When you are looking ahead toward your retirement, you probably envision leisure and recreational activities, you will have time to keep yourself in shape. Most seniors can remain active, and you can make the best of your freedom when you feel well.
These golden years can be a lot of fun as you reap the rewards of your hard work, but the clock will always be ticking. As time passes, you may find it more and more difficult to do things that you have done throughout your life, and the limitations can increase rapidly.
Unless you have some type of serious illness, you certainly expect to live into your late 60s. If you are still around at that point, your life expectancy is into your mid-80s, and this is a sobering statistic.
More than half of elders will need paid long-term care eventually, and 35 percent of American seniors will spend time in nursing homes. In the Burlington, Vermont area, the annual median cost for a full-time home health aide was almost $70,000 last year.
The figure was $65,100 for a one-bedroom unit in an assisted living facility, and you are looking at $134,320 for a private room in a nursing home. Medicare does not pay for custodial care, so this is a subject that you should take very seriously.
The Medicaid program will pay for long-term care, and in fact, most seniors in nursing homes are Medicaid beneficiaries. You are probably aware of the fact that this program is for people with limited financial resources, so there is a $2000 asset limit, but it is somewhat deceiving.
Everything that you own is not counted, starting with your home with an equity limit of $603,000 this year. If you are applying for Medicaid while your spouse is still going to live at home, there would be no equity limit.
You can potentially qualify for Medicaid as a homeowner, but you want to avoid this situation if you can. There is a Medicaid estate recovery mandate, so they would put a lien on your home after your death if it is in your direct possession at the time of your passing.
Other assets that do not count are things that you have around the house that you could not sell for a significant amount of money and one motor vehicle. Your wedding ring, engagement ring, and heirloom are exempt as well.
Concessions for the Healthy Spouse
When the assets are being tallied up to determine Medicaid eligibility status, non-exempt property that is owned by both spouses will count. However, the spouse that will continue to live independently is allowed to keep half of the assets.
This is called the Community Spouse Resource Allowance, but there is a limit to the amount that they can keep. It is updated annually to account for inflation, but in 2021, the limit is $130,380.
The healthy spouse can keep all the income that they receive, but the institutionalized spouse’s income must be used to defray the long-term care costs, with one caveat. If a healthy spouse needs the income, they can continue to receive all or some or it depending on their financial position.
They would be entitled to a Monthly Maintenance Needs Allowance, and the maximum during the current calendar year is $3259.50. There is also a minimum allowance that stands at $2155.
Five-Year Look Back Period
When all this information sinks in, you would logically resolve to give gifts to your loved ones after you find out that you need nursing home care. You would essentially be giving them their inheritances in advance, and this makes sense on the surface.
Unfortunately, this would not be in the spirit of the program, so there is a five-year look back period. If you give gifts or fund an irrevocable trust to gain eligibility, you have to wait for five years before you apply for Medicaid if you intend to become eligible immediately.
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You are here because you are looking for information about elder care and estate planning, and we have some learning opportunities coming up in the near future. Our webinars cover the most important topics, and we convey a great deal of useful information in a short period of time.
There is no charge to attend the sessions, but we do ask that you register in advance. You can see the dates and obtain registration information if you head over to our Burlington, Vermont estate planning webinar page.
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