We are going to look at a specific aspect of the Medicaid guidelines for married seniors that require nursing home care. In order to understand the implications, you have to absorb some background information about the subject, so we will start there.
Long-Term Care and Medicare
Since Medicare is the health insurance program that almost all seniors rely on, it is natural to assume that it would cover a stay in a nursing home. After all, seniors are the people that require nursing care. Why would health insurance for seniors fail to address this expense?
Whether it is fair or not, Medicare does not cover the custodial care you would receive in a nursing home. Plus, it will not pay for in-home care that is provided by a professional home health aide.
The average charge for a year in a Connecticut nursing home is over $150,000 according to the state. Just over half of seniors that need paid care receive the assistance for more than a year, and 13 percent incur long-term care expenses for more than 5 years.
Medicaid Coverage
Medicaid does cover long-term custodial care, and this is why it is important to seniors that qualify for Medicare. Of course, it is a need-based program, so there is a low asset limit. In Connecticut, it is just $1600.
There are some assets that do not count, including a home with an equity limit of $955,000 this year. Personal effects and household items are not counted, and one motor vehicle is exempt. Your wedding and engagement rings and your heirloom jewelry are not countable assets.
Medicaid Monthly Maintenance Needs Allowance
Now that we have set the stage appropriately, we can address the question at hand. A Medicaid beneficiary’s income must be contributed toward the cost of the care that is being received with the exception of a $60 a month personal needs allowance.
However, when a married person is using Medicaid to pay for nursing home care, an exception can be made. The healthy spouse can receive the income in the form of a Monthly Maintenance Needs Allowance if they have sufficient financial need. In 2022, the maximum allowance in Connecticut is $3,435, and the minimum is $2177.50.
Community Spouse Resource Allowance
While we are on the subject of spousal allowances, we should touch upon the Community Spouse Resource Allowance. The healthy spouse can keep half of the couple’s countable assets up to a limit that stands at $137,400 in our state this year.
There is also a minimum allowance of $27,480. This is the least that a healthy spouse can retain even if it is more than half of the countable assets.
Medicaid Estate Recovery
A home is not a countable assets, and there is no equity limit at all if the healthy spouse is remaining in the home. This being stated, there is a Medicaid estate recovery mandate.
If you are in direct possession of a home as a Medicaid beneficiary, a lien can be placed on the property after your death. As a result, it is best to divest yourself of direct personal possession of the property before you obtain Medicaid coverage.
Five-Year Look Back and Medicaid Trust
You can transfer countable assets out of your name to qualify for Medicaid, but there is a five-year look back period. After you divest yourself of assets, you will be ineligible for 60 months.
As a response, you could convey assets into an irrevocable trust long before you need nursing home care. While you are living independently, you can accept distributions of the earnings. You can also convey your home into the trust, and you can live in it as usual.
If you apply for Medicaid at least five years after you fund the trust, the assets that are held by the trust would not count. Plus, the home would be protected during the recovery phase.
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Today is the day for action if you are currently unprepared from an estate planning perspective. You can call us at 860-548-1000 to schedule an appointment at our Glastonbury or Westport, CT estate planning offices. If you would rather reach out electronically, send us a message and we will get back in touch with you promptly.
Mr. McCann is licensed to practice before the courts of the State of Connecticut. He is a member of the American Academy of Estate Planning Attorneys.
Mr. McCann provides to his clients, trust and estate planning, and trust and estate administration services. Formerly, Mr. McCann was an adjunct professor of economics in the State of Connecticut Community College system, and a Commissioner of the Town of Simsbury Zoning Board of Appeals.