The biggest concern for most people is that they will lose ownership of their home in order to qualify for assistance from Medicaid.
Buying long term care insurance as early as possible is critical, but if you missed that opportunity, you’ll want to know what your options are, including Medicaid requirements. As recently explored in nj.com’s article, “Spending assets before Medicaid kicks in,” there are certain assets that will have to be tapped before you or a loved one is considered eligible for Medicaid.
Unfortunately, many people fail to consider the cost of long-term care until it's too late. This care can cost more than $100,000 a year in some areas. Long-term care facilities will need to be paid for using a resident's assets to move in and remain at the facility. Those assets include Social Security, pensions, real property, investments, and any other assets.
There is the option of purchasing long-term care insurance that will help to offset the cost of services. However, if they do not purchase sufficient coverage, then it may not cover the entire expense. As a result, residents must use their assets for the uncovered portion of the resident fees. Therefore, residents must "privately pay" with all of their assets.
Once a resident's assets have been exhausted, he or she can apply for Medicaid.
To be eligible for the Medicaid program, the applicant’s assets must be valued at less than $2,000, including bank accounts, investments, real property and any other assets.
Medicaid looks at each application with what’s known as a five-year “look back” to determine whether an applicant has made any transfers of property or gifts in an effort to gain eligibility. However, this may mean they are ineligible or have a penalty period imposed.
When determining your Medicaid eligibility, your primary residence is an exempt asset provided that you or your spouse (if any) reside in the house or intend to return to the house to live. However, Medicaid will have an automatic lien on any interest in a residence in your name that’s equal to the amount of Medicaid funds you receive. When the home is sold after you pass away, Medicaid will execute the lien, unless your spouse remains an owner of the home.
The harsh but complete truth: nursing care facilities are not required to accept every Medicaid approved resident. There are wait lists for “Medicaid beds” at many facilities. A resident will often need to spend down their assets for a set period of time before the facility will even consider offering them a Medicaid bed. This is why advance planning and purchasing long term care insurance well before you need it is so important. It may not solve every problem, but it does provide more options.
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