With the aging population, estate planning has shifted to more than drafting a plan to devise your assets when you pass away. Planning for and protecting your assets from the high costs of nursing home and long-term care is a crucial issue that needs to be considered and evaluated in every estate plan.
Long-Term Care Facts
Medical Assistance (MA)
Medical Assistance is Minnesota’s public health care program that provides necessary medical services for the elderly (65 or older) and disabled. Medical Assistance provides payment for nursing home and other long-term care services.
In order to be eligible for Medical Assistance an individual must be a Minnesota resident and a United States Citizen or have the proper immigration status. The applicant must be 65 or older, blind or disabled, and they must meet certain income and asset requirements.
Income and Asset Requirements
For an MA recipient 65 or older living in the community the income limit is $1,012.00 per month or $1,372.00 for a couple. Individuals living in a nursing home receive a $99.00 personal needs allowance per month, but the remainder of their income must contribute to their cost of care.
The asset limit is $3,000.00 for an individual and $6,000.00 for a couple. Therefore, if you or you and spouse require a nursing home level of care and are unable to pay for it out of pocket or run out of money you can only keep the above specified amounts in assets. However, certain assets are excluded when determining Medical Assistance eligibility:
Medical Assistance has specific rules for dividing assets and income for married couples when only one spouse is in the nursing home. These rules were designed to protect the community spouse, so the spouse living at home does not become impoverished while the other spouse is in long-term care. The impoverishment rules are beyond the basics but require a detailed asset assessment to be conducted to determine how the assets should be divided. Despite the asset assessment, the maximum amount the community spouse may keep is $123,600.00.
Individuals seeking eligibility for Medical Assistance will be penalized if they, their spouse or anyone with legal authority to act on behalf of them or their spouse gives away or transfers assets or income for less than the fair market value.
As of January 31, 2011, the 5-year Medical Assistance look-back period applies. That means you and your spouse are prohibited from giving anything away for less than the fair market value within the 5-years prior to needing long-term care. An unauthorized transfer triggers a transfer penalty causing the individual to be ineligible for medical assistance long-term care services. For example, if you and your spouse gift your house to your children today, you will not be eligible to receive medical assistance for 5 years. Five years is a long time, making it extremely difficult to gift, especially if your health is uncertain.
Medical Assistance is a very complex and ever-changing program. There are many rules and exceptions that are not discussed here that factor into eligibility and asset and income requirements. Long-term care planning is more than having an estate plan. Your estate plan indicates what happens to your assets when you pass away but does not protect your assets from Medical Assistance. Even assets held in trust are not protected. Protecting your assets is possible. It requires diligent and careful, planning and the earlier you start the more you can protect. Our attorneys are here to discuss your estate planning and long-term care needs.