As you age, the odds that you or your spouse/partner will need long-term care increase dramatically. The cost of that care can be astronomical. As of 2015, the average cost of a year in a long-term care facility runs over $80,000 and is expected to continue to increase in costs in the years to come. Absent a long-term care insurance policy, you may have to turn to Medicaid to help cover the costs unless you can afford to pay out of pocket. You may have heard about people losing their assets when they were forced to apply for Medicaid, prompting you to wonder “Is your home a countable resource for Medicaid purposes?” The answer is “probably not”, though it is best to know ahead of time and plan accordingly.
Medicaid will help cover long-term care costs if you qualify for benefits. To be eligible for benefits, however, your income and resources must fall below the program limits. For most elderly applicants the resources limit is where the problems begin because the limit is often as low as $2,000. The good news is that only “countable” resources are considered when calculating the value of your assets. Some assets are excluded, including:
- • The value of your homestead up to a certain amount unless there is a spouse, minor child, or disabled child lawfully residing in the home;
- • The value of one automobile;
- • The value of life estate interest in real property;
- • The value of household goods and personal effects;
- • The value of undivided interest in heirs property; and
- • Up to $1,500; and set aside for the individual’s burial. (An additional $1,500 for a spouse, if living)
- • The cash value of life insurance policies owned by the individual when the total face value of all policies is $10,000 or less.
For many applicants, their home is excluded when determining eligibility for Medicaid. The same exclusion will then usually apply when considering the risk of the Medicaid Asset Recovery Program coming after the home after your death. The ARP has the authority to files claims against the estate of a decedent who received benefits while alive. There are several ways, however, in which a primary residence can be exempt.
The best way to ensure that your home, and more importantly –other assets, are protected when you apply for Medicaid is to include Medicaid planning in your comprehensive estate plan now because transferring assets at the time you apply for Medicaid will not work.
If you have additional questions or concerns about special needs planning, or your Illinois estate plan in general, contact the experienced Illinois estate planning attorneys at Nash Bean Ford & Brown, LLP by calling 309-944-2188 to schedule your appointment today.