Sometimes both members of a married couple need outside assistance with managing the day-to-day needs of daily living. Having home care aides come in every day to help makes life a lot easier and safer. However, this can be expensive without Medicaid, and Medicaid eligibility can be difficult to achieve. This is where a Lamson & Cutner Elder Law attorney can assist you.
If your spouse and you both need Medicaid coverage for home care, this strategy can get it for you and still protect your income and assets.
Many people incorrectly believe that they cannot achieve Medicaid eligibility because of Medicaid’s five-year “look back.” In New York, there is no look back for Community Medicaid, which includes home care and assisted living. Unfortunately, even without the look back, meeting Medicaid qualifications for combined home care is not easy. There are stringent Medicaid requirements you must comply with in order to achieve Medicaid eligibility. Without proper planning, you’ll have to pay the cost of your own care, until virtually all your cash and other assets are depleted.
If that sounds like your situation, there’s a better way. It’s possible to get Medicaid coverage of home care for both of you simultaneously, and to protect your money, income and assets. Here’s a detailed explanation of how it can be accomplished with an Elder Law attorney’s help.
The Medicaid eligibility hurdle for a couple needing home care…
Medicaid allows a married couple to have combined financial assets of just $40,821 in 2023, although this number changes every year – see the “Medicaid Quick Reference Chart” for the current level. So if your combined assets (Medicaid calls them “countable resources”) are above this level, you will not be eligible for Medicaid. For Community Medicaid (home care or assisted living), as long as you are over 65, Medicaid does not count your income in order to decide whether or not you are eligible. However, they do not ignore your income. Any income you receive each month over $2,268 (the limit in 2023) is required to be contributed toward the cost of your care.
If you allow yourselves to be economically diminished down to these levels, you probably won’t be able to survive financially. How will you pay your bills? It’s almost impossible to live in New York on these terms.
Fortunately, with proper planning there is a legal way to retain the value of your income and assets. This is how a Lamson & Cutner Medicaid lawyer can help you do it.
Three keys to preserving your income and assets…
Step 1: If you own a house, condominium or co-operative apartment, it should be transferred into a special protective trust ( Medicaid Asset Protection Trust). Under federal law, this protects your home from being subject to a Medicaid lien. Otherwise, when your home is no longer your primary residence, Medicaid may recover the cost it has incurred from the equity in the home. The trust protects the home against claims from Medicaid or from other future creditors.
Since the cost of home care for two people can range up to $15,000 to $20,000 a month, you can see how quickly the equity in your home will be depleted, if you don’t protect it. That means you won’t be able to preserve the equity for your own future needs, or leave it to your children or heirs. Yet with this strategy, you will.
Step 2: Transfer your money, investments, and other assets to the same protective trust, or to your children or other relatives or friends. Once in their hands, they can use these assets to pay for goods and services for you. Transfers of your money or other assets will not incur any Medicaid penalty when you are applying for home care benefits. Also, these transfers will not be subject to tax.
For your financial safety, Lamson & Cutner’s Elder Law attorneys will develop a plan that anticipates the possibility of one or both of you eventually needing nursing home care. The trusts are structured to accommodate further planning in the event of either development. Of course, it may never happen, but if it does you’ll still be able to save at least some of your assets.
You can learn more about the asset protection strategies used in the event that either or both of you need nursing facility care by clicking on these links:
- Married Couple – Spouse Needs Medicaid Nursing Home Care
- Married Couple – Both Partners Need Medicaid Nursing Home Care
Step 3: Protecting your income requires a different strategy. If the two of you are receiving monthly income from Social Security, a pension, or other source, any amount over the Medicaid threshold is transferred to a protective legal structure called a pooled income trust (“PIT”). A PIT is for an individual, so as a couple, depending on the income each receives, you each may need your own PIT. These trusts are run by certain charities and function just like a bill paying service. For example, if your spouse and you have combined monthly income of $2,000 a month OVER the threshold amount, you write a check (or two checks) every month to the trust (or two trusts) for the “surplus income.” The total amount might be split between your two trusts. The money goes into a segregated account for each of you, and the trust operates under your specific instructions to pay the bills you designate. Money in your trust account can be used to pay for anything (with minor exceptions) that benefits you.
The trust gets a small monthly administrative fee for this service. When you pass on, anything left over in your account will be used by the charity to help others. With this approach, you get the advantage of keeping the use of your money, and retaining your lifestyle. The alternative is contributing all your “surplus income” to pay for the cost of your care, under Medicaid requirements.
Learn more about protecting your financial future in Lamson & Cutner’s Special Report 25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs. It’s informative, interesting, and best of all, free.
The benefits married couples receive with this approach.
Whether you both need eight to twelve hours a day of care, or around-the-clock assistance, it’s all paid for by Medicaid. You can stay financially intact. You keep your home, and your cash, income and investments working on your behalf. That means you can comfortably afford the way of life you’ve been used to. It’s a lot more attractive scenario than spending down everything you have to pay for the help you need, until you reach the Medicaid eligibility level. There may even be something left over for your children or heirs after you both pass on.
Here’s an actual case:
Lamson & Cutner helped a married older couple qualify for Medicaid, both of whom needed home care assistance. The couple had one child, who was disabled, so a friend of the family became their agent on their Powers of Attorney. The couple were both mentally competent, but the husband was bedridden and the wife had heart issues. Together, the couple had about $700,000 in assets.
The firm helped the couple gain Medicaid eligibility by having them place their assets in a Medicaid Asset Protection Trust, and they protected their income by each joining a Pooled Income Trust. With all their income and assets now secure from Medicaid requirements that would otherwise force them to pay the bills out of their savings and income, the couple was able to get fully paid home care at no cost to them. This is a great example of how effective planning maximizes benefits and keeps money and assets in the family, safe from government regulations that would have required the money to be spent on long-term care.
In addition to these important Medicaid benefits, you’ll also save money on your medical costs, because Medicaid can cover gaps in your Medicare insurance. There’s also a wide range of convenient community services you’ll have access to, like adult day care, and transportation to and from your doctor. Medicaid will pay for all these expenses and services.
And there’s yet another layer of protection. An advantage of effective planning is that if either or both of you eventually need nursing facility care, the steps you have already taken may be helpful in facilitating your eligibility for Medicaid benefits. The asset protection strategies you have implemented for this situation may also help you to preserve as much of your cash and other assets as possible in that situation. The funds can then be used to make your stay in the nursing facility more pleasant, and to supplement your care as needed.