On the surface, it can seem as though Medicaid would not be relevant to someone that is going to qualify for Medicare as a senior citizen. The reason why Medicaid is important is because it will pay for a stay in a nursing home, and Medicare does not cover custodial care.
Nursing homes are extremely expensive, so Medicaid can preserve the legacy that you would like to be able to leave to your loved ones after you are gone.
When a married person applies for Medicaid coverage while their spouse can still live at home, the healthy spouse is entitled to certain allowances. They are going to rise in 2021 to account for the cost of living, and we will share the figures in this post.
Before we get there, we will provide a basic overview of the eligibility criteria.
In Connecticut, there is a $1600 asset limit, but there are some assets that are not countable. Your home would fit into this category, but there is an equity limit. In 2020, it has been $893,000 in our state, and it is going up to $906,000 in 2021.
One motor vehicle is not counted, and wedding rings, engagement rings, and heirloom jewelry are exempt. Your personal belongings and household furnishings and appliances are not counted, you can have unlimited term life insurance and up to $1500 of whole life insurance.
The healthy spouse is entitled to a Community Spouse Resource Allowance. This is half of the shared assets that are considered to be countable under the Medicaid rules. There is a limit to this allowance, and it has been $128,640 this year. It will rise to $130,380 in 2021.
There is also a minimum Community Spouse Resource Allowance that stands at $25,728 this year. The figure will go up to $26,076 in 2021. A healthy spouse can keep this much even if it is more than half of the shared countable assets.
A Medicaid beneficiary is allotted a monthly personal needs allowance of $60, and the rest of their income must be contributed toward the cost of the care that is being received. However, a healthy spouse can continue to use the income if it is necessary to maintain an acceptable standard of living.
The community spouse can receive a Monthly Maintenance Needs Allowance. The maximum in 2020 is $3216, and the minimum is $2113.75. In 2021, the maximum will go up to $3259.50 and the minimum will be $2155.
Five-Year Look Back Period
You can fund an irrevocable, income-only Medicaid trust to remove countable assets from your own name with future Medicaid eligibility in mind. As the name would indicate, you can continue to receive income that is generated by assets that have been conveyed into the trust.
However, you would not be able to act as the trustee, and you would have no access to the principal. If and when you apply for Medicaid coverage, the principal would not count, but timing is key.
There is a five-year look back period. The funding must be completed at least five years before you submit your application for coverage. Your eligibility is delayed if you violate this rule.
The duration of the period of ineligibility would be based on the amount that you gave away as it applies to the cost of nursing home care in Connecticut. Simply put, if you gave away enough to pay for two years of nursing home care within this five year window, your eligibility would be delayed by two years.
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Nursing home asset protection should definitely be a priority when you are developing your legacy plan. We can gain an understanding of your unique situation and your estate planning goals and help you devise a custom crafted plan that is ideal for you and your family.
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