With every new year, we inevitably hear about adjusted parameters for government programs and tax guidelines that are relevant from an elder law/estate planning perspective. With this in mind, the updated Medicaid spousal allowances for 2024 have been released, and we share the updates in this post.
Why Is Medicaid Relevant?
Before we get into the figures, we should provide the necessary background information. The vast majority of seniors are going to qualify for Medicare as a source of health insurance when they are 65 years of age. This can lead to the belief that all of your major expenses will be covered for the most part.
While this is true in a general sense, there is a gaping hole in Medicare coverage. This program will not pay for long-term custodial care, which is the type of care you would receive in a nursing facility. There are also paid professionals who provide in-home custodial care.
Medicaid will cover these expenses if you can gain eligibility. This is why the program is relevant to seniors who are going to qualify for Medicare.
Will I Actually Need Long-Term Care?
It can be hard to imagine a time when you can no longer handle all of your day-to-day needs without assistance. However, when you look at the facts, a compelling picture emerges.
According to the United States Department of Health and Human Services, more than half of seniors will incur long-term care expenses eventually. Approximately one-third of individuals who are 65 and older will spend time in nursing homes.
Long-Term Care Costs
We have offices in Glastonbury and Westport, Connecticut, and in our areas, you can expect to pay over $150,000 for a year in a nursing home. The average length of stay is 12 months, and slightly more than half of people who incur long-term care expenses require more than a year of care.
Clearly, this can be a very significant expense if you have to pay out of your own pocket. And of course, if you are married, your family may be forced to deal with two different rounds of nursing home bills.
Medicaid Eligibility Guidelines
Now that we have set the stage appropriately, we can get to the point of this post. Since Medicaid is intended for people with a significant level of financial need, there is a low asset limit.
In Connecticut, the limit is $1,600, but there are some non-countable assets. These would include one motor vehicle that is used as a primary source of transportation, personal effects, household items, heirloom jewelry, wedding and engagement rings, up to $1,500 in whole life insurance, and unlimited term life insurance. You can also have as much as $1,500 set aside for final expenses.
2024 Medicaid Spousal Impoverishment Standards
When a married person applies for Medicaid while their spouse can still live independently, the healthy spouse is referred to as the “community spouse” in Medicaid parlance. They are entitled to certain allowances, and one of them is the Community Spouse Resource Allowance.
This is equal to half of the couple’s assets that are countable up to a certain limit. In 2024, that limit is $154,140 in Connecticut.
Income that is earmarked for the spouse who will be receiving long-term care is contributed toward the cost of the care. However, an exception is made when the healthy spouse is relying on all or part of the income.
They can receive the income in the form of a Monthly Maintenance Needs Allowance. The maximum allowance in 2024 is $3853.50 a month.
Finally, we touched upon the non-countable assets in the last section. Your home is in this category as well, but there is an equity limit that stands at $1.071 million in 2024.
Irrevocable Income-Only Medicaid Trust
To qualify for Medicaid in the future, you could convey resources into an income-only, irrevocable Medicaid trust. The principal would be out of your reach after you fund the trust, but you can continue to receive income that is generated by the assets that are held by the trust.
Advance planning is the key to the successful execution of this strategy because there is a 60-month look-back period. If you transfer assets out of your name without getting fair value in return, you are ineligible for Medicaid for a period of five years.
Schedule a Consultation Today!
We can help you develop a plan for aging that will preserve your legacy in light of possible long-term care costs. You can set the wheels in motion by calling our Glastonbury or Westport, Connecticut estate planning offices at 860-548-1000, and you can alternately send us a message through our contact page.
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.