You may overlooking a very big expense that you could be confronted with as a senior citizen. Medicare does not pay for a stay in a nursing home, and it will not cover in-home care that is provided by a licensed caregiver.
Why should you be concerned about this when you have been relatively healthy and fully independent all of your life? Once you are in your mid-60s, your life expectancy is into the mid-80s, and life as an octogenarian can be challenging.
The majority of seniors will need some type of paid long-term care eventually according to the United States Department of Health and Human Services. About one out of every three seniors will require a level care that only a nursing home can provide.
Long-term care is very expensive, so nursing home costs can consume all or most of what you have always intended to leave to your loved ones after you are gone.
Medicaid will pay for long-term care, and this is why you should understand the eligibility guidelines. In this post, we will break it down and look at the five most important things you need to know.
Medicaid Asset Limit
The Medicaid asset limit is $2000 in the state of Arkansas in 2021, and this has been the limit for a considerable length of time. A Medicaid beneficiary is entitled to a $40 monthly personal needs allowance, and the rest of their income must be contributed toward the cost of the care.
Some Assets Do Not Count
There are some assets that are not counted for Medicaid eligibility purposes. If you are a homeowner, the property is not counted, but there is a $603,000 equity limit this year. This limit and the others that we will look at going forward are updated annually to account for inflation.
One motor vehicle is not counted, and you can maintain possession of your wedding ring, engagement ring, and heirloom jewelry. Furniture, appliances, and other household items are not counted, and Medicaid does not count your personal belongings.
You can have a prepaid burial plot and up to $1500 saved for final expenses. An applicant can be approved with the same amount of whole life insurance, and you can carry unlimited term life insurance because it doesn’t have a cash value.
There Are Spousal Allowances
If you apply for Medicaid coverage and your spouse is still living independently, your spouse would be called the “community spouse” in Medicaid parlance. They would be entitled to a Community Spouse Resource Allowance, which is half of the countable assets.
There is a limit of the allowance, and in 2021, it is $130,380 in Arkansas. In addition to the maximum limit, a healthy spouse can keep no less than $26,076, even if this is more than half of the countable assets.
As we have touched upon, income that is brought in by a Medicaid beneficiary will be used to defray the costs that are being incurred, but there is an exception for married couples.
If a healthy spouse is relying on the income to maintain an acceptable standard of living, they can receive a Monthly Maintenance Needs Allowance. This is half of the shared assets up to a limit of $3259.50 a month this year, and there is a $2155 minimum allowance.
Five-Year Look Back Period
You can fund an irrevocable Medicaid trust to remove countable assets from your name. The principal would no longer be accessible to you, but you could receive distributions of income that is generated by assets in the trust.
Timing is key, because there is a five-year look back period. The trust must be funded at least five years before you apply for Medicaid, and this rule also applies to large direct gifts that you give to others.
Medicaid Estate Recovery
There is a Medicaid estate recovery phase. If you are a beneficiary, the program will be able to attach assets that are part of your estate. Your home is the only truly valuable piece of property that you can possess if you are a Medicaid beneficiary, so this would be the target.
As a result, you should convey your home into your Medicaid trust to make sure that it is protected during the recovery phase.
Schedule a Consultation Today!
We are here to help if you are ready to work with a Fayetteville, Arkansas elder law attorney to put a nursing home asset protection plan in place. You can send us a message to request a consultation appointment, and we can be reached by phone at 479-443-0062.
Audra has received extensive training from the American Academy of Estate Planning Attorneys, a national organization. She is one of 8 attorneys currently serving on the Academy’s Board of Governors.
Audra and her husband Ernie have two children, Ellyn and Coleman. They enjoy traveling, auctions, and owning a gift and antique store in historic Prairie Grove, Arkansas. The whole family enjoys Razorback sports.
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