You may wonder what Medicaid has to do with your life as a senior citizen. You worked hard as you traversed a career path, and payroll taxes were taken out of your salary for years. You are going to qualify for Medicare coverage when you reach the age of 65. Medicaid is for people who have no financial resources.
This is an assumption that can get some people into trouble because they are under the impression that Medicare will indeed cover all of their health care needs during their active retirement years and the twilight years that follow. In truth, Medicare doesn’t cover everything in full, so you should be prepared to pay some out-of-pocket expenses even for the things that Medicare does cover.
The above having been stated, the reason why Medicaid is indeed relevant to many senior citizens is because Medicare won’t pay for long-term care. This is a very big deal because most people are not going to be able to easily and comfortably pay for long-term care out of their retirement savings.
A stay in a nursing home can consume all of what you have and more. In the state of New York the average annual expense for a stay in a nursing home was in excess of $130,000 last year, and costs are trending upward. Ten percent of people who receive nursing home care remain in the facilities for at least five years. The average length of stay is over two years.
As it turns out the majority of people who are residing in nursing homes are enrolled in the Medicaid program. Medicaid will assist with long-term care costs, but you do have to stay within an upper asset limit.
Everything that you own does not count, and this is something that is important to understand. In the state of New York your home up to $802,000 in equity is not counted. If you are married, the healthy or community spouse may live in the home if you are institutionalized, and there is no equity limit.
Personal effects are not counted by the program, and your wedding and engagement rings would not be counted. The value of the vehicle that you use for transportation would not be counted either.
As for the rest of your assets, you may wonder if you can simply give them away. It is possible to do this as long as you plan ahead well in advance of applying for Medicaid.
If you have not given anything away within five years of applying and you meet the eligibility requirements you should have no problems. However, if you have divested yourself of assets within five years of submitting your application you would be subject to a penalty.
This penalty would delay your date of eligibility. It is important that you speak with an elder law attorney before giving away any assets.