One of the greatest fears of older Americans is that they may end up in a nursing home. This not only means a great loss of personal autonomy, but also a tremendous financial price. Depending on location and level of care, nursing homes cost between $80,000 and $150,000 a year.
Most people end up paying for nursing home care out of their savings until they run out. Then they can qualify for Medicaid to pick up the cost. However, this is quite expensive. If the applicant is married, it can also put the well spouse at financial risk. Careful planning, however, can help protect your estate, whether for your spouse or for your children.
In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,000 in “countable” assets. The spouse of a nursing home resident–called the “community spouse” — is limited to one half of the couple’s joint assets up to $120,900 (in 2017) in “countable” assets. This figure changes each year to reflect inflation. Called the “community spouse resource allowance,” this is the most that a community spouse may retain without a hearing or a court order. The least that a community spouse may retain is $24,180 (in 2017).
Example: If a couple has $100,000 in countable assets on the date the applicant enters a nursing home, he or she will be eligible for Medicaid once the couple’s assets have been reduced to a combined figure of $52,000 — $2,000 for the applicant and $50,000 for the community spouse.
All assets are counted against these limits unless the assets fall within the list of “noncountable” assets. Some examples of noncountable or exempt assets follow.
- Personal possessions, such as clothing, furniture, and jewelry
- One motor vehicle
- The home of the applicant if the applicant, applicant’s spouse, or applicant’s minor or disabled children reside in the home. The equity value of the home must be less than $560,000 if it is the residence of the applicant. The home will not be considered a countable asset for Medicaid eligibility purposes even if none of the individuals listed above reside in the home as long as at least one of those individuals intends to return home after medical treatment.
- Prepaid funeral plans
- Income producing real estate
- Income producing personal property
- Annuities or promissory notes that meet precise criteria required by Medicaid law
- Assets that are considered “inaccessible” for one reason or another
Medicaid planning usually requires transferring, spending and/or “sheltering” excess resources in non-countable form (like those listed above). Before starting a Medicaid plan, you should consult an elder law attorney who can outline those options that best meet your goals. Contact us today if we can assist you in accessing valuable Medicaid benefits for you or your loved one and protect assets.
Jeff is Certified as an Elder Law Attorney (CELA) by the National Elder Law Foundation, a distinction held by only a handful of lawyers in Indiana. For almost 20 years, he has focused on elder law, estate planning, long-term care planning, Medicaid planning, Veterans Affairs benefits planning, special needs planning, guardianships, and estate administration.