Medicaid is state and federal funding that pays for long-term care costs, either at home, called Community Medicaid, or in a nursing home, called Institutional or Nursing Home Medicaid. The Medicaid rates change every year for income and asset requirements to determine eligibility for benefits. Following are the 2020 rates.
A single applicant for Community Medicaid may keep up to $15,750 in assets and $875 in income. If the applicant’s income is greater than the limit, a Pooled Income Trust created by a nonprofit organization may shelter the excess income to make the applicant eligible for Community Medicaid.
A married applicant for Community Medicaid may keep up to $15,750 in assets and $875 in monthly income. The non-applicant spouse may keep their own income and keep up to $128,640 in assets. The rules are different if one spouse is enrolled in a managed long-term care plan. The applicant spouse may keep $409 of monthly income and the other spouse may keep $3,216 of monthly income. The healthy spouse may keep between $74,820 and $128,640 in assets. Spousal refusal is another option that may help the healthy spouse keep more income and assets. A review of the couple’s income and assets helps determine which approach is more favorable.
Under Community Medicaid rules, the primary residence is exempt, meaning it is protected, if the applicant is living in the house up to an equity limit of $893,000.
A single applicant for Nursing Home Medicaid may keep up to $15,750 in assets and $50 of monthly income. The rest of the applicant’s income goes to the nursing home.
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A married applicant for Nursing Home Medicaid may keep up to $15,750 in assets. The spouse at home, called the community spouse, may keep between $74,820 and $128,640 in assets, plus other exempt assets including the residence up to the equity limit of $893,000, a car and other assets. If the couple’s assets exceed the limits, spousal refusal may protect more assets. The community spouse may keep $3,216 of monthly income and may keep more income if his or her own income exceeds the limit.
Other exempt assets for Community and Nursing Home Medicaid include prepaid Irrevocable Funeral Trusts for both spouses and other family members, and IRAs and other qualified retirement funds if the applicant and spouse are taking income distributions.
Gifts cause a penalty period when the applicant must use his or her own assets to pay for care for a period of time based on the amount of the gifts. The look-back rule is five years for Nursing Home Medicaid and two and a half years for Community Medicaid.
The Medicaid Asset Protection Trust protects assets from nursing home costs and home care after the assets are in the trust for the required amount of time. Despite strict Medicaid rules, it is almost never too late to save money from long-term care costs using spousal refusal for married couples or the gift and loan strategy that may save half of a single person’s assets. Consulting an elder law attorney when faced with a Medicaid application is essential.
Bonnie Kraham is an attorney practicing elder law estate planning with Ettinger Law Firm, 75 Crystal Run Road, Middletown. She can be reached at 845-692-8700, ext. 119 or bkraham@trustlaw.com. This column is intended to provide general information, not legal advice.