Before we get into the question that this blog post is built around, we will set the stage with some background information.
Medicaid is important from an elder law perspective even if you have never been financially needy throughout your life. This is because Medicare will not pay for the custodial care that you would receive in a nursing home.
These facilities are extremely expensive, carrying an average price tag of well over $100,000 a year in Vermont. The average length of stay is one year, and married people have to brace themselves for the possibility of a double dose of long-term care expenses.
Medicaid Planning
The asset limit for Medicaid in Vermont is just $2,000. That is a very low number, but some assets that you may have in your possession do not count, including your home.
Though your home is not a countable asset, there is an equity limit of $595,000 in the state of Vermont.
Aside from the house, other non-countable assets include heirloom jewelry, wedding rings, and engagement rings. One transportation vehicle is not counted, and the items that you have around the house and your personal belongings are exempt.
Prepaid burial plots are non-countable assets, and you can have as much as $1,500 set aside for final expenses. The same amount of whole life insurance is permissible, and there is no limit to the amount of term life insurance that can be carried.
We touched upon the fact that a healthy spouse could remain in the family home without any equity limit concerns. This is not the only provision that is made for a spouse that is in this position.
There is a Community Spouse Resource Allowance that gives the healthy spouse the right to keep half of the shared countable assets up to a limit of $128,640.
The community spouse can also continue to accept income that is generated by the institutionalized spouse if it is needed. This is formally called the Monthly Maintenance Needs Allowance, and it stands at $3,216 this year.
Spending Down and Medicaid Estate Recovery
Now we can get to the question of the Medicaid program seizing your property. This is a myth when it comes to the concept of “seizing.” If you have too many resources to qualify for Medicaid, nobody is going to forcefully take your property.
However, people that want to qualify for Medicaid typically give assets to their loved ones before they apply. So yes, you do have to divest yourself of resources if you want to obtain eligibility. However, you would do this voluntarily.
Timing is key, because you have to complete the gift giving at least five years before you submit your application. If you violate this rule, your eligibility is delayed for a period of time that is determined based on the amount of the divestitures.
Medicaid is required to seek reimbursement from the estates of people that used the program to pay their nursing home bills. Since you could not qualify if you have significant resources in your own name, this is usually not a problem.
Your home could be an exception since it is not counted, but there are steps that you can take to protect it in advance.
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