As elder law attorneys, we have to pass along an inconvenient truth about long-term care costs.
All of your life, you do not want to qualify for Medicaid because the program is only available to people with a significant level of financial need.
With this in mind, when you hear the term “Medicaid planning,” you have to wonder why anyone would want to be in this position. This is a totally logical perspective, but the reason why Medicaid is relevant is because it will cover long-term care.
Many people would say that it makes no sense since Medicare is in place to meet the health care needs of seniors, but the program simply does not cover custodial care.
Life Insurance and the Medicaid Asset Limit
There is a $2000 Medicaid asset limit in most states in the union, but here in Connecticut, it is just $1600. That’s the bad news, but the good news is that some assets that you probably have in your possession do not count.
With regard to life insurance, it depends on the form of coverage that you are carrying when you apply for Medicaid. You are allowed to have $1500 saved to help defray your final expenses, so you can have the same amount of whole life insurance.
Whole life insurance has a cash value, and this is why it is limited to $1500. On the other hand, term life does not have a cash value; it will pay a death benefit, but you cannot cash it out while you are living. As a result, you can qualify for Medicaid with any amount of term life insurance.
Broader Parameters
One motor vehicle is not considered to be a countable asset for Medicaid eligibility purposes, and wedding rings, engagement rings, and heirloom jewelry are exempt. Furniture, appliances, and other household items are not counted, and your personal belongings are exempt as well.
Home Ownership
The rules for home ownership sound great on the surface because you can qualify as a homeowner with a $906,000 equity limit. If a healthy spouse is remaining in the home, there is no equity limit at all.
However, there is a Medicaid estate recovery mandate. If you own your home when you die, the program will place a lien on the property in most cases.
There is an exception made if a healthy spouse is living in the home, and it extends to blind or disabled adult children. Plus, there is an exemption for caregiver children that live with their parents to provide a level care that is allowing the elder to live outside of a nursing home.
In order to take advantage of this exemption, the child must be providing the care for a minimum of two years.
Medicaid Trust and the Five-Year Look Back Period
When it comes to countable assets, you could convey them into an irrevocable Medicaid trust. You would surrender access to the principal, but you could accept distributions of the trust’s earnings while you are still living independently.
It is also possible to give direct gifts to your loved ones, but many people need the income that is generated by their assets. If you give away the resources, you would not be able to take advantage of the earning power.
This can be a very effective strategy, but advance planning is the key. There is a five-year look back period, so the trust must be funded at least 60 months before you submit your Medicaid application.
Your eligibility is delayed if you give gifts within this five-year window. You would be eligible for a period of time that is based on the amount of long-term care you could have paid for with the assets that you transferred out of your name.
Take Action Today!
We are here to help if you are ready to work with a Glastonbury, Connecticut elder law attorney to develop a nursing home asset protection strategy.
Each situation is unique, and your plan should be custom crafted to suit your needs. Personalized attention is key, and this is what you will receive when you work with our firm.
You can schedule a consultation appointment right now if you call us at 860-548-1000, and you can use our contact form if you would prefer to send us a message.
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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