Retaining Assets While Being Medicaid Eligible

Medicaid is a program with strict income and wealth limits to qualify, explains Kiplinger’s recent article entitled “You Can Keep Some Assets While Qualifying for Medicaid. Here’s How.” This is a different program from Medicare, the national health insurance program for people 65 and over that largely doesn’t cover long-term care. In this system, clients often have a goal of retaining assets while being Medicaid eligible.

If you can afford your own care, you’ll have more options because all facilities (depending on the level of medical care) don’t take Medicaid. Even so, couples with ample savings may deplete all their wealth for the other spouse to pay for a long stay in a nursing home. However, you can save some assets for a spouse and qualify for Medicaid using strategies from an Elder Law or Medicaid Planning Attorney.

You can allocate as much as $3,259.50 of your monthly income to a spouse, whose income isn’t considered, and still satisfy the Medicaid limit. Your countable assets must be $2,000 or less, with a spouse allowed to keep half of what you both own up to $130,380. Countable assets include things like cash, bank accounts, real estate other than a primary residence, and investments.  However, you can keep a personal residence, personal belongings (like clothes and home appliances), one vehicle (2 for married couple), engagement and wedding rings and a prepaid burial plot.  There are more detailed rules for countable and exempt assets, but suffice it to say most things count.

If you have too much income over the $2,382 income per month for the application, you can use a Miller Trust aka Qualified Income Trust for yourself, which is an irrevocable trust that’s used exclusively to satisfy Medicaid’s income threshold. If your income from Social Security, pensions and other sources is higher than Medicaid’s limit but not enough to pay for nursing home care, the excess income can go into a Miller Trust. This allows you to qualify for Medicaid, while keeping some extra money in the trust for your own care. The funds can be used for items that Medicare doesn’t cover.

However, your spouse may not have enough to live on. You could boost a spouse’s income with a Medicaid-compliant annuity. These turn your savings into a stream of future retirement income for you and your spouse and don’t count as an asset. You can purchase an annuity at any time, but to be Medicaid compliant, the annuity payments must begin right away with the state named as the beneficiary after you and your spouse pass away.

These strategies are designed for retaining assets while being Medicaid eligible for married couples; leaving an asset to other heirs is more difficult. Once you and your spouse pass away, the state government must recover Medicaid costs from your estate, when possible. This may be through a a claim on your probate estate (usually means the house) before assets go to heirs, reimbursement from a Miller Trust or other items.  That is a topic unto itself, albeit an important one, so see here for more information on Medicaid recovery.  https://www.galliganmanning.com/protect-assets-from-medicaid-recovery/

Note that any assets given away within five years of a Medicaid application date still count toward eligibility. Property transferred to heirs earlier than that is okay. One strategy is to create an irrevocable trust on behalf of your children and transfer property that way. You will lose control of the trust’s assets, so your heirs should be willing to help you out financially, if you need it.

Reference: Kiplinger (May 24, 2021) “You Can Keep Some Assets While Qualifying for Medicaid. Here’s How”

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Three Retirement Myths to Avoid

 There are three common retirement myths relating to retirement age, medical coverage and social security that clients often suffer from.

While you’re busy planning to retire, chances are good you’ll run into more than a few retirement myths, things that people who otherwise seem sincere and sensible are certain of. However, don’t get waylaid because any one of these retirement myths could do real harm to your plans for an enjoyable retirement. That’s the lesson from a recent article titled “Let’s Leave These 3 Retirement Myths in 2020’s Dust” from Auburn.pub.

You can keep working as long as you want. It’s easy to say this when you are healthy and have a secure job but counting on a delayed retirement strategy leaves you open to many pitfalls, especially with the effect COVID-19 has had on the workplace. Nearly 40% of current retirees report having retired earlier than planned, according to a study from the Aegon Center for Longevity and Retirement. Job losses and health issues are the reasons most people gave for their change of plans. A mere 15% of those surveyed who left the workplace before they had planned on retiring, said they did so because their finances made it possible.

Decades before you plan to retire, you should have a clear understanding of how much of a nest egg you need to retire, while living comfortably during your senior years—which may last for one, two, three or even four decades. If your current plan is far from hitting that target, don’t expect working longer to make up for the shortfall. You might have no control over when you retire, so saving as much as you can right now to prepare is the best defense.

Medicare will cover all of your medical care. A common retirement myth is that Medicare will cover all of your medical costs and consequently retirees under plan for their needs.  Medicare will cover some of costs, but it doesn’t pay for everything. Original Medicare (Parts A and B) covers hospital visits and outpatient care but doesn’t cover vision and dental care. It also doesn’t cover prescription drug costs. Most people do not budget enough in their retirement income plans to cover the costs of medical care, from wellness visits to long term care.   Clients often insist they can afford or don’t believe they will need long term care expenses,  but often are mistaken.  You can see this article for a flavor of those issues.  https://www.galliganmanning.com/can-i-afford-in-home-elderly-care/   Medicare Advantage plans can provide more extensive coverage, but they often come with higher premiums. The average out-of-pocket healthcare cost for most people is $300,000 throughout retirement.

Social Security may disappear.  A final retirement myth is that social security will cover or mostly cover a retirees needs.  Nearly 90% of Americans depend upon Social Security to fund at least a part of their retirement, according to a Gallup poll, making this federal program a lifeline for Americans. Social Security does have some financial challenges. Since the early 1980s, the program took in more money in payroll taxes than it paid out in benefits, and the surplus went into a trust fund. However, the enormous number of Baby Boomers retiring made 2020, saw the first year the program paid out more money than it took in.

To compensate, it has had to make up the difference with withdrawals from the trust funds. As the number of retirees continues to rise, the surplus may be depleted by 2034. At that point, the Social Security Administration will rely on payroll taxes for retiree benefits. Assuming Congress doesn’t find a solution before 2034, benefits may be reduced or severely impacted.

Saving for retirement is challenging but focusing on the facts will help you remain focused on retirement goals, and not ghost stories. Your retirement planning should also include preparing and maintaining your estate plan.  This is an excellent time to sit with your financial advisor to determine whether your retirement planning is safe from these three myths.

Reference: Auburn.pub (Dec. 13, 2020) “Let’s Leave These 3 Retirement Myths in 2020’s Dust”

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Can I Afford In-Home Elderly Care?

Most clients prefer to age at home. However, in-home elder care costs add up quickly, so be aware of other affordable housing options.

Staying at home isn’t always affordable, according to a recent US News and World Report article. The article, entitled “Can You Afford In-Home Elderly Care?”, says about 80% of seniors are concerned about being able to afford home health care costs, based on a 2019 SCAN Health Plan survey. Paying for personalized in-home senior care can add up quickly and isn’t always easy on a senior’s tight income.

If you’re thinking about in-home elderly care, review these criteria to determine what costs to expect and the different payment options available for this type of care.

Find Out the Services Included in Home Care for the Elderly. In-home care can vary a lot, depending on your health conditions and needs. You might get helpers if you’re recovering at home from an illness or injury, and you could also have home care workers help you with daily activities, such as preparing meals and personal hygiene. Home care services often include rides to and from appointments, monitoring heart rate and blood pressure and in-home physical and cognitive therapy sessions.

Think about the Level of Care Needed. If you can do most daily activities on your own, but could use help with certain activities, such as cooking or cleaning, home care might be a wise option. Home care is focused on the service, and it’s supposed to help those who are living on their own as long as possible. When more care is required, moving to a place with more health support may be necessary. People who have significant needs may often look to assisted living as an alternative. Assisted living facilities offer more services, like 24-hour emergency care and ongoing supervision for seniors with Alzheimer’s, dementia, or other disabilities, although funding options may be limited.

Check Out the Cost of In-Home Senior Care. Homemaker services cost about $22.50 per hour on average and include tasks to help a person with daily duties like laundry, grocery shopping and light housework. A home health aide charges an average of $23 per hour, and may help with administering medicine at scheduled times, supervising and monitoring chronic illnesses and helping with walking aids. Of course, the exact cost of these services depends on where you live and the amount of help you need. The monthly cost for in-home care ranges from $4,290 for homemaker services to $4,385 for home health aide care. This typically costs more than the monthly median cost for an assisted living facility—but less than the median cost per month for a room at a nursing home facility.

Know Your Insurance Coverage. If you’re on Medicare, you may be able to get coverage for some short-term home services. To do so, a doctor will need to indicate that skilled nursing care is needed for a short period of time. Medicare will cover speech therapy, occupational therapy, or physical therapy. You can also use it to help with the purchase of durable medical equipment and safety additions to your home. However, Medicare won’t typically cover long-term home care services.

Medicaid will cover some health services at home, like cleaning and meal preparation, rides to and from medical visits and personal care if you are financially eligible.  Depending on the program, it provides some care and services in the home to those who need it medically. If you have long-term care insurance, some in-home services may be covered by your policy.

Look at Other Payment Methods. If your insurance won’t cover in-home care, you might have to pay out-of-pocket. One way to lower costs, is by asking family members to help. If you need to hire more help over time, the cost for services will increase accordingly. If that doesn’t work, they may help pay for in-home elderly care.

Additionally, people often overlook government benefit options, such as Medicaid or Veterans’ benefits such as Aid & Assistance.  People wrongly assume they aren’t eligible for the benefits, and miss out on funds available to them.  See here for a fuller description of this issue.  https://www.galliganmanning.com/medicare-basics-what-to-know/

Reference: US News and World Report (June 10, 2020) “Can You Afford In-Home Elderly Care?”

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