Long Term Care Institutionalized Medicaid Planning Guidelines – 2014
Medicaid is a joint federal-state Social Security program. The laws governing Medicaid vary depending on whether the applicant is single or married, receiving services in the community or in a nursing home, and under or over the age of 65. Disabled individuals of any age and medically needy individuals over the age of 65 are eligible for Medicaid as long as they meet the financial criteria.
Medicaid allows an “institutionalized person” (meaning anyone confined to a nursing home or other facility) to retain only $14,550.00 in resources (“resource allowance”), $50.00 per month in income, plus retain life insurance with a face value of $1,500.00 or less while qualifying for Medicaid benefits. The “resource allowance” includes all resources, including bank accounts, cash value of life insurance policies, savings bonds, and investment accounts. The Medicaid applicant may also establish an “irrevocable trust” pre-need burial fund with a funeral home.
In the event the Medicaid applicant is married and the spouse continues to live in the community, the spouse will be allowed to possess resources totaling $74,820.00, a house with an equity value up to $750,000.00, and a car of any value.
Any assets beyond the allowable limits must first be spent-down or applied towards the cost of the nursing home care before Medicaid will cover those costs. In addition, the community spouse may keep up to $2,931.00 per month income.
There are ways to protect the community spouse during the spend-down period. For example, there is no penalty period imposed on the transfer of assets to a spouse. Also, the couple is entitled to spend funds on anything for which they receive a fair market value prior to an application to Medicaid. Therefore, when there are excess resources, it is strongly recommended that the community spouse pay off any outstanding debts, make repairs and improvements to the home, update appliances, purchase a new car, prepay for burial arrangements, or even take a vacation.
There are also important planning considerations for the community spouse after Medicaid eligibility is established for the institutionalized spouse. This includes special attention to beneficiary designations and the way his/her assets are titled and planning ahead to address the possibility that the community spouse’s health may deteriorate and he/she may need long-term care themselves.
If you have any questions about this article or wish to speak to an attorney, please contact HoganWillig at 716-636-7600. HoganWillig is located at 2410 North Forest Road in Amherst, New York, with additional offices in Buffalo, Lancaster, and Lockport