The Medicaid program is important to many seniors for one compelling reason: Medicaid will pay for long-term care. Medicare will not. Medicare will cover convalescent care after injury or illness, but it does not cover the custodial care that nursing homes provide.
Assisted Living Expenses
Most senior citizens will incur some form of long-term care costs. Be clear, nursing facilities can drain your bank account in a hurry. Genworth Financial recently released their 2021 survey, and they found that the median charge for a private room in a nursing home in Oklahoma City was $88,695.
The average length of stay for nursing home residents is one year. Clearly, $90,000 is a big chunk of change when you have been retired for years, and the expenses can be doubled for married couples. And, what if you end up having a three, four, or five-year stay?
Medicaid Eligibility
To qualify for Medicaid is not easy. There is an asset test and in some states an income test. On the asset side, there is a $2,000 asset limit. This is another area of the law where you are rewarded for early planning. Why? Because any amount of assets in your name within five years of applying that exceed $2,000 will be countable assets that must be “spent down” before qualifying. There are exceptions allowing your personal belongings, one motor vehicle, wedding and engagement rings, and household items to not be counted. If you are applying for Medicaid as a married person, your spouse would be entitled to two allowances. With proper planning, you can start the five-year clock running. That will maximize the opportunity for you to preserve the greatest amount of your assets.
The Community Spouse Resource Allowance is half of the assets that are countable, but there is a limit. In 2022, the limit is $137,400, and the minimum is $27,450.
Aside from a $75 a month personal needs allowance, income that is brought in by a Medicaid beneficiary that is in a nursing home must be contributed toward the costs.
However, there is an exception when a healthy spouse that is living independently is relying on the income. They are entitled to a Monthly Maintenance Needs Allowance. The maximum allowance this year is $3,435 of income per month.
Home Ownership and Medicaid Estate Recovery
At this time, your home is not a countable asset as long as its equity value is below $636,000 in Oklahoma in 2022. If a healthy spouse is remaining in the home, there is no equity limit.
You can qualify for Medicaid as a homeowner, but there is a very significant downside. There is a Medicaid estate recovery phase after the passing of a beneficiary. The program will seek reimbursement from the estates of deceased beneficiaries.
Without careful planning, if you owned a home at the time of your death, Medicaid will put a lien on your home unless your spouse or a blind or disabled child is living in the house.
Caregiver Child Exemption
There is another exception to the rule with regard to the estate recovery mandate. In some cases, an adult child will live with an aging parent to provide care. If the child is providing a level of care that has allowed the elder to live in the community, the child-caregiver exemption can be utilized.
The elder can transfer ownership of the home to the adult child if they ultimately require nursing home care. Medicaid would not try to attach the property during the estate recovery process.
Attend a Free Education Event!
We enjoy connecting with members of our community at the education events that we host from time to time. You will come away with a great deal of important information if you join us, and there is no charge, so you have a great deal to gain and nothing to lose.
The dates are posted on our education events page, and if you decide to join us, follow the instructions to register so we can reserve your spot.
Ready to Act Today?
If you already know that you should work with an Oklahoma City estate planning lawyer to put a plan in place, there is no time like the present.
There is no one-size-fits-all estate plan that is right for everyone and positioning your assets to qualify for Medicaid is no exception. Your plan should be tailor-made for you and your family, and we will help you take the right steps to provide for your loved ones in an ideal manner.
You can call us at 405-843-6100 to schedule a consultation appointment, and you can use our contact form if you would rather send us a message.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.