Medicaid is a powerful benefit for leveraging your resources so you can afford home care or assisted living longer, and for paying for nursing home care if you need it. Unlike Medicare, Medicaid covers long term care, but each state has its own complicated laws for qualifying. Medicaid’s strict asset and income limits, and transfer-of-asset rules, can jeopardize your life’s savings.
Medicaid Asset Protection in Connecticut:
You can protect your assets through transfers, trusts, annuities, and converting exposed assets to exempt assets, if you comply with specific rules. Appreciated assets (house, stocks) and tax-deferred assets [IRAs, 401(k)s], require careful planning to minimize capital gains and income taxes along the way. Advance planning (sometimes involving an Asset Protection Trust) is best but, if you already require care, you still can protect a worthwhile portion of your assets. The rules are voluminous and change frequently, and must be applied to your circumstances by an experienced advocate.
Avoid Medicaid’s Look-Back Period:
Transfers of assets within five years of your Medicaid application result in penalty periods, but the penalty period is calculated based on the value of the assets transferred, and can be much shorter than the five-year look-back period. Also, you may be able to qualify for an exception (no penalty period) if you live with a family caregiver, have a disabled child, or transfer certain exempt assets. If you already need some assistance with daily activities, you can transfer assets and trigger your penalty period to run while your cost of care is relatively low, so you get Medicaid when you really need it!
Spousal Medicaid Asset Protection:
Couples can exempt the house and a portion of other assets for the healthy spouse (the Community Spouse Protected Amount), and transfer certain assets after the ill spouse’s Medicaid application is granted. Those protected resources can provide for the healthy spouse’s future or for a legacy for your children upon your death. And, the estate plan of the healthy spouse can protect assets for the children if he or she becomes the first to die.
Medicaid Income Protection:
Couples can protect the healthy spouse’s income, and usually a portion of the ill spouse’s income (called the Minimum Monthly Needs Allowance), for support, based on the healthy spouse’s income and housing costs. Medicaid home care recipients who are “over-income” can qualify by running the excess income through a Pooled Trust each month, which effectively gives the income back to you in the form of paying your monthly bills.
Medicaid Home Care:
You can stay at home longer by using the strategies above to qualify for Medicaid home care benefits, which provide daily care often including a live-in caregiver! If you consume your resources paying for your home care, you could lose your independence when the funds run out. But, if you qualify for Medicaid home care benefits to reduce your cost of care, your resources (in combination with the Medicaid home care) will last much longer, enabling you to stay at home.
State of Connecticut Assisted Living Pilot Program:
If you qualify for Medicaid or the related Connecticut Home Care Program for Elders, the Pilot Program will pay the care portion of assisted living. This benefit leverages your resources to enable you to afford assisted living longer, and avoid running out of funds and preserve your independence longer.
Applications and Appeals:
Applying for Medicaid is fraught with peril, because unknown technicalities can disqualify you for months before the State even tells you, and therefore you can’t fix it in time to cover a mounting bill, leaving you owing the bill privately. Nursing home personnel may try to tell you what to do (and offer to apply for free), but they don’t know all the ways to protect your assets and income. Since nursing homes cost roughly $14,000/month, clients usually profit from using elder law attorneys to apply.
