Medicaid is the only public program that pays for long-term care in a nursing home. To qualify, the person requiring care (who is the applicant for Medicaid purposes) must meet strict income and assets limits. With proper planning by a knowledgeable elder law attorney, you may be able to substantially reduce the amount of money you spend out of pocket for care. Most of my clients are surprised to find out how much money they can save, even if the planning is being done in crisis.
Eligibility rules for single applicants are different from married folks. Here are the basic guidelines.
Monthly income limit… $2,742
Spouse needing nursing home care… $2,742
Spouse not needing nursing home care… No income limit
If the care recipient has countable income greater than the limit, he or she will not be “income eligible.” In Texas, an excess income problem is solved using what’s known as a Qualified Income Trust (QIT). The popular name for this solution is a “Miller Trust“. I prepare my Miller Trusts so they are effective for both single and married applicants.
Spouse needing nursing home care….$2,000 of countable resources.
Spouse not needing nursing home care: one half of assets up to $148,620. Planning by a skilled elder law attorney can often protect much more.
Characterization of Assets
For eligibility purposes, Medicaid characterizes assets as either countable or exempt. The following resources are considered exempt by Medicaid:
- The residence up to $5,688,000 in value
- Life insurance cash value up to $1500
- An automobile
- Prepaid funeral and burial plots
- No more than $2,000 of countable assets as discussed below.
In Texas, most other assets are considered countable and subject to Medicaid “spend down.” “Spend down” refers to the process of reducing assets to eligibility levels. But that does not mean all the excess funds have to be spent on nursing home care. Medicaid rules allow a surprising amount of flexibility to protect more assets than most people would expect. The key is knowing the rules and using them properly.
Countable assets include items like checking accounts, savings accounts, certificates of deposit, money market accounts, stocks, corporate and municipal bonds, savings bonds, mutual funds, IRAs, pensions, second homes and additional cars.
Penalties for Gifts and Transfers of Assets
Current Medicaid rules can postpone the start of benefits for certain transfers made within five years of the date of application. The length of any transfer penalty is determined by dividing the total amount transferred by a penalty factor established by the state that changes every year. As with so many of Medicaid’s rules, there are exceptions to the this general rule. I frequently suggest a well-considered gifting program as part of a well-structured Medicaid asset protection plan. Transferring assets may be suitable for you but don’t try to do this without adequate advice. Done the wrong way, gifting could prevent eligibility.
If you have questions about how to best protect everything you’ve worked to save, give me a call at 713-970-1300.