By Adil Daudi, Esq.
It has become quite evident that more and more aging Americans are beginning to rely on governmental assistance for their health care needs. In fact, Medicaid is officially the countryâ€™s largest health program when it comes to recipients â€“ serving approximately 56 million Americans.
Although the laws of Medicaid continue to evolve each year, the planning and focus given should also adjust accordingly to ensure the recipients are keeping up-to-date. It is always important to learn the new laws in the event you have a loved who is considering being entered into a nursing home.
The following are three (3) basic questions that are often misunderstood when it comes to planning for Medicaid:
Do I have to give up all of my assets to qualify for Medicaid?
No. With careful planning, you can help increase the number of assets you are allowed to keep. Medicaid applies differently depending on the marital status of the applicant. However, in general terms, any applicant applying for Medicaid is allowed to keep the following â€œexempt assetsâ€:
Life insurance with total face value of $1500 or less.
Prepaid irrevocable funeral contract
Exempt asset are assets that are not countable for Medicaid eligibility purposes. Any remaining assets are considered â€œnon-exemptâ€ assets, and these must be â€œspent downâ€ in order to become eligible for Medicaid. However, it is always advised to consult with a professional when applying for Medicaid as any experienced attorney would be able to guide you and recommend ways for you to increase your â€œexemptâ€ assets.
What does it mean to â€œspend downâ€ my assets?
Once youâ€™ve determined your â€œexemptâ€ assets, anything remaining is considered â€œnon-exemptâ€ and thus counted towards your eligibility. However, with crafty planning and proper advice, there are ways to lower your â€œnon-exemptâ€ assets and that is by spending down the value you carry. For example, purchasing a home, renovating your home, buying personal property, buying a new vehicle, purchasing an SBO trust (â€œSole for the benefit ofâ€) or a single premium immediate annuity. These are all permissible ways of â€œspending downâ€ your countable assets.
What does Medicaid pay for?
The average cost of a nursing home in Michigan is approximately $6500 a month. A person who enters into a nursing home Medicaid certified, the government will cover the cost of the care, less the patient-pay amount, which is based on a formula.
The formula itself begins with the Medicaid beneficiaryâ€™s monthly income that they receive from Social Security and any possible pension. In addition, the beneficiary can keep $60 for their personal needs and any money needed to pay for private health insurance.
Please note that the above information is simply a guide providing you with the basic understanding of Medicaid. It is always advised to seek professional advice when applying as you would learn how to maximize the assets you can keep and receive assistance in spending down the assets you canâ€™t. Despite the governmentâ€™s generousity in providing such assistance, it is always best to find ways to preserve your own money for your benefit.
Adil Daudi is an Attorney at Joseph, Kroll & Yagalla, P.C., focusing primarily on Asset Protection for Physicians, Physician Contracts, Estate Planning, Business Litigation, Corporate Formations, and Family Law. He can be contacted for any questions related to this article or other areas of law at firstname.lastname@example.org or (517) 381-2663.