Medicaid Planning
(Asset Protection)
Among the concerns of a family facing the prospect of admitting a loved one to a nursing home is how they will afford the costs, which in Pennsylvania, average around $9,000-$10,000 per month.
Why is Asset Protection Planning Important?
Most health insurance plans and Medicare provide very limited coverage for patients in nursing homes. Unless you have long-term care insurance to cover your care, the only option is to pay for the care yourself until your assets are exhausted and then apply for Medicaid. Medicaid is a joint federal/state program begun in the 1960s to provide medical care, including nursing care, to those who cannot afford it.
The Importance of Asset Protection Planning
You have worked hard to provide for your family, and you probably envision passing everything that you have worked for down to future generations. At the same time, you may incur many expenses as you get older, which is why you need to think carefully about how you can protect your assets against these costs.
In particular, you may be wondering about the prospect of living in a long-term care facility, such as a nursing home. Did you know that most health insurance plans, including Medicare, do not provide much coverage for nursing homes? If you do not have an insurance plan that covers nursing homes, you may have to spend all of your assets until they are exhausted. Then, you will have to apply for Medicaid, which can provide medical coverage, including nursing home care, for individuals who are unable to pay for it on their own.
If you work with us ahead of time, we can help you protect your assets and see if you are eligible for Medicaid. That way, you don’t have to worry about your assets being siphoned away by nursing homes.
Assessing Medicaid Eligibility in PA
If you are interested in using Medicaid to help you cover the cost of a long-term care facility, you need to understand who is eligible for it. If you want to qualify for eligibility for this program in Pennsylvania, the financial resources you can contribute cannot exceed $2,400. This includes not only the cash in your bank account but also any stocks or bonds you have. This also means that your retirement accounts and real estate holdings count toward this limit.
You may think that you can transfer your resources away to other family members before applying, but that is not how it works. If you have resources that you have transferred to somebody else within the last 5 years, these will be counted as available resources, meaning that you might not be eligible.
Because Medicaid eligibility in Pennsylvania is a complicated process, you need to reach out to us as early as possible. That way, we can have a plan in place to help you make sure that the cost of your nursing home is covered without draining all of your financial resources.
Who is Eligible for Medicaid in PA?
Generally, to qualify for Medicaid eligibility, your financial resources can be no more than $2,400. This includes cash, stocks and bonds, bank accounts, your IRA, and real estate not your principal residence. Also, if you transfer any financial resources to family or friends within five years of the date you apply for Medicaid, these will be counted as available resources, and may affect your eligibility.
Several resources are not counted in determining your eligibility for Medicaid. These include your automobile, household goods, clothing, jewelry, a grave marker, a pre-paid funeral, and your home if you state an intention to return to it after your nursing home stay, or if it is used as the principal residence of your spouse or dependent child.
After qualifying by showing your resources have been spent down to $2,400, you will have to prove that your income is insufficient to pay for your nursing home care. Generally, all of your income, but not your spouse’s income, is counted. This includes pensions, Social Security, interest and dividends from bank accounts, and other investments. You are, however, permitted to keep $45 per month as a personal needs allowance.
If you are married and living at home with your spouse, different rules may apply in determining your eligibility. Generally, your spouse is permitted to keep his or her income and any qualified retirement funds. Also, your spouse is permitted to keep a portion of the resources owned by either of you, in addition to the resources mentioned above that are not counted in determining your eligibility for Medicaid. This amount is approximately one-half of the couple’s non-exempt resources, with a low limit of $23,884 and a high limit of $119,220 in 2015. These amounts change from year to year. To learn more about navigating the complexities of Medicaid planning and asset protection, contact an attorney.
What do you do after you qualify?
After qualifying by showing your resources have been spent down to $2,400, you will have to prove that your income is insufficient to pay for your nursing home care. Generally, all of your income, but not your spouse’s income, is counted. This includes pensions, Social Security, and interest and dividends from bank accounts and other investments. You are, however, permitted to keep $45 per month as a personal needs allowance.
