When planning for the golden years, many people envision a peaceful life enjoying well-deserved rest and relaxation. However, life often presents unexpected challenges, especially in health care.
For seniors, one of those challenges is the significant cost of long-term care, and about a third of seniors will reside in nursing homes. This makes Medicaid planning crucial because Medicare doesn’t cover these expenses. Let’s delve into how Medicaid’s spousal impoverishment rules can affect you and your loved ones.
Why Medicaid Matters for Seniors
Most seniors rely on Medicare for their health coverage, which generally takes care of routine medical costs. But there’s a catch: Medicare does not pay for long-term nursing home care.
With a year in a private room in a quality nursing facility costing around $80,000 in Oklahoma City, it’s evident that this gap is more like a chasm for many seniors. This is where Medicaid comes in. Medicaid covers long-term care costs but has strict financial requirements for eligibility.
The Asset Rules for Medicaid Eligibility
To qualify for Medicaid in our state, a senior’s assets cannot exceed $2,000 – this is updated yearly. However, Medicaid excludes certain assets from this calculation. Your primary home, up to an equity limit of $688,000 in 2023, doesn’t count as an asset. One vehicle used for transportation won’t count, along with specific personal belongings, heirloom jewelry, and furniture.
Moreover, you can set aside $1,500 for final expenses and have the same amount in whole life insurance, plus unlimited term life insurance.
Understanding Community Spouse Allowances
In Medicaid terminology, the “community spouse” refers to the healthy spouse who can still live independently. This spouse has the right to a Community Spouse Resource Allowance, which is half of the couple’s countable assets, up to a limit of $148,620 in Oklahoma. At the very least, a community spouse can keep $29,724 even if that’s more than half of the countable assets.
Additionally, the community spouse can qualify for a Monthly Maintenance Needs Allowance if they rely on the institutionalized spouse’s income. In Oklahoma, the maximum limit for this allowance is $3,719 during the current calendar year.
Special Consideration for Home Ownership
While there’s usually an equity limit on home ownership for Medicaid eligibility, this limit doesn’t apply if the community spouse continues to live in the home.
The Strategy of Asset Divestment: Medicaid Trusts
To meet Medicaid’s financial requirements, many people consult elder law attorneys to “spend down” assets strategically. One effective method is funding an irrevocable Medicaid trust. Once you transfer your assets into this trust, they no longer count as your assets for Medicaid eligibility.
However, you can continue to receive income generated by these assets until you apply for Medicaid coverage. However, timing is vital due to Medicaid’s five-year look-back period. You must fund the trust at least five years before applying for Medicaid.
Free Educational Seminars: Get Informed
We conduct seminars on an ongoing basis that cover all the most important topics. You will learn a lot if you join us, and there is no charge, so this is a golden opportunity to make an initial connection with our firm.
To learn more, visit this page: Oklahoma City estate planning educational events.
Protect Your Assets From Nursing Home Costs
Long-term care costs are always looming for senior citizens, but you can protect your assets for the benefit of your loved ones if you take the right steps in advance. You can take the first one if you call our Oklahoma City elder law office at 405-843-6100, or you can alternately send us a message through our contact page.
We also have a Tulsa location, and if that is more convenient for you, you can get in touch with our office by calling 918-615-2700.
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.