Will medicaid cover what Mom's long term care insurance will not since that can't be spent down? Her nursing home claims that it will.
I am my mother's POA. She has bank accounts separate from my step-father although she does share a joint checking account with him. She also has her own investments, plus owns a lot of land which produces a little income, and receives some social security and a tiny teacher's retirement. The best thing she has for her being in a nursing home is her long term care policy which is one of those few that lasts for the remainder of her life, (she will be 82 in July).
If she dies before needing medicaid, the accounts and the securities that she made me joint owner with right of survivorship will be a major part of my inheritance.
However, if she lives to the point where all of her accounts are spent and her securities are gone, I'll have to sell the land before I can apply for medicaid and use that money for her care until it is about depleted. Now, if her husband dies first, then those funds, etc. will need to be used for her nursing home care. I understand all of that and I'm keeping all of her bank statements for each year with a copy of her tax return, so that when I need them, those documents will be there.
What will medicaid do in this situation? Will it pay for what the long term care policy does not? My nursing home claims it will.
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Some questions:
1. Does the policy currently pay the full cost of care?
2. Does the policy have an inflation rider?
3. Does all or a portion of mom's income support the husband (or vice versa)?
4. What state do they live in?
Some facts and ideas:
1. Incoming producing property is not a countable asset for Medicaid eligibility purposes if net income is going to cost of care.
2. Although they retain mostly separate assets, the state will consider the husband's assets when evaluating eligibility. In some states all assets can be transferred without penalty to the community spouse who can then retain up to $115,920. In other states half the couple's total assets are attributable to each partner and the penalty-free transfer is not permitted (depending on the level of assets). Proper planning can contend with these limitations.
3. Some states permit “spousal refusal” whereby the Community Spouse can simply refuse to support the institutionalized spouse, others do not.
4. If the policy plus her income is currently paying the cost of care it may make sense to move her assets now to an irrevocable trust with you as trustee. This will start the clock on the “five-year look back” for asset transfers. This may be a good move for two reasons: a) as joint holder her assets are subject to the claims of your creditors and b) her assets may be preserved to assist her while receiving public benefits down the road.
2. The policy does have an inflation rider.
3. None of her money supports her husband and none of his supports her.
4. She lives in NC.
Also, she currently receives social security as well as a very small retirement check as a former teacher.
The immediate goal should be to obtain a financial “snapshot” (believe it or not that is the technical term) of the couple presently. The total assets of the couple are then added together and then half attributed to the nursing home spouse and half attributed to the at home spouse (Community Spouse).
For example, if a couple owns $90,000 in countable assets on the date the applicant enters the hospital and stays in it or a nursing home for 30 days or more, he or she will be eligible for Medicaid once their assets have been reduced to a combined figure of $47,000 – $2,000 for the applicant and $45,000 (one-half of $90,000) for the at-home spouse. If the couple owned $250,000 in assets, the spouse in need of care would not become eligible until their savings were reduced to $117,920 ($2,000 for the nursing home spouse and the maximum $115,920 for the community spouse).
Confusing, isn’t it? The bottom line is that assets can be preserved for both spouses to be used for their benefit. It is to their advantage to get started now. You definitely need to seek professional help with this matter.