It can seem like the Medicaid program will have no relevance if you know you will qualify for Medicare when you are an elder. This makes sense on the surface, but there is a major gap in the Medicare coverage that you should understand when you are anticipating your future expenses.
Long-Term Care
This program will not pay for the custodial care you would receive in a nursing home, and it does not cover in-home care that is provided by a caregiver. Paying out-of-pocket is not a very pleasant prospect when you have been retired for many years.
The median annual cost for a private room in a nursing home in the Hartford, CT area in 2021 was $179,398 according to Genworth Financial. A year is the average length of stay, so we are talking about some big dollars.
Medicaid will pay for long-term care, and in fact, most seniors in nursing homes are enrolled in the program. In this post, we will provide some key facts and figures to help you gain an understanding of the path to eligibility.
Asset Limit and Non-Countable Assets
Since Medicaid is a need-based program, there is a $1,600 limit on countable assets, but this is a little bit deceiving. Your home is not considered to be a countable asset, but there is an equity limit of $1.033 million in Connecticut this year.
Wedding rings, engagement rings, and heirloom jewelry are not counted, and your furniture and other household items are exempt along with your personal effects. You can have one motor vehicle, a prepaid burial plot, unlimited term life insurance, and $1,500 of whole life insurance.
Spousal Allowances
When an individual is entering a nursing home while their spouse is capable of living independently, the healthy spouse can keep half of the couple’s assets. This is called the Community Spouse Resource Allowance, but there are limits.
The maximum allowance is $148,620 in 2023, and the minimum allowance is $50,000. These figures are adjusted annually to account for inflation, so you will see slightly higher limits next year.
With the exception of a $75 a month personal needs allowance, income that is brought in by the institutionalized spouse must be contributed toward the cost of the care. However, this requirement is not enforced when a healthy spouse needs the income to get by comfortably.
They can continue to accept the income in the form of a Monthly Maintenance Needs Allowance, and the maximum is $3,715.50 a month at the present time. The minimum allowance is $2,288.75.
Medicaid Estate Recovery
It is possible to qualify for Medicaid if you are in possession of a home, but this is less than ideal. There is a Medicaid estate recovery mandate, so the program is entitled to seek reimbursement from the estates of deceased beneficiaries.
Since you cannot qualify if you have more than $1,600 in assets, there is usually not much to take, but there is an exception when it comes to home ownership. A lien could be placed on the property if you own a home at the time of your death as a former Medicaid beneficiary.
Medicaid Trust and the Five-Year Look Back Period
You can take full advantage of the exemptions and convey the assets that are countable into an income only, irrevocable Medicaid trust. Until you are in a nursing home, you would be able to accept distributions of the trust’s earnings, and this can help you live comfortably.
The principal would not be accessible to you, and you would not be able to act as the trustee. If you apply for Medicaid, the assets in the trust would not count – with one important caveat.
There is a five-year look back period, so you have to fund the trust at least 60 months before you submit your application for Medicaid coverage.
Schedule a Nursing Home Asset Protection Consultation!
When you take the right steps at the right times, you can go forward with the knowledge that your legacy will be protected from potentially devastating nursing home costs.
If you are ready to get started, you can schedule a consultation at our Westport or Glastonbury, CT estate planning offices if you call us at 860-548-1000. There is also a contact form on this site you can use to send us a message, and if you reach out electronically, you will receive a prompt response.
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.