Medicaid is a joint federal and state program that provides medical assistance, including long-term care, to the poor who are elderly, blind or disabled. Medicaid is very different than Medicare. Medicare is a federally funded health insurance program designed for Americans 65 years of age and older.
Although Medicaid was originally established to provide healthcare to the poor, over time it has become the primary source of financing for nursing home care after an elderly individual runs out of money. Ohio requires an individual to spend down until they only have $1,500 in countable assets before they can qualify for Medicaid.
Due to the cost high cost of nursing home care (in Ohio it can cost over $75,000 per year), many people try to protect their assets from nursing home costs by giving them away, with the ultimate goal of qualifying for Medicaid. However, the government does not want to support people who are sheltering assets that could be utilized to provide for their care. As a result, Medicaid has a 5 year “look-back” period. This means that if an individual gives away money or property within 5 years of applying for Medicaid, it triggers a penalty period during which the individual will not be eligible for Medicaid.
Despite the look back period and its penalty period, there are still viable Medicaid Planning strategies available to protect an individual’s assets from the high cost of nursing home care. For married couples there may be even more planning opportunities available.
Many individuals applying for Medicaid are unaware that certain assets and expenses are exempt from the Medicaid asset test, so they don’t count towards the $1,500 asset limit. Exempt assets can include such things as household goods, up to $543,000 of equity in your home under certain situations, a car valued at $4,500.00 or less, and irrevocable pre-paid burial plans.
Countable assets are assets that count towards the $1,500.00 resource standard. Countable assets include, but are not limited to, checking and savings accounts, CDs, money market accounts, stocks, mutual funds, IRAs and second cars.
For married couples, where only one spouse will be entering the nursing home, the Medicaid asset test looks at the assets owned by both spouses in total. However, the spouse who is not in the nursing home is entitled to keep a minimum of $23,448 and a maximum of $117,240, plus their home and car, regardless of their value. So in many situations there is an opportunity to transfer certain assets to the spouse who his staying at home without fear of triggering a penalty period under the look-back rules.
The information provided above is designed to give the reader a general overview of the Medicaid eligibility rules in Ohio, but the Medicaid process can be complex and nuanced. So, when the time comes for a loved one to enter a nursing home, it is important to seek out a knowledgeable adviser who can help the family navigate the Medicaid process.
Paul Kellogg is a lawyer with Phillips Law Firm, Inc., whose practice focuses on estate planning, probate and representing entrepreneurs and business owners. He can be reached at (513) 985-2500.