Georgia seniors who need nursing home care are often shocked to discover that the cost of that care can average as much as $65,000 a year. In many cases, that’s far more than seniors earned each year while they were working, and few have amassed sufficient savings to cover those costs in their later years. It’s no wonder so many elderly Georgians turn government programs for assistance with those high care costs, as friends and family are often unable to provide more than token help. Still, to make the most of your available options, you need to learn how to pay for nursing home care using available options like Medicaid.
Medicaid is a program with a long history in the United States. For five decades, this partnership between the federal government and all fifty states has provided critical health care assistance for millions of low-income Americans. Many of those low-income Americans are seniors who receive benefits to help with their nursing home costs. According to official tallies, the program has become the number one payment source for nursing homes throughout the country. And it can benefit you too, if you understand how to qualify for benefits the right way.
Most people probably assume that seniors should be able to qualify for assistance easily. In theory, that would seem to make sense – especially when you consider that so many elderly residents live on fixed incomes. In reality, many seniors can struggle to achieve eligibility for Medicaid benefits, despite the fact that they don’t have enough in assets or income to pay for their care on their own. It’s actually fairly common for seniors to find themselves in a position where their wealth and income are too low to cover their own health care costs, but too high to qualify for benefits.
To understand how that happens to so many seniors, you only need to look at the eligibility standards that Medicaid uses. These standards involve both income and assets, and are strictly enforced.
- Income cannot be more than $2,199 each month. That’s determined based on gross income, which means that deductions for premiums and other expenses are included in the program’s calculations. So, if you have income of $2,500 but have $301 in premiums deducted from your monthly check prior to receipt, Medicaid counts the $2,199 that you receive plus the $301 that you didn’t receive – for a total of $2,500. And that would make you ineligible for benefits.
- The maximum value of your combined assets must be $2,000 or less. Assets can be more complicated for some people to understand, however, since certain types of assets are excluded from consideration. Those so-called exempt assets include things like your home, one vehicle, life insurance policies, home furnishings, burial packages, and so on.
So, what happens to seniors who have more income or assets than the rules permit? Is there any way that you can qualify for the program if you bring in more income from pensions, annuities, and Social security than the rules allow? And what about those assets that might be placing you above that allowable asset limit? The good news is that you can still manage to qualify for benefits – but it requires some changes in your estate.
When your income is too high to qualify for Medicaid, there is an easy solution: The Miller Trust. This is an option that was created just for Medicaid eligibility, and involves the creation of a Qualified Income Trust that contains a bank account used to accept any extra income that you receive each month. The trust is structured to take that money and direct it to your nursing home, as partial payment for your bills. That allows your income to be lowered to the right level each month, ensuring that you qualify for the Medicaid benefits that you need.
Assets are another matter entirely, and can present some serious problems if they’re not managed properly. Many people are tempted to simply transfer ownership of their personal assets to another person – usually an adult child or other close relative – in an attempt to reduce the size of their estate. Most do this with the understanding that those assets can still be used for their personal benefit if necessary. The problem is that Medicaid knows that truck all too well, and the government is prepared to counter it.
When you apply for Medicaid, the government looks back at the previous five years of asset transfers and can flag them for inclusion in benefit calculation. That five-year look-back power carries with it the potential for penalties too. If the program administrators determine that any transactions were made to shield wealth from the nursing home, Medicaid can levy an eligibility penalty. That penalty could leave you ineligible for benefits until you’ve paid for your own care for a set number of months.
The better option for dealing with assets is to convert countable assets to non-countable assets, use irrevocable trusts, and implement long-term planning to prepare for Medicaid eligibility well in advance of need. To use those strategies, you should be working with an estate and Medicaid planning attorney now to ensure that your assets are properly organized in the future. Again, these are not techniques and strategies that you should be trying on your own.
Once you understand how program eligibility works, it’s easier to learn how to pay for nursing home care and avoid having your entire state consumed by those excessive costs. At Fouts Law Group, LLC, our team of Medicaid planning experts can help you to resolve issues related to your Medicaid eligibility and ensure that you have the asset protection you need. We can devise the strategies you need to preserve some wealth even as you lower your income and asset levels to ensure your Medicaid eligibility. If you’d like to learn more about how sound Medicaid planning strategies can help you to manage the high costs of nursing home care, contact us online or give us a call at (404) 596-7520 today.
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