Long-term care adds up fast; the annual median cost for a private nursing home room was $105,850 in 2020. The government can pay the bill for people with Medicaid, but it’s not easy to qualify. However, there are tools a person can use to avoid spending down assets and still qualify for Medicaid in Maryland.
Medicaid and nursing homes
Medicare is health care insurance for people 65 and older, and it doesn’t normally cover long-term care. Not every long-term care facility accepts Medicaid, but people with private health care will have more options.
A person can save some assets for a spouse and still qualify for Medicaid. Restructuring assets can help meet Medicaid rules.
Rules for Medicaid
Qualifying for Medicaid depends on the state. On average, a person’s monthly income needs to be under $2,382, but they can give up to $3,259.50 of their income to their spouse. A person applying for Medicaid can only have up to $2,000 in assets, but their spouse can keep $130,380 or less. Assets that Medicaid counts include cash, bank accounts, real estate other than a primary home, investments, and an IRA or 401(k). Medicaid doesn’t count a personal residence, one vehicle, home appliances, non-luxury personal belongings, a prepaid burial plot, and engagement or wedding rings.
Redistributing assets for Medicaid
Restructuring assets can help a person meet Medicaid’s standards. Instead of keeping $100,000 in the bank, they can pay the mortgage down. If there’s too much cash in the bank, it may help to use some for a prepaid burial plot. Purchasing or upgrading an old car helps restructure assets as well.
A person who needs long-term care will get Medicaid sooner, and their spouse will keep the benefits of the purchases. The amount of money a spouse ends up with probably isn’t enough, however. A Medicaid-compliant annuity could boost their income. A person can buy an annuity at any time. The contracts turn savings into retirement income, which doesn’t count as an asset. For a Medicaid annuity, the state is the beneficiary when the couple dies.
It can be hard to meet eligibility for Medicaid, but restructuring and transferring assets can help meet the Medicaid rules. Redistributing assets five years before the Medicaid application date will count toward eligibility.