My mom, 82, is in declining health and wants to go to a nursing home — but will… | Latest Lifestyle News
Since Medicare doesn’t pay for long-term care, Medicaid is the safety net for the old and impoverished.
But eligibility is a tricky issue as it varies by state, and there are certain rules that retirees should know — particularly if they’re low-income and considering a move into a long term care facility.
Let’s say a woman named Lillian is in this situation. She is in her 80s living in Florida and becoming too ill to look after herself in her own home. She had intended to leave the house to her daughter Maggie, as she has no other significant assets that could be passed down in her will, but now she’s worried that Medicaid could seize her home to pay for the cost of her treatment in a nursing home.
It’s a legitimate concern, but there are certain exemptions to the rule. Let’s examine the eligibility criteria.
To begin, states require you to have a limited income. In Florida, it’s a maximum of $2,901 per month in income for single people like Lillian.
Most states including Florida also require that a person must have no more than $2,000 in countable assets in order to be eligible for Medicaid. These include cash, bank accounts, stocks, bonds and other investments.
Retirement accounts like 401(k) and IRAs are also often included as an asset or income, but the rules vary by state. You should also know that if you’ve divested yourself of assets in the last five years in order to qualify for the program, you will be excluded from coverage.
Whether or not a house is counted as assets under Medicaid coverage depends on a number of factors. For example, if Lillian was married and had a spouse living in her home, the property would be exempt from Medicaid calculations as it would remain that person’s primary residence.
In the case of single people like Lillian, there is a home-equity interest limit that is set at the state level to determine whether a person’s home will be counted towards the Medicaid asset limit. Home-equity interest is the share of the home equity value owned by the applicant. If Lilian’s home has the market value of $300,000 and she has no mortgage and it’s in her name alone, her home-equity interest is $300,000.
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For single seniors, if their equity interest in their home is larger than the amount set by the state, then their house will be counted as an asset, and they will likely be disqualified from Medicaid. The home-equity interest limit in Florida is $730,000, so Lilian’s home will not be considered an asset.
If her home was worth more than the limit, the only workaround for this rule is if the applicant intends to continue living in their home, which Lillian does not. Even if she was to be a short term resident in a nursing home, her intent to return to the home would safeguard it from being considered as a countable asset. However, some states will exempt a person’s primary residence from being counted in certain cases, so it’s critical to be familiar with your own state’s guidance.
Even if Lillian’s home isn’t counted towards her Medicaid eligibility, it will still be subject to the Medicaid Estate Recovery Program, and it’s possible it will be seized to pay for her care.
After the death of an individual using Medicaid, the state agency can demand reimbursement for the cost of their care from the individual’s estate, which includes any assets they held, including their home. The types of care they can seek reimbursement for include nursing facility services, home care, and prescription drugs.
There are exemptions for undue hardship. States are also prevented from recouping costs from the estate if the deceased is survived by a spouse, a child under 21, or a blind or disabled child of any age.
Since Maggie is in her 60s and still working, it’s unlikely she would meet the requirements for undue hardship if the state was to seize her mother’s home. It’s important to note that the state may also put a lien on Lillian’s home while she’s still alive and living in a care facility permanently.
So Lillian’s home will likely be considered an asset that can be used to pay for her Medicaid care, meaning that Maggie is less likely to inherit. Unfortunately, they have few options for safeguarding her home now, as Lillian is in increasingly urgent need of care.
If they had planned ahead, however, they would have been able to avoid the five-year look-back rule by placing Lillian’s home in an irrevocable trust. While this would have removed the home from Lillian’s control, it would have also meant that it couldn’t be counted by Medicaid as one of her assets.
They might also have opted for a Medicaid Asset Protection Trust if they had acted before the look-back period. This type of trust is specifically designed to remove assets from being counted by Medicaid, and is a type of irrevocable trust.
While Medicaid can challenge a MAPT, especially if it was established within the previous five years, they are generally considered a safe bet unless the trustee-beneficiary named in the trust exercises their control over the assets and leaves the grantor with no funds.
Considering the strict eligibility requirements for Medicaid and the potential to jeopardize your estate, seniors are well advised to look into private options for covering their long-term care, including health insurance coverage, annuity policies, and setting up investments specifically for the purpose of covering the cost of care.
In all, the best approach is to be prepared well in advance and ensure that you’re familiar with your own state’s rules before deciding on whether Medicaid is the right choice for you.
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This article originally appeared on Moneywise.com under the title: My mom, 82, is in declining health and wants to go to a nursing home — but will Medicaid take her home to pay for it?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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