It is natural to assume that your health insurance needs will be satisfied for life after you qualify for Medicare coverage. Unfortunately, there is a significant expense that most senior citizens will face that is not covered by the program.
Medicare will not pay for a stay in a nursing home, and it doesn’t cover custodial care that is provided by an in-home caregiver. You can expect to pay over $150,000 for a year in a nursing home in the Hartford area, and in-home care comes with a price tag of more than $50,000.
This is a lot of money to come up with late in your life after you have been retired for years, and a married couple could potentially face two different sets of nursing home bills.
Fortunately, there is a widely embraced solution in the form of the Medicaid program.
Countable Assets
Since Medicaid is a need-based benefit, there is an asset limit. In Connecticut in 2021, it stands at $1600, but certain things that you own are not considered to be countable for Medicaid eligibility purposes.
Your home is the most valuable piece of property that is not counted, but there is a $906,000 equity limit this year. If a healthy spouse is remaining in the home, there is no equity limit at all.
These are the other non-countable assets:
- One motor vehicle
- Wedding and engagement rings
- Heirloom jewelry
- Personal effects
- Household items
- Prepaid burial plots
- Unlimited term life insurance
- $1500 of whole life insurance
- $1500 saved for final expenses
Medicaid Estate Recovery
There is a Medicaid estate recovery mandate. The program is required to seek reimbursement from the estates of beneficiaries after they pass away.
As a result, even though you can qualify if you own a home, Medicaid could place a lien on the home after your death if it was in your personal possession at the time of your passing.
However, there are exceptions. If a healthy spouse is still living in the home, it would be protected, and there is a caregiver child exemption.
To explain this exemption through the use of an example, let’s say that your daughter has been caring for you in your home for three years late in your life. If she did not provide the assistance, you would have moved into a nursing home.
Under these circumstances, you could give the home to your daughter under the caregiver child exemption, and it would be protected from Medicaid estate recovery. We used a three year timeframe for the purposes of this example, but the minimum is two years.
Irrevocable Medicaid Trust
The major step that you have to take to initiate a nursing home asset protection plan is the creation of an irrevocable, income-only Medicaid trust. To implement the strategy, you fund the trust and you name a trustee to act as the administrator.
You would not be able to touch the principal, but you could receive distributions of the earnings, and this will be sufficient for many people. If you apply for Medicaid at some point, the principal would not count, but there is one important caveat.
There is a five-year look back period, so the trust must be funded at least 60 months before you submit your application. Your eligibility is delayed if you divest yourself of assets within this timeframe.
The duration of the period of ineligibility would depend on the amount of the divestiture and the cost of long-term care in Connecticut.
For instance, let’s say you transfer an amount that would pay for six months of care. Under these circumstances, your eligibility would be delayed by six months.
Schedule a Medicaid Planning Consultation Today!
When you work with an attorney from our firm to develop a plan for aging, we will gain an understanding of your situation and make the appropriate recommendations. Ultimately, you will go forward with a custom crafted plan that provides total peace of mind.
You can schedule a consultation appointment at our Glastonbury, Connecticut elder law office if you call us at 860-548-1000. There is also a contact form on this site you can use to send us a message, and if you reach out electronically, you will receive a prompt response.
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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