on this allowance is $3,853.50 during the current calendar year.
Income-Only Medicaid Trust
You can convey countable assets into an income-only Medicaid trust to develop a financial profile that will lead to eligibility. As the name would indicate, you can accept distributions of income from the earnings, but you would have no access to the principal.
As long as you fund the trust at least five years before you apply for Medicaid, the assets will not count. For Community Medicaid to cover in-home care, the look-back is 30 months.
If you violate the five-year look-back rule, you will be penalized, and your eligibility will be delayed. The length of the period of ineligibility would be based on the amount of the divestitures as they compare to the cost of nursing home care in your area.
For example, let’s assume that the state determines that the annual cost of nursing home care is $170,000. You convey $170,000 into a Medicaid trust, and you need nursing home care a year later. This amount would have paid for 12 months of care, so you would have to pay out of your own pocket for 12 months.
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