When you work and pay taxes you accumulate retirement credits. You can accrue a maximum of four credits per year. Once you have accumulated 40 credits, you qualify for Medicare coverage when you reach the age of 65.
Medicaid is a program that provides health insurance for people with very limited financial resources. You don’t have to accumulate credits to qualify for Medicaid. Most working people qualify for Medicare when they retire, so they don’t need Medicaid at first.
Because of the fact that Medicare will not pay for long-term care, many seniors do in fact enroll in the Medicaid program late in their lives. Medicaid will pay for custodial care.
Because Medicaid is a need-based program there are certain guidelines that you must stay within to be able to qualify.
When someone who is married is applying for Medicaid to pay for long-term care, his or her spouse is allowed to keep a certain amount of property without impacting the eligibility of the soon-to-be institutionalized spouse.
Your home is not counted by the Medicaid program, but there is an upper equity limit of $814,000 in 2014. However, if your spouse is going to remain in the home after you enter an assisted living facility, there is no equity limit at all.
In addition to this, the healthy or community spouse is allowed to keep his or her half of community property up to a particular limit. In 2014 this limit is $117,240.
The healthy spouse is also entitled to a monthly maintenance needs allowance. If the healthy spouse is relying on the institutionalized spouse’s income, the healthy spouse may continue to receive some of this income.
The maximum amount that the community spouse could draw in 2014 is $2931.
Because of the Medicaid program rules it is important to plan ahead with eligibility in mind if you intend to use the program to address future long-term care costs. We have shared a few of the facts here, but there are many other things to take into consideration.
While it is true that your spouse can maintain ownership of some property, you can potentially keep more property in the family by spending down in advance of applying for Medicaid.
Spending down is a term that is used to describe divestitures. You could give assets to family members who would have otherwise inherited these resources. Some people choose to spend down by living it up.
You have to plan ahead in advance if you want to engage in a spend down because of the five year look back. If you give away assets within five years of applying for Medicaid a penalty is applied, and your eligibility is delayed.
If you would like to learn about Medicaid planning in-depth, we invite you to download our free report on the subject. To access the report, click this link: New York Medicaid Planning Report.