When people first hear about the concept of Medicaid being relevant to elders, they are sometimes confused. If you are going to qualify for Medicare as a source of health insurance, why would you need Medicaid?
Plus, people with resources cannot qualify for Medicaid because it is a need-based program.
This line of thinking makes total sense on the surface, but when you scratch beneath it, you see a different picture.
Long-Term Care Costs
Medicaid should be on your radar when you are looking ahead toward the future because Medicare does not pay for a stay in a nursing home or assisted living facility. This would extend to home health aide expenses that are incurred because custodial care is needed.
Long-term care is exorbitantly expensive, so this gap in the Medicare coverage is a very big deal. Medicaid does pay for living assistance, and this is why it is important for many senior citizens.
Countable vs. Non-Countable Assets
Since Medicaid is intended for people with sparse resources, there is an asset limit of just $2000 in Indiana. That’s a paltry sum of money in the big picture, but there are some possessions that do not count.
The most significant non-countable asset is your home, but there is an equity limit. The figure is adjusted to account for inflation annually, but in our state, it is $595,000 during the current calendar year.
Other exempt assets include one vehicle, wedding rings, engagement rings, heirloom jewelry, prepaid burial plots, unlimited term life insurance, your household goods, and personal effects. You can have as much is $1500 set aside for final expenses, and the same amount of whole life insurance can be carried.
Medicaid Estate Recovery
Now that we have set the stage appropriately, we can address the question that serves as the title of this blog post.
People sometimes hear that Medicaid will take your home or other assets after you die if you use the program to pay for long-term care. There is some truth to this, but there is a bigger picture.
Medicaid is required to seek reimbursement from the estates of people that were enrolled in the program after they die. However, you cannot qualify if you have significant assets in your own name. For this reason, the cupboard is typically bare, and Medicaid would have nothing to take.
Since your home is initially exempt, it could be an exception, and it could be attached during Medicaid estate recovery efforts. However, you can take steps to divest yourself of direct ownership of the home before you apply for Medicaid.
You do have to act in light of the five-year Medicaid look back period. A penalty would be imposed, and your eligibility would delayed if you divest yourself of assets within 60 months of the submission of your application.
The length of the penalty would be tied to the amount that you gave away as it compares to the average cost of nursing home care in Indiana. To provide an example, let’s say that the state determines that the average cost for year in a nursing home is $70,000.
A year before you apply for Medicaid, you give gifts that total $210,000 in value. Under this scenario, your eligibility would be delayed by three years, because you gave away enough to pay for three years of nursing home care.
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