Statistics tell us that you will probably need help with your activities of daily living at some point, and a Medicaid waiver can provide a financial solution.
Before we explain the waiver, let’s look at the reasons why it is relevant if you are going to qualify for Medicare as a senior.
Aging-in-Place
One of the benefits of a long-term care community is the living space construction. There can be handrails, grab bars, motion sensor lighting, door levers instead of knobs, elevators, etc.
This may be great on the one hand, but on the other, you may not want to leave your home even though you have mobility challenges. Under these circumstances, you can engage professionals to implement aging-in-place modifications.
There are countless different ways that your living space can be altered to suit your needs, and it can be an evolving process.
Many seniors get the assistance that they need from their family members, but the commute can be time-consuming and inconvenient. Adult child caregivers sometimes urge parents who need living assistance to move in with them, and aging-in-place solutions can make this possible.
In-Home Care Costs
The ideal situation when family members are fully capable and willing to provide help is not the reality for many seniors. A professional in-home health aide may be needed if there are no willing unpaid caregivers nearby, and there is another consideration.
Even if unpaid assistance is available, sometimes the level of care that is needed will exceed the capabilities of well-meaning family members and friends. When that time comes, in-home care costs are going to enter the picture.
The cost for an in-home health aide is about $70,000 a year in our area, and most people who require paid living assistance get the care for more than a year. Clearly, this is a very large expense to deal with late in your life.
Medicare does not cover custodial care in the home or in a nursing a facility, so this is not the answer.
Medicaid Waiver
Medicaid will cover long-term care in a nursing facility, and there is a Medicaid waiver that will pay for in-home care. That’s the good news, but the bad news is that you can’t qualify if you have more than $1,600 in countable assets.
Medicaid Treatment of the Home
Your home is not a countable asset for Medicaid eligibility purposes with an equity limit of $1.071 million in Connecticut in 2024. Before you breathe a sigh of relief, you should be aware of the Medicaid estate recovery mandate.
The program is required to seek reimbursement from your estate after you pass away if you were a Medicaid beneficiary when you were living. They can place a lien on the home if it is your personal property at the time of your death, but there is a child caregiver exemption.
If an adult child has been living in the home with you providing a level of care that has enabled you to live at home for at least two years, you can transfer ownership of the home to the child. Medicaid would not be able to touch the property during the estate recovery phase.
Irrevocable Medicaid Trust
There is a five-year Medicaid look-back period, so you can divest yourself of assets, but you will not be eligible for five years after you transfer the assets out of your name. For this reason, advanced planning is necessary.
A lot of elders rely on income that is earned by assets that are invested, and they would not be able to give loved ones the principal that is generating the income. On the surface, this can make advance gift-giving impossible.
Fortunately, there is a solution in the form of an irrevocable, income-only trust. You fund the trust, and you no longer have access to the principal, but it would not count if and when you apply for Medicaid or the Medicaid Home and Community Based Services waiver.
While you are living independently, you can accept distributions of the trust’s earnings as usual, so this approach can allow you to implement an intelligent intermediate-term strategy.
Implement a Life Care Plan!
We can help you take the right steps to prepare yourself for potential long-term care costs. To set the wheels in motion, call us at 860-548-1000 to schedule a consultation at our Westport or Glastonbury, CT estate planning offices.
If you would rather reach out electronically, fill out our contact form 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.