“Have you priced nursing homes lately? In Texas, you are looking at an average annual cost of $50,000. We are on the low end; nationally, the average annual cost is closer to $75,000. New Jersey costs a whopping $109,500 annually.”
Medicaid provides several programs funded through a state-federal agreement, explains the article “Planning a must: Medicaid and paying for nursing homes” from The Dallas Morning News. One of the programs provides long-term nursing home care benefits to pay for nursing home or approved residential care facilities. However, requirements to qualify for Medicaid vary widely from state to state. It’s best to speak with an elder law attorney, who will be able to help you plan in advance.
Let’s take Texas as our example. To qualify in the Lone Star state, you must have a medical need and fall under the income and asset caps, which change yearly. In 2020, the income limit for an individual is $2,349 and the asset (resource) amount is $2,000. For a married person, your spouse can have income and resources that are protected, $25,728 is the minimum SPRA (the minimum resource protected amount) and the maximum is $128,640. The monthly maintenance needs allowance for a spouse is $3,216.50. If they sound like low levels, they are. However, there are some assets that Texas does not count. The well spouse may continue to maintain the family home, as long as its value is less than $595,000. A car, burial plots and prepaid funeral arrangements are also permitted.
For most people, this presents a bad situation. Their assets are too high to qualify for Medicaid, but they don’t have enough money to pay for nursing home care. That’s where Medicaid planning with an elder law attorney comes in. The attorney will know where assets can be shielded to protect the well spouse and how to work within the Medicaid requirements.
A word of advice: Don’t start giving away assets because you think that you can do this yourself. The first rule: there is a five-year lookback period, and if assets have been distributed within a five year period of the person applying for Medicaid, their eligibility will be delayed. The rules about gifting assets are complicated and mistakes are non-negotiable.
Be careful of elder exploitation. Planning for Medicaid is one thing, being convinced to impoverish yourself so someone else can have a luxurious lifestyle is another. There’s a fine line between the two. Be aware of the difference. An attorney can play an important role here, since they have a legal and ethical responsibility to protect their client’s interests.
Be certain that you have a Durable Power of Attorney in place. Why? If you become incapacitated during the process of Medicaid planning, your agent will be able to help with Medicaid planning and file for the Medicaid application.
Don’t sell your home. In most states, the primary residence is a protected asset for Medicaid. Once it is sold, however, the proceeds of the sale are considered a personal asset and will be counted.
It’s also important to understand that Medicaid does not pay for all nursing home stays. Medicaid pays for a nursing-home designated “Medicaid bed” in a semi-private room. Depending on where you live, there may not be as many Medicaid beds as there are people who need them.
An elder lawyer will be able to help you and your family with planning for Medicaid, and with an application. You’ll be better off relying on the help of an experienced attorney.
Reference: The Dallas Morning News (March 15, 2020) “Planning a must: Medicaid and paying for nursing homes”
For more information on elder law and estate planning, please visit my estate planning website.
