If you are going to qualify for Medicare as a source of health insurance when you reach the age of 65, you may have no interest in Medicaid. Why should you care about a health insurance program for people with very sparse financial resources when you will have assets and Medicare coverage?
This is a very good question, and we have to convey some bad news to deliver the answer. Medicare will cover convalescent care after surgery or an injury when recovery is anticipated at some point. Unfortunately, it does not pay for the custodial care that you would receive in a nursing home.
A lot of people absorb this fact and shrug it off because they assume that they will always be able to receive the care that they need from family members and friends for free. Without question, this may well be possible, at least for a while.
However, according to the United States Department of Health and Human Services, about 35 percent of senior citizens will reside in nursing homes eventually. That is a statistic that should certainly get your attention.
Medicaid will pay for long-term care, and this is why it is relevant to people that will qualify for Medicare. In this post, we will look at the state of long-term care costs and some updated Medicaid eligibility parameters for 2020.
Six Figure Expenses
If you have to pay for nursing home care out of your own pocket, you are going to have to dig rather deeply. According to the New York Department of Health, the estimated average annual cost for a year in an Albany area nursing home is in excess of $135,000.
The average amount of time spent is right around 12 months. And remember, married people could face the possibility of two separate rounds of nursing home bills.
Medicaid Eligibility Guidelines
Since Medicaid is intended for people with sparse financial resources, there are asset limits. In other states, the limit on countable assets is just $2000, but New York is different (in a good way). In 2020, the asset limit in New York is $15,750. Last year, it was $15,450.
It should be noted that some assets don’t count, including a car or truck, heirloom jewelry, wedding and engagement rings, household items, personal belongings, and prepaid burial plots.
Home Equity Limit
The most significant asset that does not count is your home, but there is an equity limit. It has gone up to $893,000 in New York during the calendar year. There is no equity limit at all if a healthy spouse is remaining in the home.
Community Spouse Resource Allowance
When a healthy spouse can still live independently, they are entitled to a Medicaid Community Spouse Resource Allowance. This allows them to keep half of the shared countable assets up to a limit of $128,640 in 2020.
Monthly Maintenance Needs Allowance
Most of the income that is brought in by Medicaid recipients must be contributed toward the cost of the care. However, the requirement is waived if a healthy spouse is relying on all or some of the income. This is called the Medicaid Monthly Maintenance Needs Allowance, and during the current calendar year, it stands at $3216.
Five-Year Look Back
It is possible to give gifts to your loved ones in an effort to reduce the amount of assets that you have in your own name so that you can qualify for Medicaid to pay for long-term care. This being stated, you have to act in advance, because there is a five-year look back period.
If you give away assets within five years of the time of your application submission, it will be denied, and your eligibility will be delayed. The duration of the penalty will depend upon the amount that you gave away as it compares to the average cost of nursing home care.
For example, if the average cost of nursing home care is $135,000 a year, and you gave away this amount shortly before you applied for Medicaid coverage, your eligibility would be delayed by one year.
Schedule a Consultation Today!
We can help you put a nursing home asset protection plan in place so that you can protect your legacy for the benefit of your loved ones. To set the wheels in motion, send us a message through our contact page or give us a call at 518-389-6020.