The majority of senior citizens will eventually need help with their activities of daily living, and about one third of them will reside in nursing homes. In Connecticut where we practice law, the average cost for year in a nursing home is approximately $150,000.
Medicare is the primary insurance provider for seniors. Since most elders will require living assistance, and Medicare is largely for older people, you would assume that the program would pay for long-term care. In fact, the custodial care that these facilities provide is not covered.
The Medicaid Solution
Medicaid is a jointly administered federal/state government health insurance program, and it does pay for living assistance. However, because it is need-based, there is a very low asset limit. In most states, it is $2000, but the limit in Connecticut is just $1600.
That’s the bad news, but the good news is that some things that you may own are not considered to be countable assets for Medicaid purposes. One motor vehicle is allowed, and you can retain ownership of your wedding ring, your engagement ring, and any heirloom jewelry that you may have.
The items that you have around the house are not counted, and personal belongings are exempt. An applicant can have $1500 set aside for final expenses and the same amount of whole life insurance. Prepaid burial plots do not count, and you can have unlimited term life insurance.
Home Ownership and Medicaid Estate Recovery
Your home is another asset that is not counted, but there is an equity limit. It is adjusted annually to account for inflation, but at the time of this writing, it stands at $893,000 in our state.
You can qualify for Medicaid if you own your home, but you have to be concerned about Medicaid estate recovery. The program is required to seek reimbursement from the estates of people that were enrolled after they pass away. Since the home is the only asset of significant value that a benefit recipient can own, this is where the efforts would be focused.
To keep the home in your family, you could give it to loved ones before you apply for Medicaid. However, this is easier said than done, because there is a five-year look back period.
All gift giving has to be completed at least five years before you submit your application for Medicaid coverage. If you violate this rule, you are penalized, and you have to wait out a penalty period before you can become eligible.
The state has determined that the average cost for a month in a nursing home at this time is $12,851. To explain the penalty through the use of a simple example, let’s say that you gave your son $128,510 one year before you applied for Medicaid. That would pay for 10 months of care, so your eligibility would be delayed by 10 months.
Child Caregiver Exemption
There is one exception to the five-year look back rule as it applies to home ownership. If one of your adult children was living in the home with you for at least two years as a caretaker, you could give the home to the child, and there would be no penalties.
Attend a Free Seminar
Our attorneys are conducting a number of seminars over the coming weeks, and you can learn a lot if you attend one of these sessions. The seminars are chock-full of useful information, and there is no admission charge. You can visit our send us a message to request a consultation appointment, and we can be reached by phone at 860-548-1000.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
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