Before we get to the specific focus of this pointed post, we have to provide some background information so you know why any of this should matter to you.
If you have never been financially needy, and you will qualify for Medicare when you reach the age of 65, you may wonder why Medicaid is relevant to you in any way. After all, you will already have health insurance, and you wouldn’t qualify for the program anyway, because you are going to retire with a sufficient store of financial resources.
This makes total sense on the surface, but there is a very good reason why a significant percentage of elders seek Medicaid eligibility late in their lives.
It is difficult to imagine a time when you will need help with your activities of daily living. Of course, you may have found it hard to envision yourself driving a car someday when you were five years old. Until you have had a certain experience, it can seem completely alien to you, but the fact is that most elders will eventually need some form of living assistance.
The figure is about seven out of every 10 people that are old enough to collect Social Security, and this percentage rises as you start to enter the ranks of the “oldest old.” Right around 35% of elders will ultimately spend time in nursing homes.
Since Medicare exists in large part to cover the health care needs of senior citizens, and most elders will need living assistance eventually, it would be natural to assume that Medicare will pay for it. Many people would say that it makes no sense, but in fact, you cannot rely on Medicare to help with long-term care costs.
This is a very big deal, because nursing homes are extremely expensive. At the time of this writing, you can expect to pay about $140,000 annually for a private room in an Albany area nursing home. The average length of stay is one year, and of course, people sometimes stay longer. Plus, if you are married, your family can potentially face two separate rounds of long-term care costs.
The Medicaid Solution
Now that we have set the stage appropriately, we can get to the point of this blog post. The reason why many seniors that qualify for Medicare ultimately seek Medicaid eligibility is because it will pay for a stay in a long-term care facility. However, because it is intended for people with sparse resources, there is a $15,150 limit on countable assets.
The word “countable” is operative, because there are things that you own that are not part of the equation when Medicaid is evaluating your eligibility status. If you are a homeowner, your property is not counted, but there is an equity limit of $878,00 in New York in 2019.
One vehicle that is used as a primary source of transportation is not counted, and you can keep your personal belongings and household effects. If you have any heirloom jewelry, it would not be counted, and you can maintain ownership of your wedding ring and your engagement ring.
Unlimited term life insurance, which is life insurance with no cash value, is exempt, along with as much as $1500 worth of whole life insurance. The same amount can be set aside for final expenses.
The Community Spouse
In many cases, an elder that is married will require nursing home care while their spouse is still capable of independent living. Under these circumstances, the healthy spouse, which is called the community spouse in Medicaid parlance, can retain a certain store of assets.
As we touched upon above, there is an asset limit when it comes to home ownership. This is completely waived when a healthy spouse is remaining in the place of residence.
The independent spouse is also entitled to a Community Spouse Resource Allowance. This equates to half of the shared countable assets, but there is a limit. In the state of New York, the maximum allowance is $126,420 during the current calendar year, and the minimum is $74,820.
When someone is accepted into the program, their income must be used to defray the cost of the care that is being received, with one exception. If a community spouse is depending on the income, he or she can receive a Monthly Maintenance Needs Allowance. Right now, the maximum allowance is $3161, and this is also the minimum in the Empire State.
Attend a Free Seminar!
Our elder law attorneys are holding a series of workshops over the coming weeks, and you can learn a lot if you attend one of the sessions. There is no admission charge at all, and you can get all the details if you visit our estate planning and elder law seminar page.
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