Since Medicare doesn\u2019t pay for long-term care, Medicaid is the safety net for the old and impoverished.<\/p>\n
But eligibility is a tricky issue as it varies by state, and there are certain rules that retirees should know \u2014 particularly if they\u2019re low-income and considering a move into a long term care facility.<\/p>\n
Let\u2019s 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\u2019s worried that Medicaid could seize her home to pay for the cost of her treatment in a nursing home.<\/p>\n
It\u2019s a legitimate concern, but there are certain exemptions to the rule. Let\u2019s examine the eligibility criteria.<\/p>\n
To begin, states require you to have a limited income. In Florida, it\u2019s a maximum of $2,901 per month in income for single people like Lillian.<\/p>\n
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.<\/p>\n
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\u2019ve divested yourself of assets in the last five years in order to qualify for the program, you will be excluded from coverage.<\/p>\n
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\u2019s primary residence.<\/p>\n
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\u2019s 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\u2019s home has the market value of $300,000 and she has no mortgage and it\u2019s in her name alone, her home-equity interest is $300,000.<\/p>\n
Story Continues <\/p>\n
Read more: Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US \u2014 with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in \u2018great wealth\u2019<\/a>. How to get in now<\/strong><\/p>\n 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\u2019s home will not be considered an asset.<\/p>\n 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\u2019s primary residence from being counted in certain cases, so it\u2019s critical to be familiar with your own state\u2019s guidance.<\/p>\n Even if Lillian\u2019s home isn\u2019t counted towards her Medicaid eligibility, it will still be subject to the Medicaid Estate Recovery Program, and it\u2019s possible it will be seized to pay for her care.<\/p>\n After the death of an individual using Medicaid, the state agency can demand reimbursement for the cost of their care from the individual\u2019s 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.<\/p>\n 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.<\/p>\n Since Maggie is in her 60s and still working, it\u2019s unlikely she would meet the requirements for undue hardship if the state was to seize her mother\u2019s home. It\u2019s important to note that the state may also put a lien on Lillian\u2019s home while she\u2019s still alive and living in a care facility permanently.<\/p>\n So Lillian\u2019s 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.<\/p>\n If they had planned ahead, however, they would have been able to avoid the five-year look-back rule by placing Lillian\u2019s home in an irrevocable trust. While this would have removed the home from Lillian\u2019s control, it would have also meant that it couldn\u2019t be counted by Medicaid as one of her assets.<\/p>\n 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.<\/p>\n 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.<\/p>\n 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.<\/p>\n In all, the best approach is to be prepared well in advance and ensure that you\u2019re familiar with your own state\u2019s rules before deciding on whether Medicaid is the right choice for you.<\/p>\n Join 200,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/strong><\/p>\n This article originally appeared on Moneywise.com<\/a> under the title: My mom, 82, is in declining health and wants to go to a nursing home \u2014 but will Medicaid take her home to pay for it?<\/a><\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Since Medicare doesn\u2019t pay for long-term care, Medicaid is the safety net for the old and impoverished. 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