A recent nj.com article, “Spending assets before Medicaid kicks in,” considers the consequences of long-term care. Without long-term care insurance, in addition to potentially depleting one's savings, what other assets, such as one's home, are at risk if funds are needed to pay for long-term care?
Unfortunately, many people fail to consider the cost of long-term care until it's too late. This care can cost more than $100,000 a year in some areas. Long-term care facilities will need to be paid for using a resident's assets to move in and remain at the facility. Those assets include Social Security, pensions, real property, investments and any other assets.
There is the option of purchasing long-term care insurance that will help to offset the cost of services. However, if they do not purchase sufficient coverage, then it may not cover the entire expense. As a result, residents must use their assets for the uncovered portion of the resident fees. Therefore, residents must "privately pay" with all of their assets.
Once a resident's assets have been exhausted, he or she can apply for Medicaid.
To be eligible for the Medicaid program, the applicant’s assets must be valued at less than $2,000, including bank accounts, investments, real property and any other assets.
Medicaid looks at each application with what’s known as a five-year “look back” to determine whether an applicant has made any transfers of property or gifts in an effort to gain eligibility. However, this may mean they are ineligible or have a penalty period imposed.
When determining your Medicaid eligibility, your primary residence is an exempt asset provided that you or your spouse (if any) reside in the house or intend to return to the house to live. However, Medicaid will have an automatic lien on any interest in a residence in your name that’s equal to the amount of Medicaid funds you receive. When the home is sold after you pass away, Medicaid will execute the lien, unless your spouse remains an owner of the home.
In many instances, long-term care facilities will require that a resident "spend down" his assets for a specific period of time (often one or two years), before the facility will consider offering a Medicaid bed to a resident. Note that care facilities aren’t required to accept each and every Medicaid approved resident. Every facility is licensed, and its license states the minimum number of beds at the facility that must be set aside for Medicaid eligible residents. Because of this, wait lists for Medicaid beds are not unusual.
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Jeffrey Bellomo, Esq.
Reference: nj.com (November 6, 2017) “Spending assets before Medicaid kicks in”