Although you may not realize it, there is a very good chance that you will need to qualify for Medicaid at some point in the future. If Medicaid eligibility is something you have never before had to worry about, you might find yourself facing the loss of significant assets should you need to rely in Medicaid at some point. To help prevent that from occurring, the Indianapolis Medicaid planning attorneys at Frank & Kraft explain what you need to know about Medicaid.
The Cost of Long-Term Care May Cause You to Need to Qualify for Medicaid
As of 2019, the average cost of a year in long-term care (LTC) nationwide was over $100,000. In Indiana, LTC costs have hovered right around the national average in recent years. Although most seniors rely on Medicare to cover health care expenses, Medicare explicitly excludes LTC expenses as do most private health insurance policies. For over half of all seniors currently in LTC it leaves them turning to Medicaid for help covering the high cost of long-term care.
Medicaid Often Covers Alternatives to LTC
For seniors who cannot safely remain in their own home, yet do not need the level of care provided by a nursing home, one of the Indiana Medicaid waiver programs may cover alternatives such as assisted living, community based care, and even in-home health aids.
Transferring Assets Prior to Applying Can Trigger a Waiting Period
If you apply for Medicaid, your finances will be subject to scrutiny for the 60-month period prior to the date of your application. Any asset transfers completed during that time period for less than fair market value could trigger a penalty in the form of a waiting period. The length of the waiting period is calculated by dividing the value of your excess assets by the average monthly cost of LTC in your area.
Your Spouse Will Not Be Left Destitute
A common myth holds that a spouse who remains in the community will be left with nothing when the other spouse turns to Medicaid to help pay for long-term care. It is just that – a myth. When one spouse needs long-term care, instead of combining the assets owned by the couple for the purpose of Medicaid eligibility, the Medicaid program allows for a “division of assets.” The spousal share (which fluctuates by state and changes yearly) is protected from the Medicaid spend-down requirement, leaving them available for use by the community spouse. In addition, the “Minimum Monthly Maintenance Needs Allowance,” or “MMMNA” allows the community spouse to keep part of the institutionalized spouse’s income in some cases if the community spouse’s monthly income is low.
Some Assets Are Exempt When Determining Eligibility for Medicaid
Eligibility for Medicaid depends, in part, on an applicant’s income and “countable resources.” If either are over the program limit, your application will be denied. The countable resources (asset) limit is exceptionally low — $2,000 for an individual in most states, including Indiana. Fortunately, some assets are exempt, meaning they are not taken into consideration when determining your eligibility. In Indiana, the following are examples of exempt assets:
- Personal belongings and home furnishings
- One home up to an equity limit of $595,000 (as of 2020) IF you are planning to return OR a spouse resides in it.
- One vehicle
- An irrevocable burial trust
The need to qualify for Medicaid as a senior can put your retirement nest egg at risk if you failed to plan ahead. To prevent that scenario from occurring, talk to an experienced attorney about incorporating Medicaid planning into your estate plan as early on as possible.
Contact Indianapolis Medicaid Planning Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about Medicaid eligibility or Medicaid planning, contact the experienced Indianapolis 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.
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