Are you prepared for the very real possibility that you, or your spouse, will need long-term care when you are older? If not, now is the time to start preparing by incorporating Medicaid planning into your overall estate plan. Doing so may also help dispel some of the myths and misconceptions you have about Medicaid, such as the widely held belief that your spouse will end up with nothing if you need to qualify for Medicaid to help pay for nursing home care. The Indianapolis Medicaid lawyers at Frank & Kraft get you started by explaining the Community Spouse concept and Medicaid rules.
Long-Term Care By the Numbers
Like most people, you likely hope to grow old in your own home without ever needing to enter a long-term care facility. Statistically speaking, however, you stand more than a 50 percent chance of needing long-term care (LTC) at some point after you reach retirement age (age 65). Those odds continue to increase the longer you live. At age 85, you will stand a 75 percent chance of needing LTC before the end of your life. Because the chance of needing LTC is very real, it only makes sense to plan for the possibility that you will need to pay for LTC at some point in the future.
How Will You Pay for the High Cost of LTC?
While we have access to excellent health care in the United States, we also pay a high price for that care. For the year 2018, the average cost of a year in LTC nationwide was about $100,000. Indiana residents paid, on average, about the same as the national average at $98,000 for that same year. With an average length of stay of about three years, you are looking at an LTC bill of around $300,000 – and that’s if you need LTC today. Because neither Medicare nor most private health insurance policies will cover expenses related to LTC, many seniors faced with the need to pay for LTC turn to Medicaid for assistance.
Medicaid Eligibility Basics
To get help from Medicaid with your LTC expenses, you must first qualify for the program. The Medicaid eligibility guidelines impose both an income and a “countable resources” (assets) limit. Typically, a couples’ income and assets are combined for the purpose of determining Medicaid eligibility. If a couple’s assets exceeded the program limit, those assets must be “spent-down” (sold or transferred) until their value drops below the limit. If the need to qualify springs from the fact that one spouse is in LTC, the spend-down requirement would clearly leave the other spouse (referred to as the “community spouse”) with no resources. Fortunately, the Medicaid “Spousal Impoverishment” rules protect a community spouse.
Understanding the Community Spouse Resource Allowance
In Indiana, Medicaid’s asset limits are $1,500 for an individual applicant and $2,250 for married couples applying together. While the low asset limit isn’t a problem for the spouse going into LTC, it would leave the community spouse with virtually nothing. The good news is that if one spouse of a married couple does not require long-term care, they are subject to Indiana’s Community Spouse Resource Allowance (CSRA. The Community spouse is allowed to keep 50% of their assets up to $123,600 in countable assets which is known as the Community Spouse Resource Allowance. The Community Spouse is allowed to keep 100% of their marital assets up to $24,720.
In addition, the “Minimum Monthly Maintenance Needs Allowance,” or “MMMNA” allows the community spouse to keep part of the institutionalized spouse’s income if the community spouse has a low monthly income. Community spouses may keep between $2,002 – $3,090, depending on their spouse’s income. A community spouse may keep no more than $3,090, but they may keep no less than $2,002 to prevent spousal impoverishment. This allows the institutionalized spouse to transfer some of their income to their partner without penalty if the community spouse makes less than $2,002 a month.
Contact Indianapolis Medicaid Lawyers
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns about the Community Spouse rules for Medicaid, contact the experienced Indianapolis Medicaid lawyers at Frank & Kraft by calling (317) 684-1100 to schedule 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.