Most people probably associate Medicaid with health insurance for the nation’s poorest citizens, but it is also the largest single funding source for elder nursing home care. The program also provides in-home care for the elderly, but this option requires a waiver that can be hard to get.
If you’re over 65 years of age and in need of nursing care — in your home or at an outside facility — Medicaid places income and asset limitations in order for you to qualify. For most purposes, the Medicaid applicant cannot have income exceeding $2,382 a month, or assets exceeding $2,000 (which rises to $3,000 if two spouses are applying).
Married or single, what can you do to become eligible for Medicaid nursing care if your income or assets exceed those amounts?
If you’re in Greenwood, Indiana, or anywhere from Indianapolis to Martinsville, the estate planning and elder law attorneys at Vick Law, P.C., can explore options for you to protect your income and assets while qualifying you for Medicaid elder care. Reach out today to schedule a consultation.
The math can get a bit tricky when it comes to income and asset levels to qualify for Medicaid, either Institution/Nursing Home Medicaid or Medicaid Waivers/Home and Community-Based Services (HCBS). If you’re single or only one spouse is applying alone for Medicaid, the standards given above apply — $2,382-a-month in income and $2,000 in assets. If both spouses are applying, they can each have that level of income, while asset allocation rises to $3,000.
Income includes virtually every source imaginable — annuities, retirement income, Social Security, stock dividends, employment, alimony, and the like. (COVID-19 stimulus checks are exempt.) Assets include savings, checking accounts, non-residence real estate, cash, and most investments. Exemptions include personal belongings, household furnishings, an automobile, irrevocable burial trusts, and one’s primary residence up to an equity value of $603,000.
If only one spouse is applying for Medicaid, the non-applicant spouse can retain up to $103,380 in assets in addition to the exempt assets listed above. Only the applicant’s income is capped.
If your income is over the limit of $2,382 monthly, you can establish what is called a Qualified Income Trust (QIT), also known as a Miller Trust. Your income above the allowable limit is deposited into a trust and a trustee is named to control the money. The trust must be irreversible — cannot be modified or canceled — and the money must be used for qualified purposes like medical expenses. The money in the trust is then not counted as income.
Assets are a different story. The only allowable method to reduce assets is called “spending down.” To spend down means to use your assets to pay off your credit card debt and other debts, make modifications or additions to your residence, or pay funeral and burial expenses.
A method that will not likely work is to give money to others, for instance, to transfer $20,000 to a child or grandchild for a down payment on a home. This is called “asset shielding” and can cause huge problems when qualifying for Medicaid.
By law, the Medicaid program is allowed to examine your spending and other financial records going back five years when you apply for the program. If you did give $20,000 away for a down payment, that could easily become a red flag in the qualifying process.
If this gift is deemed to be asset shifting, then Medicaid will deny your application for the number of months that sum represents in terms of the average cost of nursing home care in your state. Say this works out to be six months. Then you won’t be eligible for Medicaid for six months. But it gets worse: you then have to spend those six months in a nursing home paying for yourself before you can become eligible for Medicaid.
Medicaid pre-planning can help avoid the pitfalls of being denied because of income or asset levels, or because of asset shifting. Remember, the Medicaid people will examine every aspect of your financial life going back five years. This could put you in a huge financial hole to begin with. With this in mind, planning should begin well before you turn 65 years old.
Vick Law, P.C., is dedicated to helping people achieve peace of mind and financial security as they approach their elder years. This includes solid estate planning, along with the possibility of long-term elder care. No one wants to consider the possibility of being incapacitated or too ill to care for themselves, but having the legal instruments in place to protect your financial well-being should long-term nursing care be needed is important.
If you’re anywhere in Indiana — from Greenwood to Indianapolis to Martinsville — the Medicaid pre-planning and estate planning firm of Vick Law, P.C., can help you achieve peace of mind for the long term by putting a detailed plan in place. Preparing for tomorrow really can start as soon as today. Call now to schedule an initial consultation.