When you are looking ahead toward your retirement years, you may be omitting a very big expense from your projected budget. According to the United States Department of Health and Human Services, 35 percent of seniors will eventually reside in nursing homes.
Genworth Financial tells us that the annual cost for a private room in a nursing home in the Hilton Head, SC area was $86,688 in 2021. The average length of stay happens to be one year, and if you are married, you and your spouse could be presented with two different sets of nursing home bills.
Since Medicare is intended for seniors, and most seniors will need some type of living assistance, you may assume that Medicare will cover nursing home care. In fact, this is not the case, so you have to look elsewhere for assistance.
Nursing Home Asset Protection
Elder law attorneys help clients address this difficult situation, and Medicaid is at the core of effective nursing home asset protection plans. This jointly administered federal/state government program will pay for nursing home care if you can gain eligibility.
Since it is a need-based program, there is a $2000 limit on countable assets, but your home is not counted. There is an equity limit of $636,000 in 2022.
One motor vehicle that is used as a primary source of transportation is not counted, and wedding rings, engagement rings, and heirloom jewelry are exempt. Your personal belongings, furniture, appliances, and other items that you have around the house are not counted.
A prepaid burial plot is allowed, and you can have $1500 set aside for final expenses. The same amount of whole life insurance is permitted, and you can have unlimited term life insurance.
Healthy Spouse Allowances
When a married person is entering a nursing home and their spouse can still live independently, the healthy spouse is entitled to a couple of allowances.
One of them is the Community Spouse Resource Allowance. This gives the healthy spouse the ability to keep half of the jointly owned property up to a certain limit. In 2022, the limit in South Carolina has been $66,480.
Income that is brought in by a Medicaid beneficiary must be contributed toward the cost of the care that is being received, but they do get a $30 a month personal needs allowance. However, if a healthy spouse is relying on the income, this requirement does not apply.
The healthy spouse is entitled to a Monthly Maintenance Needs Allowance that is drawn from their spouse’s income. During the 2022 calendar year, the maximum allowance has been $3435 a month.
We touched upon the fact that there is a home equity limit, but when a healthy spouse is remaining in the home, there is no equity limit. The limit would also be waived if there is a disabled or underage child living in the home.
You could convey assets that are countable into an irrevocable Medicaid trust to establish a financial profile that will lead to future eligibility. When you create this type of trust, you would have no access to the principal, but you could receive distributions of the trust’s income.
Timing is key, because you have to fund the trust at least five years before you apply for Medicaid coverage. Your eligibility would be delayed if you violate this rule.
How long is the period of ineligibility? It would be tied to the amount of the funding as it compares to the cost of nursing home care in our state.
For example, if you gave away enough to pay for 18 months of nursing home care, your eligibility would be delayed by 18 months.
We Are Here to Help!
Our doors are open if you are ready to work with a Hilton Head, SC estate planning lawyer to develop a nursing home asset protection plan. You can send us a message to request a consultation appointment, and we can be reached by phone at 843-815-8580.