We closely monitor the Medicaid parameters because many seniors will rely on this program to preserve their legacies. Why is Medicaid relevant to people that will qualify for Medicare as a source of health insurance?
Most seniors will need help with their activities of daily living, and more than one third of them will require nursing home care. You can expect to pay well over $100,000 for a year in a Burlington area nursing home, and Medicare does not cover the custodial care they provide.
Medicaid covers long-term care, and this is why it should be on your radar if you are going to be enrolled in the Medicare program.
Before we focus on the allowances that a healthy spouse can receive when their spouse is using Medicaid to pay for long-term care, we will provide a broader overview.
Medicaid Parameters
Since Medicaid is only available to people with very sparse resources, there is a $2000 asset limit, but your home is not considered to be a countable asset. Wedding rings, engagement rings, and heirloom jewelry are not counted, and personal belongings and household goods are exempt.
One motor vehicle is permitted along with unlimited term life insurance. As much as $1500 of whole life insurance can be carried, and this amount can be saved to cover final expenses. Prepaid burial plots are not counted when Medicaid is making their eligibility determinations.
You can fund an irrevocable trust to get assets out of your name to qualify for Medicaid to pay for nursing home care, but timing is key. The funding must be completed at least 60 months before you apply because there is a five-year look back period.
Healthy Spouse Allowances
When a married person is applying for Medicaid and their spouse is still capable of living independently, the spouse is entitled to a couple of allowances. One of them is the Community Spouse Resource Allowance, which is equal to half of the shared countable assets.
There is a limit, and it is adjusted annually to account for inflation. The 2021 limit is going to be $130,380, which is an increase of $1740 over the 2020 figure.
The institutionalized spouse can receive a very modest monthly personal needs allowance of less than $100 a month. Aside from this, their income must be contributed to the cost of the care that is being received, but this requirement is waived if the healthy spouse is relying on the income.
They can qualify for a Monthly Maintenance Needs Allowance. During the current calendar year, the maximum allowance has been $3216, and it is going up to $3259.50 in 2021.
The minimum allowance has been $2113.75 this year, and it will be increased to $2155 when the new year rolls around.
In the previous section, we touched upon the fact that the family home is not a countable asset. While this is true, there is an equity limit, and this is also going to be increased in 2021. The 2020 home equity limit of $595,000 will go up to $603,000 next year.
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