You may feel pretty confident about healthcare expenses that you incur as a senior citizen if you know that you are going to qualify for Medicare. This program will provide a solid underpinning, but there are deductibles, coinsurance, and premiums.
The out-of-pocket expenses are usually not overwhelming if you have planned ahead for retirement effectively, and there are supplemental Medicaid plans that fill in the gaps. However, there is a major void in the coverage that everyone should take very seriously.
Long-Term Care
Most senior citizens will incur long-term care expenses, and 35 percent of elders will move into nursing homes. The average cost for a month in a nursing home in Connecticut at the present time is just over $14,000 according to the state, and more than half of people that need paid care receive it for more than a year. Medicare does not cover the custodial care that nursing homes provide.
Medicaid Eligibility
Fortunately, Medicaid will pay for long-term care, but it takes careful planning to gain eligibility because it is only available to people with less than $1,600 in countable assets. Clearly, you have to transfer assets out of your name to qualify for Medicaid if you have resources.
Healthy Spouse Allowances
If you are married and you apply for Medicaid to pay for long-term care, your spouse would not be forced to live in poverty. A healthy spouse is entitled to a Community Spouse Resource Allowance that is equal to half of the countable assets.
There is a limit that stands at $148,620 in Connecticut in 2023. The minimum is $50,000, so a healthy spouse can keep this much even if it is more than half of the assets.
A home is not considered to be a countable asset for Medicaid eligibility purposes, but there is a $1.033 million equity limit in our state. If a healthy spouse is remaining in the home while their spouse is in a nursing facility, there is no equity limit at all.
The healthy spouse may also continue to accept income that is brought in by the institutionalized spouse. This is the Monthly Maintenance Needs Allowance, and the maximum allowance this year is $3,715.50; the minimum allowance is $2,288.77.
Five-Year Look Back Period
When it comes to divesting yourself of countable assets, you have to act in light of the five-year look back period. If you were to give your children their inheritances in advance today, you would not be eligible for Medicaid for another five years.
A lot of people depend on income that is generated by their nest eggs, so they are not in a position to give away their assets years before they need long-term care. This is understandable, and there is a solution.
You can establish an irrevocable, income-only Medicaid trust. While you are living independently, you can accept distributions of the trust’s earnings, but you would not be able to touch the principal.
As we have stated, you can potentially qualify for Medicaid as a homeowner. However, Medicaid would place a lien on the home after your death during the recovery phase.
If you convey the home into the trust, it would no longer be in your direct personal possession, so it would be protected during the recovery process.
Attend a Complimentary Seminar!
We are conducting seminars on an ongoing basis that cover the most important elder care planning and estate planning topics. There is no charge to attend our events, so you should definitely take advantage of the opportunity.
You can see the dates and obtain registration information if you visit our seminar schedule page.
Need Help Now?
If you already know that it is time for you to work with a Glastonbury or Westport, CT estate planning lawyer to put a plan in place, our doors are open. You can send us a message to request a consultation appointment, and we can be reached by phone at 860-548-1000.
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.