As you go through life, you find that people that are in advantageous positions are the individuals that were able to see over the horizon. They take the right actions at the right times, and more often than not, they are rewarded when the future becomes the present.
This is a dynamic that applies to long-term care and the costs that go along with it. Nobody wants to think about a time when they may not be able to handle their own day-to-day needs, but it happens to most of us.
Seven out of 10 seniors will need some type of living assistance, and more than one third of elders will eventually reside in nursing homes.
Some people hear this type of thing and they ignore it as they hope for the best. Others take it seriously, and they look for solutions.
You can brace yourself for these potentially devastating expenses if you position your assets with Medicaid eligibility in mind. This program will pay for a stay in a nursing home, but Medicare does not pay for any type of custodial care.
Since Medicaid is a need-based program, there is a $2000 asset limit, but some types of property are not counted. Your home is not looked upon as a countable asset for Medicaid eligibility purposes, but there is a $595,000 equity limit in Vermont this year.
The program is not concerned about your personal belongings and the items that you have around the house, and they do not count your wedding and engagement ring and heirloom jewelry.
One motor vehicle is permitted, and Medicaid has no problem with any amount of term life insurance, because it has no cash value. There is a $1500 limit on whole life insurance, and you can have this amount set aside to help cover your burial or cremation expenses.
Healthy Spouse Allowances
Now that we have provided the necessary background information, we can focus on the healthy spouse. If you are married and you require nursing home care while your spouse can still live at home, your spouse would be able to take advantage of certain allowances.
One of them is the Community Spouse Resource Allowance, which gives the healthy spouse the right to keep half of the community assets that are countable.
This can sound quite encouraging, but there is a limit of $128,640 at this time. There are annual inflation adjustments, so the figure rises a bit each year.
Some states have a minimum allowance that gives the healthy spouse the right to keep a certain amount even if it is more than half of the shared assets. We do not have that provision here in Vermont.
Almost all of the income that is brought in by a person that is enrolled in the Medicaid program has to go toward the cost of the care that is being received. However, there is an exception if the independent spouse is relying on that income.
The community spouse can receive a Monthly Maintenance Needs Allowance that maxes out at $3216 this year. There is also a minimum allowance of $2155.00.
Spending Down Assets
People engage in a process called a “spend down” to divest themselves of assets so they can qualify for Medicaid. Some folks actually spend money more freely, but for most, the idea is to give their children inheritances in advance.
This is a sound strategy, but you have to complete the gift giving at least 60 months before you apply. The penalty for violating this look back rule is a period of ineligibility.
How long would you have to wait? It depends on the amount of the gifts. For example, if you gave away $250,000, and that amount would pay for two years of care, your eligibility would be delayed by two years.
Take Action Today!
If you are ready to discuss a nursing home asset protection strategy with a licensed elder law attorney, we are here to help. You can send us a message to request a consultation appointment, and we can be reached by phone at 802-879-7133.