Like many people, you may have been fortunate enough to make it through your entire working years covered by employer-sponsored or privately funded health insurance. Consequently, you had no need to qualify for Medicaid. As a senior, however, there is a good chance that might change, and if you are not prepared, your retirement nest egg could be at risk. To help ensure that you are prepared, the Durham Medicaid Lawyers at Clarity Legal Group® discuss five things you need to know about qualifying for Medicaid as a senior.
Why Would I Need to Qualify for Medicaid as a Senior?
Experts tell us that if you are close to retirement age right now (age 65), you stand close to a 70 percent chance of needing some type of long-term care (LTC) services before the end of your lifetime. If you or your spouse does need LTC, you will quickly realize that the expenses associated with LTC are high. Nationwide, residents paid, on average, over $80,000 for a year of LTC in 2017. North Carolina has historically kept pace with the nation when it comes to LTC costs, with a year of LTC averaging about $90,000 in the state that same year. Taking into consideration the average length of stay is three years, it becomes easy to see how LTC costs could become problematic if you are forced to pay them out of pocket. That is precisely what could happen given that neither Medicare nor most health insurance policies will cover LTC expenses. It is for this reason that you might find yourself in need of qualifying for Medicaid as a senior, because Long-Term Care Medicaid does cover LTC expenses.
Qualifying for Medicaid as a Senior
Medicaid is a healthcare program that is primarily funded by the federal government; however, the individual states have the option to supplement funding for Medicaid if they choose to do so. Although the federal government provides oversight for Medicaid, it is administered by the individual states, which is why there are differences in the eligibility criteria and benefits offered from state to state. In general, however, the following information relating to qualifying for Long-Term Care Medicaid as a senior is fairly universal:
- Medicaid has asset limits. Because Medicaid is a “means-tested” program that is intended to help needy individuals and families with health care expenses, the program uses asset limits when determining eligibility. An applicant cannot own “countable resources” (assets) valued at more than the limit or the application will be turned down. In North Carolina, the Long-Term Care Medicaid program has an asset limit of $2,000 for an individual applicant. If the value of your countable resources exceeds that limit, your application will be denied and you will be forced to “spend down” those assets, effectively putting your retirement nest egg at risk.
- Not all assets are considered “countable resources.” Although Medicaid does employ an asset limit, not all assets are considered countable resources. Some assets are exempt from consideration. Common exempt assets include a primary residence, a vehicle, and term life insurance policies. For 2018, there is an equity limit of $572,000 for your home.
- The five-year “look-back” period prevents last-minute asset transfers. At one time, an applicant could simply transfer valuable assets to a family member immediately prior to applying for Medicaid to resolve the asset limit obstacle. Medicaid now employs a five-year “look-back” rule that prevents such asset transfers. The rule allows Medicaid to review your finances for the 60 month period prior to applying. Any asset transfers made for less than fair market value could result in the imposition of a waiting period before Medicaid will begin paying for LTC expenses.
- Your spouse will not be left completely without assets and income. The Spousal Impoverishment rules attempt to ensure that your spouse will not be left destitute should you need to qualify for Medicaid to cover LTC expenses. They are not particularly generous. The current Medicaid rules call for a “division of assets.” All assets belonging to either spouse are added together, except for exempt assets. One-half of the total (but not less than $24,720.00 nor more than $123,600 as of 2018) is considered as the “spousal share” for the community spouse. The spousal share is protected from the Medicaid spend-down requirements, ensuring that those assets remain available for the community spouse to use.
- Medicaid could still come after your assets after your death. The Medicaid Estate Recovery Program (MERP) allows states to pursue claims against your estate after your death if the state paid for your LTC through Medicaid while you were alive. North Carolina has recently updated its MERP rules to be more aggressive in their efforts to collect against the estates of former Medicaid recipients. You should be aware of the ability to file a claim against your estate.
Contact Durham Medicaid Lawyers
The key to ensuring that you qualify for Medicaid as a senior if you need it, and protecting your retirement nest egg, it to incorporate Medicaid planning into your comprehensive estate plan now. Planning will help you protect assets, avoid a look-back penalty period, and avoid exposure to an estate recovery claim. Such planning can also include assistance in filing the Medicaid application itself, which has pitfalls and best practices to ensure that your application has its best chance to be approved. To find out more about Medicaid planning, or to schedule a consultation, give the Raleigh, Durham, Cary, and Chapel Hill Medicaid Lawyers at Clarity Legal Group® a call at 919-484-0012 or contact Clarity online.
- 5 Things You Need to Know about Qualifying for Medicaid As a Senior - October 4, 2018