Many people worry about what will happen if their spouse needs to go to the nursing home. Will Medicaid take the home where so many of their memories were made? What about their car? Investment accounts? Their life savings? While it’s true that Medicaid income and asset limits are strict, with proper planning and an understanding of Medicaid eligibility requirements, most couples can avoid losing their hard-earned assets to the nursing home.
In Alabama, the average cost of nursing home care is $6,459/month—and this number is expected to increase to $11,648 by the year 2038. Medicaid will pay the cost of long-term care for those who meet income and asset eligibility requirements. If you are married, in order to qualify for Medicaid, the individual who needs nursing home care cannot have monthly income in excess of $2,523, and cannot own assets valuing more than $2,000. The spouse who doesn’t need nursing home care—known as the “community spouse”—can keep one half of their assets, valuing no more than $137,400.
Fortunately, for married couples, Medicaid does not include the marital home towards the asset limit. The community spouse can continue to live there. However, if they eventually need long-term nursing care, Medicaid will put a lien on the house for the amount of money they pay for your care, and your children may not be able to inherit the home.
That being said, you have worked a lifetime to accumulate your wealth and assets, and passing them down to your children and grandchildren is important. There are some strategies that can help you comply with Medicaid income limits, without making costly mistakes that could disqualify you:
1. Asset Protection Trusts. These trusts, when drafted and funded properly, transfer the ownership of assets from you to the trust. This means they are protected from Medicaid, and other creditors and predators. However, keep in mind that Medicaid will look back 5-years from the date of application—any assets transferred during that period can incur penalties.
2. Income Trusts. Qualified or Pooled Income Trusts can hold income in excess of the $2,323/month limit imposed by Medicaid.
3. Medicaid Compliant Annuities or Promissory Notes. This can be helpful to offset the cost of nursing home care if a penalty period is inflicted. While planning ahead is obviously a better choice, if you find yourself in a crisis where nursing home care becomes necessary on short notice, this strategy can save you and your heirs money.
4. Spend Down Assets in Compliance with the Look-Back Period. The following purchases and investments will not violate the 60-month look-back period:
a. Pay off accrued debt
b. Purchase medical devices, like wheelchairs, dentures, eyeglasses and hearing aids, etc.
c. Home modifications and renovations
d. Vehicle repairs
e. Create a formal life care agreement with the help of an attorney
f. Pre-pay for your funeral
To qualify for Medicaid, it’s imperative that you avoid certain mistakes—and some of them are not so obvious. Working with a qualified elder law attorney who understands Medicaid income limits and eligibility requirements, as well as how to structure a trust to protect your assets while increasing your chances of qualifying for Medicaid, is so important.
Attorney Bill Miller of Miller Estate and Elder Law is an experienced elder law attorney, with offices in Birmingham and Anniston, AL. Gain access to his free 20-minute webinar about Medicaid qualification by following the link below, or contact us via the website today.
https://millerestateandelderlaw.com/medicaid-qualification-webinar