As life care planning attorneys, we advise clients that are preparing to transition into different stages of life. You may need help with your activities of daily living when you pass through your senior years, and it is important to be prepared from an emotional and financial perspective.
We are going to look at the updated 2022 Medicaid allowances for a healthy spouse in this post. Before we focus on these particular figures, we will provide some background information to help you understand why Medicaid is so important to many seniors.
Long-Term Care
You are led to believe that Medicare will take care of the vast majority of the significant health care expenses that you will incur during your elder years. This is true up to a point, but there is an enormous gap in the coverage that applies to long-term custodial care.
If you have to enter a nursing home, Medicare will not help with the costs, and this also applies to in-home care that is provided by a home health aide. You can expect to pay about $100,000 for a year in a nursing home in our area, so these are some significant expenses.
An in-home health aide will cost somewhere in the vicinity of around $50,000, and just over half of people that receive paid care need the assistance for more than a year. Thirteen percent incur the costs for at least five years, so the expenses can be devastating.
Medicaid Eligibility
Now that you understand the challenge, we can focus on the subject at hand. Medicaid will pay for long-term care, but there is a $2000 asset limit because it is a need-based program.
That may sound like a dealbreaker, but life care planning attorneys understand how to set a course that will lead to eligibility.
Non-Countable Assets
Everything that you own does not count for Medicaid eligibility purposes, but most of the exempt property is not very valuable. You can maintain ownership of a vehicle, and your wedding ring, engagement ring, and heirloom jewelry are not counted.
A home is not a countable asset, but there is a Medicaid estate recovery mandate. The program will put a lien on the property if it is in your direct personal possession after your passing, so gaining eligibility as a homeowner is less than ideal.
Other non-countable assets include your personal belongings and household items, a prepaid burial plot, a prepaid funeral, and any amount of term life insurance.
2022 Medicaid Spousal Allowances
If you are going to be entering a nursing home while your spouse is still capable of independent living, your spouse would receive a Community Spouse Resource Allowance. This is half of the assets that are countable up to a particular limit.
In 2022, the maximum allowance IN is $137,400, and there is a $27,480 minimum allowance. Last year, the minimum was $26,076, and the maximum was $130,380.
The spouse that is a Medicaid beneficiary can keep a $52 a month personal needs allowance, and the rest of their income must be contributed toward the care they are receiving. However, an exception is made when a healthy spouse needs the income to make ends meet.
They can accept their spouse’s income in the form of a Monthly Maintenance Needs Allowance, but there is a limit. During the current calendar year, it is $3435, and the minimum allowance is $2177.50.
Countable Assets
All the above is well and good, but what about countable assets? Fortunately, there is a solution in the form of an irrevocable, income only trust. You can transfer income-producing assets and your home into the trust.
Until and unless you apply for Medicaid, you can accept distributions of the income, but you would no longer have access to the principal. Of course, you would continue to live in your home rent-free as usual.
As long as you fund the trust at least five years before you apply for Medicaid, the principal would not count. This is a highly effective strategy, but advance planning is key.
We Are Here to Help!
If you are ready to put a plan together to age in place, we would be more than glad to assist you. You can schedule a consultation at our Crown Point, IN elder law office if you call us at 219-865-2285.
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