Today, we are living longer than ever. Although that is good, it has some unfortunate drawbacks. As an aging population, we are now tasked with funding that longer life. How do we ensure that we have enough money to live into retirement and beyond while living a good life? The first step could be talking to an elder law attorney about your options.
Most older adults are looking at long term care options as future possibilities. Assisted living, nursing home care, and even adult day care options aren’t covered under Medicare benefits. Consequently, they need to be funded by other methods.
One option in funding long term care is Medicaid. Although this is designed for low-income individuals, for many aging adults, it is worth considering. And, it is very important to know that when an older adult meets Medicaid’s medical requirements, but their income and resources are over Medicaid’s limits, they can still qualify via a Medicaid spend-down.
Medicaid’s View of Income and Resources
While a spend-down strategy can get Medicaid long term care benefits for someone who medically qualifies, before getting there, it is important to understand how Medicaid looks at your finances. This is done by categorizing them in two ways: income and resources. Here are some basic guidelines on what Medicaid looks for:
Income – You cannot qualify for Medicaid in New Jersey and many other states if your income exceeds $2,349. However, you can offset that income with certain expenses and allowances, such as a “personal needs allowance” and health insurance premiums. If your income is still too high, many states allow you to establish a Qualified Income Trust to divert money and qualify. With that said, this is state specific and other states allow you to qualify for Medicaid as long as your income is below monthly long term care costs, which are quite high. (Please note this is a general discussion and, for example, I am not getting into details on married vs. single applicants. Medcaid’s income requirements will be covered in greater detail in another article.)
Resources – Medicaid’s term “resources,” pretty much equates to our generally accepted concept of an individual’s financial assets. Medicaid imposes a resource limit, which will vary by state. For instance, New Jersey’s limit is presently $2,000 whereas New York’s is $15,750. For purposes of qualifying for benefits, your resources are divided into ones that are “countable,” and those that are “non-countable.”
Countable vs. Non-Countable Resources
Countable and non-countable resources are simply those that are considered and not considered when Medicaid is determining whether you are financially eligible for benefits.
Countable resources are pretty much everything you own, including:
- Cash and money in savings and checking accounts
- Property other than your primary home
- Investment accounts such as stocks, bonds, mutual funds, and CDs
- Retirement accounts (but this is a state specific evaluation and may not be countable depending on your circumstances)
Non-countable resources are excluded in the financial evaluation. They include:
- Your primary home, if you intend to return there after receiving care
- Any pre-paid funeral or burial expenses
- One automobile (all others deemed “countable”)
- Whole life insurance policies with a face value under $1,500
- Term life insurance policies
- Personal property and household effects
- See above regarding retirement accounts
Qualifying for Medicaid long term care benefits can be complicated, but we hope this article helps you better understand the financial requirements. In future articles, we will go into greater detail on what we covered here as well as strategies to spend-down your resources to qualify for long term care coverage. Once again, it is also important to talk to an elder law attorney if you are evaluating whether Medicaid is an option to help pay for your long term care.