In the March edition I introduced a three-part series to address the four ways that you can pay the cost of nursing home care. It is crucial that all of us (at or nearing our retirement years) take the time to educate ourselves and then implement a plan that will address long-term care costs. Of people turning 65, 69 percent will need some form of long-term care and Women are more at risk (79 percent).
The corner stone to this education and planning process is to understand the roll Medicare and Medicaid will play. Medicare was addressed in the April edition.
What is Medicaid?
Medicaid is a benefits program that is funded by both the federal and state governments and administered by each state. Sometimes the rules can vary from state to state. One primary benefit of Medicaid is that the Medicaid program will pay for long-term care in a nursing home beyond Medicare’s 100-day limitation and Medicaid will pay for custodial care for Alzheimer’s and Parkinson’s disease. However, to be eligible to receive Medicaid long-term care assistance you must pass certain tests on the amount of income and assets that you have.
Exempt Assets & Countable Assets:
What Must Be Spent?
To qualify for Medicaid, applicants must pass some fairly strict tests on the amount of assets they can keep. To understand how Medicaid works, you first need to understand the difference between “exempt” and “non-exempt” (or countable) assets. Exempt assets are those that Medicaid will not take into account (at least for the time being) when determining whether someone qualifies for long-term care assistance. In general, the following are the most common exempt assets:
Real property, which the individual owns and occupies as his or her home, subject to a $536.000 equity limitation. The home must be the principal place of residence. The nursing home applicant may be required to show some “intent to return home” unless the applicant’s spouse is still living in the home
Household goods and personal effects of moderate value used in the home
One (1) motor vehicle (used for employment or medical transportation)
Burial spaces and certain related burial items and arrangements for the applicant and spouse
Irrevocable burial trust and/or an insurance policy irrevocably assigned for the purpose of burial – up to a specified dollar maximum
Cash surrender value of life insurance policies with combined face values of $1,500 or less per individual
All other property and assets are generally treated as non-exempt and are countable. Basically, all money and property, and any item that can be converted into cash, is a countable asset unless it is one of those assets listed previously as exempt.
While the Medicaid rules themselves are complicated, typically a single person will qualify for long-term care Medicaid assistance (as long as they meet all of the other requirements) if they only have exempt assets and a small amount of cash and/or money in the bank – not to exceed $4,000 in Nebraska.
Division of Assets:
Medicaid Planning for Married Couples
Division of Assets is the name commonly used for the Spousal Impoverishment provisions and only applies to married couples. The intent of the Spousal Impoverishment rules was to change the eligibility requirements for Medicaid where one spouse needs nursing home care while the other spouse remains in the community, i.e., at home. The law, in effect, recognizes that it makes little sense to impoverish both spouses when only one needs to qualify for Medicaid assistance for nursing home care. As a result of this recognition, division of assets was born.
Basically, in a division of assets situation, the couple gathers all their countable assets together in a review. Exempt assets, discussed previously, are not counted. The countable assets are then divided in two, with the at-home or “community spouse” allowed to keep the greater of one-half of all countable assets up to (in 2014) a maximum of $117,240 (the maximum amount) or $23,448 (the minimum amount). The other half of the countable assets must be “spent down” until less than $4,000 remains. The amount of the countable assets that the at-home spouse gets to keep is called the Community Spouse Resource Allowance (CSRA). Next month I will present some case studies to demonstrate how these Medicaid asset qualification rules work with different situations.
