Nursing Home Medicaid is not just for poor and low-income seniors. With the right planning, mid to higher-income seniors can also qualify, while protecting some assets from Medicaid spend down.
Medicaid was created by Congress in 1965 to help with insurance coverage and protect seniors from the costs of medical care, regardless of their income, health status or past medical history, reports Kiplinger in a recent article “How to Restructure Your Assets to Qualify for Medicaid.” Medicaid is a state-managed, means-based program, with broad federal parameters that is run by the individual states. Eligibility criteria, coverage groups, services covered, administration and operating procedures are all managed by each state.
With the increasing cost and need for long-term care, Medicaid has become a life-saver for people who need long-term nursing home care.
Texas is what Medicaid calls an “income cap” state. This means that there is a hard limit for the amount of household income an applicant can have. For single applicants, the income limit is $2,523 and for married applicants it is $3,435. If the household income exceeds the Nursing Home Medicaid eligibility threshold, two commonly used trusts may be used to divert excess income to maintain program eligibility.
QITs, or Qualified Income Trusts. Also known as a “Miller Trust,” income is deposited into this irrevocable trust, which is controlled by a trustee. Restrictions on what the income in the trust may be used for are strict. Both the primary beneficiary and spouse are permitted a “needs allowance,” and the funds may be used for medical care costs and the cost of private health insurance premiums. However, the funds are owned by the trust, not the individual, so they do not count against Medicaid eligibility.
If you qualify as disabled, you may be able to use a Pooled Income Trust. This is another irrevocable trust where your “surplus income” is deposited. Income is pooled together with the income of others. The trust is managed by a non-profit charitable organization, which acts as a trustee and makes monthly disbursements to pay expenses for the individuals participating in the trust. When you die, any remaining funds in the trust are used to help other disabled persons.
Meeting eligibility requirements are complicated and vary from state to state. An experienced Texas Elder Law attorney will help guide you through the process, using his or her extensive knowledge of state laws. Mistakes can be costly—and permanent.
For instance, your home’s value (up to $636,000) is exempt, as long as you still live there or plan to return. There are a few other exempt assets, but Texas Medicaid applicants can have no more than $2,000 in total (non-exempt) assets. Transferring assets to family members or others is a very risky strategy. Texas Medicaid has a five-year look back period and if you’ve transferred non-exempt assets, you will have a penalized period of ineligibility. If the person you transfer assets to has any personal financial issues, like creditors or divorce, they could lose your property.
An experienced Elder Law attorney can help you protect assets for your spouse or for other supplemental needs.
Talk with your estate planning attorney if you believe you or your spouse may require long-term care. Keep in mind that Medicaid gives you little or no choice about where you receive care. Planning in advance is the best means of protecting yourself and your spouse from the excessive costs of long term care.
Reference: Kiplinger (Nov. 7, 2021) “How to Restructure Your Assets to Qualify for Medicaid”