Medicaid is a means tested program. If your countable assets or your income exceed the allowable maximums you do not qualify and Medicaid will not pay your long-term care costs until you do. Once you need long-term care, in the Washington area you will be spending $8,000 – $12, 000 per month on nursing home care and somewhat less for care in assisted living or at home, depending on the level of care and the hours of coverage. If you are going to end up qualifying for Medicaid, it makes sense to qualify as soon as possible. This general discussion applies to Maryland, Virginia and the District of Columbia but there are differences, some very significant, in Medicaid law and practice in the three local jurisdictions.
If your countable assets exceed the individual resource allowance of $2,500 in Maryland, $2,000 in Virginia and $4,000 in D. C., in order to qualify for Medicaid you would have to decrease your countable assets. Complicating the process is Medicaid’s penalty for uncompensated transfers. If you simply give assets away you cannot receive Medicaid benefits until after a penalty period.
One possible choice for the “over-resourced” Medicaid applicant is to convert countable assets into noncountable assets.
In most circumstances and within equity limits, your home is not a countable asset. So if you have a mortgage loan, pay it down or off. If your home needs improvements, have those improvements done.
Irrevocable burial contracts, designated burial savings within limits, and a burial plot, and analogous cremation arrangements, are exempt resources. Some kind of final expenses are inevitable so these are generally good uses of excess countable resources.
At least one vehicle is exempt in all three jurisdictions whether or not the applicant drives it so long as it is available to meet the applicant’s transportation needs.
There are other various other exempt assets.
Another choice in some cases is to purchase a Medicaid compliant annuity, turning your countable asset into an income stream. This can be a viable planning strategy but it depends on, among other things, your income before the annuity purchase – lower is better, and whether some or all of the funds are in an IRA – lower is better.
Gifts, outright or to a trust, or loans to trusted family members can also be beneficial, even when they cause Medicaid to impose a penalty period. The timing of the gift or loan, the use of the funds and the timing of your Medicaid application are all crucial to obtaining the maximum benefit of this strategy.
For married applicants, Medicaid looks at the combined assets of both spouses even if only one is applying. The non-applicant spouse is allowed to keep up to $123,600 of otherwise countable assets, the community spouse resource allowance (CSRA). Transfers between spouses are not penalized.
Every case is unique and Medicaid planning requires knowledge, careful analysis and good judgment. If you or a loved one need or will soon need nursing home level care, call us. We can help.