Many Americans believe that Medicare will pay for their long term care in a skilled nursing facility, but Medicare is not designed for this purpose. Under the best of circumstances Medicare will pay all of the first twenty days of skilled nursing care and a part of the next eighty days, but there are conditions that must be met for the Medicare patient to qualify. For example, a physical therapist or occupational therapist must certify that the patient is improving. If that certification cannot be made, all Medicare coverage for the nursing home stay ceases.
Medicaid is
designed to provide skilled nursing care for those 65 years of age or older
residing in a nursing home, but only if that patient is relatively poor. For
2008 a Medicaid recipient may not have more than $4,000 in countable resources or
more than $1,911 in monthly income. When a person is otherwise qualified for
Medicaid but has too much income, a Medicaid income trust can be established to
qualify that person for Medicaid. There are certain assets that are exempt such
as one’s home with equity of $500,000 or less, two motor vehicles and $5,000 of
other personal property. However, at the Medicaid recipient’s death, the State
of
Congress is
making it progressively harder for middle class
Some people transfer some or most of their assets out of their names in order to qualify for Medicaid. Is this legal? Yes, but there are conditions that must be met and pitfalls for the unwary. Currently there is a sixty month look back period for transfers out of the Medicaid applicant’s name. This means that if you transfer countable resources out of your name and file for Medicaid within sixty months, there will be a severe penalty.
All transfers of assets out of one’s name have their risks. How does one know that the person to whom the gift is made will preserve it for you? Even if that person is absolutely trustworthy, there is always the chance that your assets will be lost to that person’s judgment creditor or through a divorce. Some people transfer their assets to a specially designed trust, which eliminates those risks.
There are special planning opportunities for couples when one of them is going to the nursing home and the other is staying at home (the community spouse). Medicaid rules do not count transfers between spouses, so the nursing home spouse can transfer all assets to the community spouse. For 2008 the community spouse can have up to $104,400 of countable resources and unlimited income and the nursing home spouse still qualify for Medicaid. Even if the community spouse’s countable resources exceed the maximum allowable, there are ways to convert countable resources into non-countable resources so that the nursing home spouse can qualify for Medicaid.
There are
many long term care planning opportunities available, but some require more
time than others. If you would like to discuss long term care or estate
planning, call David Dunn at 662-327-4211 in
W. David Dunn © 2007-08
