A person can have certain assets of significance and still qualify for Medicaid long-term care benefits. I received a call from someone whose father was trending toward the need for nursing home care, and she was concerned about how to pay for care. She worried how mom would make ends meet. She said she had spoken with friends on the subject and understood that to receive benefits her parents had to have just about no money. This is not true.
Medicaid benefits that cover long-term care are somewhat different from those benefits that cover other medical care. The Medicaid program provides benefits for many people, not just for those who are broke. In fact, some of Medicaid’s rules are specifically designed to prevent the impoverishment of the spouse who remains at home and does not need nursing home care.
Not many people can afford to indefinitely pay the $10,000 to $13,000 per month that it costs for nursing facility care, and Medicare only pays a small portion of it. Privately paid in-home care can cost $20,000/month, or more, and in most cases that is not sustainable. The Medicaid program, known in Pennsylvania as the Medical Assistance program, helps pay nursing home and in-home care for those who qualify. You do not need to be completely out of money to qualify, but there are specific asset rules.
To qualify for benefits, an applicant for Medicaid long-term care benefits must keep their “countable assets” that are within limits, but not all assets are countable. Some assets are considered “exempt” or “excluded” from the eligibility determination.
The countable assets of the person qualifying for Medicaid long-term care benefits do need to be under the applicable limit, which is $2,400 or $8,000, depending on the person’s income. An elder law attorney can consult with you on how to legally turn non-exempt countable assets into exempt resources. Each case is different, but it is worth a consultation, just so you know the rules.
For example, the house of the Medicaid applicant can be exempt if a spouse lives there, or if there is an intent to return home. For a single applicant, the limit on home equity at the time of this writing (2024) is $713,000. For a married couple there is NO LIMIT on the amount of home equity that can be protected.
For a married couple, the retirement account of the spouse who is in the community (and not in the nursing home) is exempt from consideration, regardless of value. For example, if Mrs. Smith requires nursing facility care, and Mrs. Smith’s spouse has $400,000 of retirement accounts, those retirement accounts can be exempt in Pennsylvania. The retirement account of the nursing home resident is a countable asset, but in most cases it is possible to protect these funds for the spouse at home, and they absolutely do not need to go broke if they secure good advice from an elder law attorney.
Also, in the case of a married couple, the income of the spouse not in the nursing home is exempt. If there are significant countable resources, it is possible under current law to convert non-exempt assets to an exempt income stream for the benefit of the community spouse. In the right cases, this can be accomplished using a Medicaid qualifying annuity that complies with applicable law. Before proceeding with the purchase of this type of annuity, you should review the pros and cons of the contemplated strategy with an elder care lawyer. There may be other options to protect assets that do not involve purchasing an annuity and they should be explored.
For example, in some cases if excess resources exist, it may be possible to use the non-exempt cash to pay down a mortgage on the applicant’s primary home, if there is a mortgage. This strategy legally converts non-exempt cash to exempt if the house is the residence.
These are just a few examples that illustrate that you do not need to go broke paying nursing home costs. Key to being able to pursue these strategies is advance planning so you can consider all your options. Although there is usually some good that can be done at the last minute, the sooner you get your documents in order and consider your options, the better prepared you will be in the case of a long-term care emergency. Medicaid pays for in-home care and care in a nursing home. Give us a call today to see if we can take steps to help you legally protect your assets from nursing home costs.
Disclaimer: This article has been posted for general information purposes only. You should not act upon the information in this article without first retaining legal counsel. We recommend that you have ongoing legal advice from an elder law attorney before attempting to navigate the Medicaid application process. If you have questions or wish to secure our services, please contact Gerhard & Gerhard, P.C.
