If you don’t know much about long-term care and the costs associated with it, you should definitely educate yourself when you are looking ahead toward the future. You may be surprised to hear that Medicare does not pay for living assistance, and this is a very big deal, because long-term care is extremely expensive.
Here in the Overland Park area, the median annual charge for a private room in a nursing home is over $70,000. Assisted living communities are also costly at more than $34,000 per year. If you have to spend multiple years in one of these facilities, the accumulated costs can be devastating.
In fact, depending on the extent of your resources and the duration of your stay, you may lose everything that you intended to leave to your loved ones after you pass away.
Nursing Home Asset Protection
Fortunately, there is a strategy that can be implemented to prepare for potential long-term care costs. Though Medicare does not pay for the custodial care that you would receive in a nursing home or assisted living facility, Medicaid does pay for long-term care. That’s the good news, but the bad news is that it is difficult to qualify if you have resources, because there are low asset limits.
The limit on countable assets for a single person is just $2000, but there are a good number of things that are not considered to be countable for Medicaid eligibility purposes. You can have unlimited term life insurance, which is life insurance with no cash value, and you can have up to $1500 of whole life insurance coverage.
Your household items and personal effects are not counted, and the value of one car or passenger truck would not be applied toward this $2000 limit. If you have a wedding ring, engagement ring, and/or heirloom jewelry, the items would not be looked upon as countable assets.
If you own a home, it would not be counted, but there is an equity limit. At the time of this writing in 2020, the home equity limit in the state of Kansas is $595,000.
It is important to point out the fact that Medicaid could seek reimbursement from the value of your home after your death, but this can be prevented through the proper advance planning.
Speaking of the healthy spouse, there are certain protections for a spouse who will still be able to live independently.
Under Medicaid rules, most of your income must go toward the cost of your care if you are a benefit recipient who is residing in a nursing home. However, if your spouse is relying on the income, they can continue to utilize it. This is called the Medicaid Monthly Maintenance Needs Allowance, and the maximum amount of this allowance is $3216 in 2020.
The healthy spouse is also entitled to a community spouse resource allowance. This allows the spouse who is still living independently to keep half of the couple’s shared countable assets up to $128,640. This is the figure for 2020, but it changes slightly year-by-year to account for inflation.
When it comes to the assets that are countable, you can engage in a process called a Medicaid spend down. As the name would imply, you either give away or spend assets to be able to satisfy the Medicaid eligibility requirements. It would be logical to assume that you can simply do this if you ever find out that you need to enter a long-term care facility or nursing home.
The powers that be you don’t want people to be able to do this, so there is a five-year look-back period in place. You are penalized, and your eligibility is delayed if you give away assets within five years of your Medicaid application date. This is why careful, intelligent advance planning is important, and we understand exactly how to advise our clients who are positioning assets in an effort to obtain Medicaid eligibility when the time is right.
Our Free Workshop Series Is Underway!
Now is the time to register if you would like to attend one of the workshops that our elder law attorneys are holding. They are free, but space is limited, so we urge you to visit our workshop page to register for the session that fits into your schedule.