You are probably aware of the fact that Medicaid is a government health insurance program that is in place to provide a safety net for individuals that have little to no financial resources. A lot of people that have worked all their lives while saving for retirement wonder why this program would ever be relevant to them.
If you are confused on this score, you should certainly understand some facts about nursing home care and the costs that go along with it.
If you work for at least 10 years and pay FICA or self-employment taxes, or if your spouse has satisfied this requirement, you will qualify for Medicare as a source of health insurance when you reach the age of 65. This is the age of eligibility at this time, but it is always subject to change via legislative mandate, so it is something that you should keep in mind as you are looking ahead toward your retirement years.
Though there are some people that qualify for Medicare that are not seniors, for the most part, it is intended to provide assistance for elder Americans. Most people over the age of 65 will need long-term care eventually, so it would certainly make sense to assume that Medicare would pay for residence in a nursing home if it ever becomes necessary.
A lot of people would say that it is unfair, but in reality, Medicare does not pay for the custodial care that you would receive in a nursing home. It would pay for convalescent care and some services that are considered to be palliative care or hospice, but it does not pay for long-term custodial care.
Medicaid & Long-Term Care
Now that we have shared the necessary background information, we can move on to the relevance of Medicaid for people that qualify for Medicare. This jointly administered federal/state government health insurance program will pay for long-term care if you can obtain eligibility.
Of course, as we have stated, this is easier said than done, because you cannot qualify if you have significant assets in your own name.
One thing to understand is that there are countable assets, and monetary resources that are not considered to be countable for Medicaid eligibility purposes. The limit on countable assets is just $2000 all around the country with the exception of New York. Here in our state, the limit is $15,450.
Once again, these are countable assets, but there are a number of things that you may own that are not countable for Medicaid eligibility purposes. The most significant one is your home, but there is a limit on home equity. The states have a choice with regard to how much they want to allow within certain parameters. New York has opted for the maximum level of equity, which is $858,000 in 2019. Notwithstanding the fact that the home is not a countable asset, Medicaid will seek recovery from the home if an individual receives care and Medicaid will lien the home for the amount of care provided.
If you have any heirloom jewelry, it is not counted, and you can add your wedding ring and engagement ring to this list. Furniture and other household items are not countable, and your personal belongings are out of play. You can have one vehicle that is used as a primary source of transportation, along with unlimited term life insurance.
An applicant can retain ownership of $1500 that is earmarked for final expenses along with a whole life insurance policy valued at as much as $1500.
We mentioned above that the home is not a countable asset, but there is an equity limit. In many instances, there will be a healthy spouse that will not be entering a long-term care facility. Such a spouse could continue to live in the family home without any equity limit at all.
The healthy spouse is also entitled to a Community Spouse Resource Allowance. This is half of the shared countable assets, but there is a limit to how much you can keep. In New York during the current calendar year, that limit is $126,450. There is a minimum limit of $74,820.
Under ordinary circumstances, the spouse that is going to qualify for Medicaid must use their income to help pay for the care that is being received. A married person is not subject to this stipulation if the income is needed by the healthy spouse. This is called the Monthly Maintenance Needs Allowance, and it stands at $3160.50 during the current calendar year.
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Geoffrey Rafalik
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