The Medicaid program is largely ignored by people with health insurance that will qualify for Medicare when they are 65 years of age. This being stated, it should definitely be on your radar if you want to preserve your legacy for the benefit of your loved ones.
It is important because of one inconvenient truth: Medicare does not pay for nursing home care. According to the state, the average cost for a month in a nursing home in Connecticut is $13,512.
According to the U.S. Department of Health and Human Services, 13 percent of people that receive paid care require the assistance for more than five years. Overall, the average length of stay is one year, and the possible exposure is doubled for married couples.
Medicaid will pay for the custodial care that nursing homes provide, and this is why you should gain an understanding of the Medicaid parameters.
2021 Medicaid Asset Limit in Connecticut
In almost all states in the union, the Medicaid asset limit is $2000, but it is different in Connecticut. Our resource limit is just $1600, but everything that you own does not count.
Countable Assets
The most significant asset that is not counted is your home, but there is a $906,000 equity limit. If a healthy spouse is remaining in the home while their spouse is entering a nursing facility, there is no equity limit.
Medicaid does not count one motor vehicle, and wedding rings, engagement rings, and heirloom jewelry are exempt. Furniture, appliances, and other household items are not counted, and your personal effects also fit into this category.
Up to $1500 can be set aside to help cover final expenses, and you can have the same amount of whole life insurance. Prepaid burial plots and unlimited term life insurance are permitted.
Healthy Spouse Allowances
If a married person can still living independently while their spouse is entering a nursing home, the healthy spouse is entitled to a Community Spouse Resource Allowance. This is half of the countable assets up to a limit that stands at $130,380 this year.
In addition to the maximum limit, there is a minimum amount that a healthy spouse can retain even if it is more than half of the assets. In 2021, the minimum allowance is $26,076.
A Medicaid beneficiary can keep $60 a month to cover personal needs, and the rest of their income must be contributed toward the cost of the care that is being received.
However, if a healthy spouse needs the income, they can receive it in the form of a Monthly Maintenance Needs Amount. The maximum allowance in our state this year is $3259.50, and the minimum is $2155.
Medicaid Estate Recovery
We touched upon the fact that the home is not a countable asset, and this could allow you to breathe a sigh of relief. However, taking advantage of this opportunity is not a permanent solution because of the Medicaid estate recovery mandate.
If you use Medicaid to pay for long-term care and you are in direct possession of a home, Medicaid would place a lien on the property after your death.
Medicaid Spend-Down and Look Back Period
When you digest all this information, you would logically resolve to give assets to your loved ones if you ever find out that you need long-term care. This would not be in the spirit of the Medicaid program, so there is a five-year look back in place to prevent reactive divestitures.
You have to divest yourself of assets at least five years before you apply for Medicaid coverage.
For many, a Medicaid trust is the ideal solution. You fund the trust and you would have no access to the principal, but you would be able to accept distributions of the trust’s earnings until you apply for Medicaid.
We Are Here to Help!
Our doors are open if you are ready to work with a Glastonbury, Connecticut elder law attorney to develop a nursing home asset protection strategy. You can 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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