Medicaid for long-term care is a huge topic, but we’re going to cover the basics as briefly as possible here. How this applies depend to you or your loved one depends on your particular circumstances. Because these rules are complicated and change often, you should consult with Board Certified Elder Law Specialist to get the best results.
For care in the Nursing Home
For a single person: If you’re single and need nursing home care, you can qualify for Medicaid when your countable assets are less than $2,000. (The house is a noncountable asset, but see the Estate Recovery information below so you know why the house may be noncountable but it’s not necessarily protected.)
If you’re single and have over $2,000 in countable assets (plus the house), the assets will have to either spent them on care, or converted to noncountable assets, or gifted. Any gifts made within 5 years prior to application are subject to a medicaid penalty. Despite this 5-year lookback rule, generally with the right combination of strategies, the Medicaid applicant can qualify for Medicaid while protecting some of the assets without continuing to pay privately. He or she can protect about half of their assets plus protect the homeplace if he or she gets the right advice AND can either sign documents still or has the right type of Durable Power of Attorney in place. In other words, you need to plan for a Medicaid application immediately after you enter the nursing home, not after you’ve spent down. Don’t presume that there is nothing to be done or that you have to pay privately for 5 years. People often ask, “When is it too late to plan?” We say, “When you have nothing left to protect.”
For a married couple: When your spouse is in the nursing home, Medicaid will tell you to spend half or more of the assets, and apply later to see if you can qualify for assistance. Don’t listen to them! It’s not their job to help you preserve your assets. Married couples can generally protect nearly all of their combined assets…which is a better result than for a single person…and the at-home spouse can keep all of his or her own Social Security and monthly pension. Get the right help soon after a spouse enters the nursing to avoid impoverishment for the at-home spouse.
For care in Assisted Living
Special Assistance (which is similar to Medicaid) can help to pay for North Carolina Care in assisted living.Like Medicaid, the Special Assistance applicant can have only $2,000 of countable assets. The house is not a countable asset. However whereas there is no income limit for Medicaid in a nursing home, there is an income cap for Special Assistance eligibility. Currently, if the applicant has more than $1247.50 (gross) income per month, he or she will not be eligible for Special Assistance. If the applicant is in a memory care facility, the income cap is higher: $15,80 maximum gross income per month. Not all facilities accept Special Assistance. Again, if you have too much in countable assets, there are ways to protect most of those assets regardless whether you’re married or single. Be sure to get help from an Elder Law attorney who handles these types of applications.
VA Aid and Attendance can help pay for assisted living costs. For a wartime veteran who served during a war, and meet the income and asset tests (or for a surviving spouse of a wartime veteran), the VA Aid and Attendance program can pay up to about $2,000 per month for a married veteran. The amounts are less for a single veteran or married couple. Generally the applicant can have a house plus about $80,000 for a married couple, and about $$50,000 for a single applicant. There are pending rule changes about gifting penalties for this VA benefit, so get help from someone who knows the rules.
For care at home
Care at home is likely to require private pay, and is a good reason to plan ahead by making wise financial decisions and leveraging your resources with investments that have long-term care benefits. Also, Veterans Aid and Attendance can help to pay for care at the home (the rules are the same as mentioned above). There is also a program available called PACE, that can help provide care at home for a single or married person, and the Medicaid rules could apply to help the person qualify without having to spend everything and become impoverished. Although there is a CAP program for at-home Medicaid help, it generally doesn’t prove helpful for most people because of a long waiting list, and limited benefits.
What about protecting my house?
Your house is a noncountable asset. But if you are in a nursing home and die owning that house, the house is not protected. Medicaid will be able to have your house sold and get reimbursed for every dime Medicaid spent on your care. So if you’re single generally you’ll want to use an enhanced life estate deed if you haven’t already placed your home in trust. If you’re married, you’ll want to have the house transferred into the healthy spouse’s name.
How can I protect my spouse if he or she survives me?
People sometimes ask, “I’m married and my spouse is in the nursing home or has Alzheimer’s. What happens if my spouse survives me and is there any planning I need to do?”
The answer is, that if you’ve got a “Sweetheart Will” that leaves everything to your spouse (as most people do) you’ve got a problem that needs to be fixed. If you die first, all of your assets and your jointly owned real estate will pass to your spouse, and then will be largely spent on his or her care leaving them with only $30 per month to live on for the rest of his or her life. You need to have the homeplace transferred into your name, and you need to update your Will so that you leave assets in a trust specifically designed to protect assets for the surviving spouse, so that he or she will not run out of money in a nursing home.
But I thought that I could make a $15,000 gift without a penalty?
Yes, gift tax rules do allow for gifting without requiring any gift tax return. However, Medicaid does not have any such rule. Medicaid counts all gifts made within 5 years before the Medicaid application. The gifts are totaled, then divided by $6,300 to determine the number of months a person must wait before Medicaid can start.
What should I do next?
There are three times it’s important to update your planning, as follows:
- When you’re healthy and there are no health care concerns. By planning ahead you’ll have more options and you will be ready for a future crisis due to sudden illness or accident.
- If you have memory or mobility concerns, or get a diagnosis of Alzheimer’s. At that point it’s not so much a question of might you need long-term care, it’s a question of when. You should work with a Board Certified Elder Law attorney to plan for your future legal, financial and health care concerns…for you and your loved ones.
- When you’re confronting a care crisis head on. If you or a loved one is in the nursing home home or will be soon, take action right away. Long-term care can cost $75,000 per year or more, and can leave you and your family broke if you delay. You never want to be out of money, because they you will be out of options.