Medicaid and long term care: Do you qualify?
According to a recent national survey, every day until 2030, 10,000 Baby Boomers will turn 65 – and 7 out of 10 people will require long term care at some point.
Unfortunately, long term care costs continue to increase, and show no signs of slowing down. The most dramatic increase has been in nursing homes. The same survey found that the annual median cost for a private nursing home room increased from $65,185 in 2004 to $102,200 in 2019. By 2029, it’s estimated that this will increase again to over $137,000 annually.
With staggering costs like these, long term care may seem to be out of reach for anyone but the wealthy. However, Medicaid may be an option for some.
The key is determining if you qualify. In Michigan, there are several eligibility requirements. There are four core areas that determine your eligibility. In addition, in some circumstances, whether you are single or married will also affect your eligibility:
1. Age or disability
If you are 65 or older, disabled or blind, and you:
Already receive supplemental security income (SSI): You are automatically eligible to receive Medicaid in Michigan.
Don’t receive SSI benefits: You may qualify for Medicaid if you meet certain income and asset limits.
2. Income limit
Medicaid income rules are complex, and are different for different situations. In addition, the Michigan Department of Human Services considers more than just employment wages. Other types include:
Pension payments or IRA withdrawals
Stock dividends
Alimony payments
Social Security or Social Security Disability payments
3. Asset limit
When you apply for Medicaid, your assets are also considered. There is a $2,000 limit on assets for a single applicant. This includes:
Cash (savings and checking accounts at a bank or credit union)
Investments such as stocks and bonds
Real estate that is not the primary residence
Not all assets are counted toward the $2,000 total. Some exceptions include:
Primary residence (as long as the applicant’s equity interest is no more than $595,000, or if a non-applicant spouse lives in the home)
1 automobile
Personal belongings and household furnishings
Pre-paid funeral arrangements that are non-refundable
If you are over the $2,000 asset limit, there are several financial strategies that you might want to consider to reduce your asset total. These include spousal asset transfers, spending down assets on qualified expenses (such as care-related home modifications), certain types of trusts and other planning options. Given the complexities and the fact that Medicaid eligibility requirements can change, it’s best to engage a legal professional with Medicaid experience before implementing any of these.
In addition, the American Council on Aging offers a free online test to help you determine if you meet the income and asset eligibility requirements.
4. Amount and type of long term care expenses
The focus is often on nursing homes, given that this type of long term care costs the most and is the one that requires the highest level of assistance. But this is just one of many possible Medicaid pathways. Others include regular assistance for home health care or adult day care, or waivers for home or community-based care, such as assisted living. The waiver option only allows for a limited number of enrollees.
No matter what type of care an applicant needs, eligibility is also determined in part based on a demonstrated care need.
Ongoing eligibility and Medicaid estate recovery
Long term care should be addressed as part of any estate plan or elder care plan. It’s also important to note that even if you do qualify for Medicaid, your financial eligibility will need to be reviewed once a year to ensure that you still qualify. In addition, given Michigan’s estate recovery law, after a Medicaid recipient dies, their estate may be required to repay some or all of the benefits received during their lifetime unless additional planning is done.
Call (810) 207-6670 or complete our online form to request a free phone consultation.
Buzz Suuppi
Buzz started The Plan Firm for his family, which is everything to him. Every member of his team is committed to providing effective estate planning and related solutions for families in St. Clair County, Michigan.