You probably feel a sense of confidence about your health care insurance situation during your senior years.
Medicare will be a solid source coverage, but there are out-of-pocket expenses that you have to cover yourself. These would include premiums, deductibles, and co-insurance, but if you plan ahead for retirement effectively, they should be manageable.
However, there is one very costly healthcare-related expenses that Medicare will not cover.
Medicare will pay for convalescent care after an injury or illness, but it does not cover the custodial care that nursing homes provide, and it doesn’t pay for in-home care. This is a very serious situation, because nursing facilities and home caregivers are quite expensive.
According to Genworth Financial, the median annual cost for a private room in an Austin area nursing home was $84,680 last year. For an in-home caregiver, you are looking at an annual price tag of just under $55,000.
The United States Department of Health and Human Services tells us that 52 percent of seniors will need some type of paid care, and 35 percent will eventually reside in nursing homes.
If you are married, you and your spouse could potentially face two different rounds of nursing home expenses. It should be noted that the average length of stay in a nursing home is one year, and 13 percent of people that receive paid care require assistance for more than five years.
Medicaid is another government health insurance program that will pay for long-term care if you can gain eligibility. Because it is a need-based benefit, there is an asset limit of $2000 here in the state of Texas.
This can sound like an immediate deal breaker, but there is a bit of good news with regard to the details. Your home is not considered to be a countable asset, but there is a $603,000 equity limit in Texas this year.
One motor vehicle is not counted, and you can have unlimited term life insurance. Up to $1500 of whole life is allowed, and you can have the same amount set aside for burial or cremation expenses.
Your household items and personal effects are not counted, and your wedding ring, engagement ring, and any heirloom jewelry that you may have would be exempt.
There are a couple of allowances made for a healthy spouse that can live independently when their spouse is entering a nursing home. One of them is the Community Spouse Resource Allowance.
This is equal to half of the shared assets that are countable, but there is a limit. The maximum allowance in our state in 2021 is $130,380, and the minimum is $26,076.
Income that is brought in by the spouse that is in a nursing home must go toward the cost of the care that is being received. However, this requirement is set aside if a healthy spouse is relying on the income.
They can receive a Monthly Maintenance Needs Allowance, and the maximum is $3259.50 this year.
Irrevocable Medicaid Trust
You could convey countable assets into an irrevocable Medicaid trust to shape a financial profile that will lead to future eligibility. The term “future” is key, because you have to fund the trust at least five years before you submit your application for Medicaid.
If you violate this rule, your eligibility is delayed. For example, if you give away enough to pay for one year in a nursing home, your eligibility would be on hold for one year. This relative formula would apply to any divestiture within the five-year look back period.
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We are here to help if you are ready to work with an Austin, Texas elder law attorney to develop a nursing home asset protection plan. You can send us a message to request a consultation appointment, and we can be reached by phone at 512-258-9455.
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