Even though 70% of individuals older than 65 now will need long-term care in the future, health insurance and Medicare do not cover long-term care costs. Medicaid may cover all of your long-term care costs if your income and assets are below the set levels in North Carolina. The NC Department of Health and Human Services Medicaid Eligibility Unit determines whether you qualify for Medicaid coverage for long-term care. Let’s look at some of the requirements so that you may qualify for Medicaid while also maximizing your standard of living. Working on your Medicaid planning in NC can help you meet financial goals and still get the care you need in the future.
What is Medicaid Planning?
You need Medicaid planning if you may need long-term care in the future and do not have coverage for this type of care. Assisted living and nursing home expenses run high, as much as $8000 per month for a single room and board. If you have assets, they will pay for your long-term care unless you make a plan at least five years before you need care.
Medicaid planning is a way of using legal tools to maximize the assets and income you make now so that you can qualify for Medicaid in the future while retaining your assets.
Qualify for Medicaid
In North Carolina, you may qualify for Medicaid coverage for long-term health care services if your monthly income is $1,041 ($1,410 for two people). Your Supplemental Security Income must be under $2000 ($3,000 for two people). However, if you or your spouse is in a nursing home facility, the spouse at home may have protected monthly income that does not count toward your limits for eligibility. Your spouse can keep their monthly income from $2057.50/mo up to $3160.50/mo, depending on their housing expenses.
And you may keep some of the assets you own with a spouse. Medicaid counts the total assets you own together and allows the spouse to keep ½ of the total value. The amount your spouse can keep without affecting your eligibility may be as much as $126,420.
If you are in a nursing facility, you pay all of your monthly income to the nursing facility except for a $30 personal needs allowance. Medicaid pays the remainder of your care costs.
If You Don’t Plan: Medicaid Spend Down
When the state denies eligibility because your assets are over the income or total asset limit, you will need to spend down your resources on qualified expenses before becoming eligible. However, you may not just give away your assets to your family. This type of behavior can keep you ineligible for much longer.
To qualify for Medicaid coverage, you must be careful about giving away resources or selling them for less than market value. Your eligibility may suffer penalization when you give away resources and do not receive equal compensation.
If you give away or sell assets without equal compensation, Medicaid will not pay for most needed services. The amount of time that Medicaid will not pay depends on the value of the transferred resource.
During the ineligibility period for Medicaid (due to giving away or selling resources below market value), Medicaid will not pay for:
- Care in a nursing facility
- Care provided under the Community Alternative Program (CAP)
- Other in-home health services
- Health Service supplies
The good news is that there are many different types of services and needs that you may pay for during this time. You’ll need to spend your extra assets on qualified services during the five years so that you will get help when you need it. However, the better choice is to plan so that the state does not force you into a Medicaid spend-down.
5-Year Lookback Period
There is a 5-year lookback period in which you may not sell assets for less than market value. Doing so may cancel or decrease your level of eligibility for Medicaid. You also may not hide assets in a trust during the lookback period. There are some exceptions to these rules.
If you take action now and work with an estate planning attorney to prepare for a possible long-term care need, you can maximize your assets for the future. The key is to prepare five or more years before you will need long-term care.
Preparing Your Estate
Working with an attorney to set up an irrevocable trust before the 5-year look-back period can enable you to keep your assets even while receiving Medicaid coverage. With proper planning, Medicaid can meet your long-term care needs while your assets remain under the control of a trust. There is no need to endure a Medicaid spend down to qualify for care coverage.
In addition, you may set up an irrevocable trust to care for any additional needs you may have during a long-term care situation. Medicaid allows only a $30 allowance for your income needs. The rest of your income goes to the nursing home. With a trust, if you need other items, you may work with the trustee to buy what you need from your safely tucked away funds.
We Can Help
If you work hard your entire life and have savings you’d like to protect, talk with our estate planning attorneys at Hopler, Wilms, and Hanna. We work to protect your assets and preserve your legacy for future generations. Whether you need help writing your last will and testament, executing advanced directives like a living will, or help drawing up legal documents for a trust, we are here to help. You can depend on our legal expertise to keep you informed about the latest laws and developments that affect you and your loved ones. Contact us today and find out how we can help you.