If you have even a rudimentary estate plan in place already, you are ahead of the game considering the fact that over half of all Americans do not have any type of estate plan in place. Do not stop there though. While even a simple estate plan is better than no plan, creating a comprehensive plan can help you achieve a wide range of inter-related goals. For example, as you near retirement age, Medicaid planning should be part of your estate plan. As part of your Medicaid planning component, you will need to understand what is considered a countable asset for Medicaid eligibility purposes in Indiana.
Why Do You Need to Worry about Medicaid Eligibility?
For many people who have relied on employer-sponsored or privately funded health insurance, the need to qualify for Medicaid has never been a concern. If you are one of those people, you first need to understand why you might find yourself turning to Medicaid as a senior. During your retirement years, the need for long-term care (LTC) may result in the need to qualify for Medicaid. With the average cost of LTC both across the nation and in Indiana coming in at around $100,000 a year nationwide for 2018, the average person cannot afford to cover that cost out of pocket. Although Medicare will likely cover most of your healthcare costs as a senior, it will not pay for LTC nor will most basic health insurance plans unless you purchased a separate LTC insurance plan. Consequently, over half of all seniors needing LTC turn to Medicaid for help with the cost of that care because the Medicaid program does pay for LTC expenses.
Is It a Countable Asset for Medicaid Eligibility Purposes?
Knowing that Medicaid covers LTC expenses is good news; however, you must qualify for Medicaid for that news to actually help you. Because Medicaid is a needs-based program, an applicant must demonstrate financial need to be approved. To do that, both your income and your countable resources (assets) must be below the program limits. The “countable resources” limit is very low in most states, including Indiana. An individual applicant cannot have countable resources worth more than $2,000. If you do have excess assets at the time you apply, your application will be denied and you will have to “spend-down” your assets before applying again. This is what is often referred to as the Medicaid “spend-down” rule. Fortunately, some assets are exempt, meaning they do not count toward your “countable resources,” including:
- Personal effects and household goods.
- Your home, up to an equity limit of $572,000 if you are planning to return or you have a spouse, a child under 21, or a disabled person residing in it.
- One motor vehicle if it is worth less than $5,000 of the current market value. If the vehicle is used for the long term care recipient’s medical treatment, employment, modified to accommodate a disability, or the primary vehicle of the community spouse then it is exempt no matter the value.
- Life insurance is considered income in the month it is received, but dividends from life insurance fall into the asset category, to be no higher than $1,500. Note that interest on dividends from a life insurance policy is not exempt. If life insurance has a face value of $10,000 or less and the beneficiary is the policy holder’s estate or the funeral home, it is exempt.
- Burial spaces and irrevocable pre-paid burial trusts if tied to specific funeral or burial services.
- Series E/EE Saving Bonds interest, I Bonds interest.
How Can Medicaid Planning Help?
By incorporating a Medicaid planning component into your estate plan early on you can rest assured that your income and assets will fall within the program eligibility limits to ensure that you qualify for Medicaid if you need it in the future.
Contact Indiana Medicaid Planning Attorneys
For more information, please download our FREE estate planning worksheet. If you have specific questions about what is a countable asset for Medicaid eligibility, or about Medicaid planning in general, contact the experienced Indiana Medicaid planning attorneys 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.