Medicaid and Medicare of often used synonymously, but these are different programs entirely.
While both pay for medical and health care-related costs, Medicare is age-based; not income or asset-based. The only time income plays a role in Medicare is determining your premiums for certain coverage options. Instead, you can receive Medicare benefits if you are over 65 years, or if you have a qualifying disability. Medicaid, on the other hand, works more like public assistance; therefore, the program scrutinizes everything from income to assets to financial resources to determine if you qualify.
You are required to provide documentation when you apply for Medicaid, and omitting assets not only will guarantee that you are excluded, but it could also constitute fraud.
The Medicaid income assessment is straightforward, and it includes any income like Social Security, retirement, or actual wages from a job. However, the asset portion of qualifying is more complicated, and sometimes you might think that an asset doesn’t count when it does – affecting your chances of approval.
Note: Medicaid Law Update – October 2021
New York finally adopted several regulations that imposed a major change in Medicaid eligibility. These regulations also introduced a “look-back” period into New York’s state’s Medicaid program.
A 30-month look-back provision gives the state the power to review the financial statements of anyone who is applying for home health care, private nurses, and other kinds of assisted living. By “looking back” at these records during the time period prior to their Medicaid application, the state can limit applicants’ eligibility.
Learn more about these changes if you’re planning to apply for Medicaid. Let our trusted attorney assist you with your Medicaid application.
What Assets Count for Medicaid?
Assets eligible for Medicaid consideration include:
- Checking and Savings Accounts – Any checking or savings account with your name or your spouse’s name count as an asset. Therefore, having a high amount of funds in those accounts could disqualify you. This includes long-term savings accounts or investments like CDs.
- Stocks and Bonds – Any investment accounts you have, including bonds, stocks, or funds, count toward your eligibility. These are considered assets that you can withdraw and pay for medical expenses and long-term care. Therefore, the state will assume you have enough funds to pay for your care.
- Real Estate Other Than Your Primary Residence – Your primary residence does not count. But if you own secondary property such as a rental home, vacation property, or even a co-owned property like a timeshare, these count.
- Extra Cars – Your primary vehicle will not count, but any additional cars and recreational vehicles do count as assets.
- Life Insurance – The cash value of a life insurance policy also counts. If the amount exceeds $1,500, then any excess is considered an asset to your estate and will be considered in your application.
- Cash – While you can possess some cash, too much may disqualify you. For example, if you have $50,000 in a checking account, it would most likely disqualify you unless you could prove those funds were dedicated to something specific.
What Assets Do Not Count for Medicaid?
Medicaid doesn’t count certain assets that go toward your living, and those not considered liquid.
Some assets that are not counted include:
- Your Primary Residence – Luckily, your primary residence doesn’t count against you for Medicaid. Even if you own your home in full, it is your home and primary residence where you live 90% of the time. Therefore, you do not have to worry about it disqualifying you. There are limits to your home equity, however.
- Personal Property – Any personal property you own, especially that inside your primary residence, does not count.
- Life Insurance – Any life insurance with a face value under $1,500 does not count.
- Burial Expense Funds – You can still set aside funds for burial and funeral expenses, up to $1,500, without it counting against you when you apply.
Home Equity
When Medicaid looks at your home, regardless of the value, it is exempt. However, it will affect whether you get payments for long-term care and nursing homes from Medicaid, especially if the equity of your home exceeds a specific threshold. The equity of your home, which is the fair market value minus what you owe, does affect Medicaid qualifications.
What about Income?
Any income you receive from pensions, retirement accounts, and Social Security will count in your application. You can, however, keep up to $800 per month of your income, along with any costs associated with healthcare premiums, if you qualify for Community Based Medicaid. Any extra income, referred to as spenddown, must be used on your healthcare before Medicaid pays for the excess.
Your Options for Managing Assets When Applying for Medicaid Programs
Because your assets do play a heavy role in determining eligibility for Medicaid programs, you may want to look for other ways to protect family assets rather than selling or disposing of them to qualify for the healthcare coverage you need.
One of the best options is a Pooled Income Trust. A Pooled Income Trust is a unique trust that allows you to become eligible for Medicaid programs while still preserving your assets. Not everyone requires this type of trust, but when your assets exceed the qualifications for Medicaid, you may want to use a Pooled Income Trust.
How It Works
Pooled Income Trusts are allowed by federal law. You protect your public benefits, but you also receive pooled funds for expenses. You can then use your Pooled Income Trust for multiple expenses, such as:
- Living costs, including food, clothing, and shelter
- Housing costs, including rent or utilities
- Private nursing care
- Assisted living care
- Medical procedures not covered by your government insurance plan
- Entertainment
- Travel
- Attorney fees
Under the current laws in New York, your monthly income excess must be spent down to qualify for Medicaid, which is where your trust comes in. When you deposit into the Pooled Income Trust, you are no longer subjected to the ordinary rules for extra income and now you can protect the income benefit without selling your assets.
Speak with an Estate Planning Attorney to See How You Can Plan for Long-Term Care and More
If you are worried about how you will afford long-term care or how you will preserve assets while using government insurance, then you need to meet with an estate planning attorney.
Andrew M. Lamkin, P.C., has helped countless clients just like you figure out how to manage their assets, create estate plans, and ensure they can still qualify for Medicaid without throwing away everything they have earned.
Schedule your free consultation to discuss your Medicaid planning by calling us, or you can request more information about estate planning online.
Andrew Lamkin is principal in the law firm of Andrew M. Lamkin, P.C., where he focuses his practice in the areas of elder law, estate planning and special needs planning, including Wills and Trusts, Medicaid planning, estate administration and residential real estate transactions. He is admitted to practice law in New York and New Jersey.
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