Medicaid is a program that is available to qualified applicants nationally. Indiana Medicaid is a health insurance program, and it is administered by the federal government along with the state government.
Most senior citizens will qualify for Medicare when they reach the age of 65 under currently existing laws. Medicare is a source of health insurance, so you would not need Medicaid if you qualify for Medicare. Plus, if you have resources, you would not be eligible for Medicaid coverage, because it is a need-based program. To qualify for Medicaid, you must be able to prove that you have a significant level of financial need.
In spite of the above, many senior citizens do seek Medicaid eligibility, because this program will pay for long-term care. Medicare does not pay for living assistance.
Paying out-of-pocket is not a very pleasant proposition, because nursing home care is very expensive. According to the state, the average cost for a month in a nursing home in Indiana is nearly $6,000. It is not uncommon for seniors to spend multiple years receiving care, so the overall costs can be astronomical.
The United States Department of Health and Services tells us that seven out of every 10 people who attain senior citizen status will require help with their day-to-day needs at some point in their lives. It is likely that you will need living assistance at some point in time if you live a normal life span, so this is an issue that is relevant to each and every one of us.
Indiana Medicaid Parameters
Since Medicaid is a need-based program, there is an asset limit of $2,000 for individuals. This can lead to the belief that you have to impoverish yourself if you want to qualify for Medicaid to pay for long-term care. In reality, this is not true if you plan ahead in an intelligent and informed manner.
First of all, we should point out the fact that everything that you own is not considered to be countable for Medicaid purposes. Your home is not a countable asset, but there is an equity limit. In Indiana in 2016, the equity limit is $552,000. There is no equity limit applied if a healthy spouse is remaining in the home while his or her spouse enters an assisted living facility.
The Medicaid program does not count your wedding ring, your engagement ring, and your heirloom jewelry. One vehicle would not be counted, and your household items and personal belongings are not countable assets for Medicaid purposes.
Plus, if you need long-term care while your spouse is still capable of independent living, your spouse can keep half of the shared countable assets up to a certain prescribed limit. This is called the Community Spouse Resource Allowance. During the current calendar year, the Community Spouse Resource Allowance is $119,220 in the state of Indiana. The minimum amount that a healthy spouse can keep it is $23,844.
Under program rules, you would have to contribute most of your income toward the cost of your care if you qualify for Medicaid to pay for living assistance. However, this is not required if a healthy spouse is relying on some or all of this income to maintain a basic standard of living.
The healthy spouse is entitled to a Monthly Maintenance Needs Allowance. The maximum allowance in the state of Indiana in 2016 is $2,981, and the minimum is $1,991.25.
When you combine all of these facts, you can see that you don’t necessarily have to completely impoverish yourself and your spouse to qualify for Medicaid coverage. Plus, you could give countable assets to your family members before you apply for Medicaid. This is often referred to as a Medicaid spend down.
You do have to act in advance to optimize your position, because there is a 60 month look-back in the state of Indiana. The gift giving must be completed at least five years before you apply for Medicaid coverage. If you do divest yourself of assets within this 60 month look-back period, a penalty would be imposed, and your eligibility for coverage would be delayed.
Action Is Required
If you are preparing yourself for your twilight years, or if you are helping out an aging relative, you should definitely explore nursing home asset protection strategies. For many, Indiana Medicaid will be the solution.
Our firm is standing by to help if you are ready to take action to protect family resources. We offer Medicaid planning consultations, and you can call us at (317) 684-1100 or send us a message through our contact page to set up an appointment.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.