We are going to share some important facts about the Medicaid program here, but before we do, we must provide some background information. On a surface glance, a lot of people would have no interest in this subject, because they know that they will qualify for Medicare when they are seniors.
Why would you need Medicaid if you going to have Medicare coverage? And if you are going to have some resources, you wouldn’t qualify for Medicaid anyway, right?
This logic is understandable, but there is a good reason why Medicaid should be on your radar.
Medicare does not pay for nursing home care or any other type of custodial care. Long-term care is extremely expensive, and Medicare does cover living assistance. That’s the simple but profound answer to these questions.
Now that you get the picture, we can move on to provide some important facts and figures.
Asset Limits and Countable Resources
In the state of Connecticut where we practice law, the Medicaid eligibility limit for countable assets is $1600. This can sound like a very small amount of money, and it is, but some things do not count.
Your home is not a countable asset, but there is an equity limit. In our state in 2020, the limit is $893,000. When a married person is applying for Medicaid and there is a healthy spouse that can still live independently, the independent spouse can keep the home with no equity limit at all.
One vehicle that is used as a primary source of transportation is not counted. Wedding rings, engagement rings, and heirloom jewelry are not countable assets, along with personal belongings and household goods. Up to $1500 of whole life insurance is allowed, and the same amount can be set aside for final expenses.
Term life insurance is coverage with no cash value. There is no limit to the amount of term life insurance that an applicant can retain, and prepaid burial plots are exempt from consideration.
Provisions for a Healthy Spouse
In addition to the lifting of the home equity limit, there are some other provisions made for a healthy spouse. One of them is the Medicaid Community Spouse Resource Allowance. This gives the healthy spouse the right to retain half of the shared countable assets up to a limit.
The limit in Connecticut in 2020 is $128,640. There is also a minimum allowance of $25,728. This is the minimum that can be retained even if this figure is more than half of the total shared countable assets.
If the healthy spouse is relying on some or all of the income that is brought in by the institutionalized spouse, the independent spouse can receive a Monthly Maintenance Needs Allowance. The maximum allowance in our state is $3216 a month, and the minimum is $2113.75 monthly.
After you digest all this information, you would logically resolve to give gifts to your loved ones if you ever find out that you need long-term care. This is essentially what Medicaid planning is all about, but you have to act in light of the five-year look back period.
You would not be eligible if you give away assets within five years of applying for Medicaid. A penalty would be imposed that would be based on the amount that you gave away as it compares to the cost of long-term care.
For example, if you gave away enough to pay for two years in a nursing home, your eligibility would be delayed by two years. This is why it takes careful advance planning to maintain your standard of living as you aim toward future Medicaid eligibility.
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