If you have never been financially needy throughout your life, and you are going to qualify for Medicare when you reach the age of 65, why would you care about Medicaid planning? After all, you will have Medicare as a source of health insurance, and you wouldn’t qualify for Medicaid anyway if you have a reasonable store of financial assets and adequate sources of retirement income
This is an understandable perspective, but when you digest all the facts, a very different picture emerges. The first thing to understand is that the Medicare program does not pay for custodial care. This is the type of care you would receive in a nursing home or an assisted living facility. Professional in-home caregivers also provide custodial care to people that need help with their activities of daily living.
You can carefully save and invest so that you can retire in comfort with a legacy plan in place that will provide something for your loved ones after you are gone. However, if you were to be forced to pay for long-term care out of your own pocket toward the end of your life, the inheritances that you intended to leave to your loved ones could wind up in the coffers of a nursing home.
Medicaid will pay for long-term care, and this is why it is quite relevant when you are devising your plan for aging. It is true that this program is intended for people with very limited financial resources. The asset limit is just $2000, and when you first hear this figure, you may assume that you could never qualify for Medicaid.
Without question, this is a very low bar when you are talking about your life savings. The good news is that there are a number of assets that are not considered to be countable for Medicaid eligibility purposes. If you are like most people, your home is your most valuable asset. Fortunately, it is not counted when you apply for Medicaid coverage, but there is an equity limit. It changes periodically to account for inflation, but at the time of this writing, the home equity limit is $572,000 in the state of Illinois.
Other assets that are not counted would include your wedding ring, your engagement ring, and any heirloom jewelry that you may have in your possession. Household items like furniture, appliances, etc. are not counted, and your personal effects are exempt as well.
You may maintain ownership of one vehicle that is used as a primary source of transportation. Unlimited term life insurance along with a burial plot that is paid for can be retained without impacting eligibility for Medicaid coverage. You can also have up to $1500 of whole life insurance, which is life insurance that has a cash value.
If you are applying for Medicaid to pay for long-term care, and your spouse is still capable of living at home, your healthy spouse would be entitled to certain considerations. The home that is shared by the couple would not be subject to any equity limit at all, and the healthy spouse would be entitled to a Community Spouse Resource Allowance. This is equal to half of the shared assets that are considered to be countable, but there is a limit. Once again, the exact amount of this limit is adjusted on an ongoing basis, but at the moment, it is $109,560 in the state of Illinois.
With the exception of a very limited amount of money that is allotted for “personal needs,” all income that is brought in by the person receiving the nursing home care must be used to pay some of the costs involved. However, this requirement can be waived if the healthy spouse is relying on this income to maintain a reasonable standard of living. This is called a Monthly Maintenance Needs Allowance, and the limit on this is $2739 at the present time.
Schedule a Medicaid Planning Consultation!
As you can see, these rules are rather complicated. The complexities are compounded by the fact that gift giving in an effort to get countable assets out of your own name must be completed at least five years before you apply for Medicaid. This is why legal counsel is so very useful when you are interested in positioning your assets with future Medicaid eligibility in mind. If you would like to schedule a consultation with our firm, we can be reached by phone at 309-944-2188, and our toll-free number is 800-644-5345.
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