Until you learn about an inconvenient truth, you may not understand why a lot of senior citizens seek Medicaid eligibility, even though they were on Medicare. It involves the matter of long-term care and the costs that go along with it.
You may be surprised to hear that 35 percent of elders will require nursing home care late in their lives. In South Carolina as a whole, the average cost for a year in a nursing home is right around $100,000, and 12 months is the average length of stay.
A married couple may face two different sets of nursing home bills, so the impact on a family can be considerable. Medicare will not cover a stay in a nursing home, but Medicaid will pick up the tab, and this is why it is important to many elders.
There is a $2000 limit on assets, but your home and items around your house that have no significant monetary value are not countable. You can also retain ownership of a motor vehicle, and the program does not consider the value of your wedding and engagement rings.
Spousal Allowances
In many cases, a married person will apply for Medicaid while their spouse is still capable of independent living. Under these circumstances, there are allowances for the healthy spouse, and the term “community spouse” is used in geriatric circles.
The Community Spouse Resource Allowance gives a healthy spouse the ability to keep half of the countable assets. Unfortunately, there is a limit, and it is going up to $137,400 next year. In most states, there is a minimum allowance, but there is no minimum in South Carolina.
Income that is due to the institutionalized spouse must be used to defray the cost of the care that they are receiving. This is the arrangement for a single person, but a healthy spouse can continue to receive income if they need it to maintain a reasonable lifestyle.
This is formally called the Monthly Maintenance Needs Allowance, and the maximum next year will be $3435. We touched upon the fact that a home is not a countable asset. There is an equity limit that will be $636,000 next year, but it does not apply when a healthy spouse is remaining in the home.
Medicaid Planning
There is the question of the assets that are countable. Obviously, you can give your loved ones their inheritances in advance, but half of the remainder would be less when the allowance is being calculated. Plus, if the assets are producing income, it would be significantly reduced.
The situation is further complicated by the five-year look back period. If you give away assets right now, you have to wait five years before you can qualify for Medicaid.
When you work with an elder law attorney, you can overcome these challenges. Your resources could be conveyed into an irrevocable Medicaid trust. You can move the assets that are earning income into the trust, and you can continue to receive distributions of the earnings.
There is a Medicaid estate recovery mandate. If there are assets in your estate at the time of your passing, Medicaid can place a lien on the property. Because of the asset limit, your home would be the only property in your estate that they can take.
For this reason, you would convey your home into the trust along with the other countable assets. If you apply for Medicaid after waiting five years, the home and everything else in the trust would be protected, and you would be eligible for coverage.
Take Action Today!
A new year is here, and it is time to make resolutions. If you do not have a plan for aging in place, you should take action right now and take the right steps to protect the people that you love.
You can schedule a consultation at our Bluffton, SC estate planning office if you call us at 843-815-8580, and you can use our contact form to send us a message.
Hunter is a member of the South Carolina Bar Association, the Beaufort County Bar Association, and has served on charitable and advisory boards in the Bluffton/Hilton Head area.
Hunter graduated from Hilton Head High School. He then earned his Bachelor of Science Degree in Economics from Clemson University, in Clemson, South Carolina.
Hunter graduated Cum Laude from Regent University School of Law in Virginia Beach, Virginia, having earned a Juris Doctor Degree. He also wrote his doctorial thesis on Estate Planning Dynasty Trusts.
Hunter has called Beaufort County home for since 1984, where he lives with his wife and two children.In his spare time he dabbles in automobiles, reading history, hunting and fishing.
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