Medicaid is considered a need-based program. For this reason, in order to qualify for Medicaid, you must have only a limited income and a maximum amount of assets to qualify. Many people worry that because they have a home or a car that they will be ineligible to apply for Medicaid. This is untrue, as certain assets will be excluded from your total assets.
There are a number of asset limits that need to be followed in order to receive assistance from the Medicaid program. Below is a list of assets you may retain while still being eligible for Medicaid funding:
- Cash – $2000 if you are single, $3,000 if you are married
- Home – If your home is valued at $500,000 or less at the time of applying, your home will be excluded as an asset.
- Car – One automobile of any market value is excluded as an asset.
- Funeral and Burial Funds – Pre-planned funeral arrangements and burial plots are excluded as assets, no matter the value. If you have not yet made any pre-planned funeral arrangements, you may set aside $1,500 in a bank account specifically for the use of funeral and burial funds.
- Property – Under Federal Law, any real or personal property that is deemed essential to self-support is excluded as an asset.
- Life Insurance – If your life insurance has a cash value in excess of $1,500, and is owned by you, the applicant, that is counted towards your assets.
If you plan on applying for Medicaid to support you and your long-term health, but you have a greater amount of assets than the above list provides, you may want to start thinking about reducing your assets. It is never too late to plan for Medicaid eligibility, but the sooner you have a plan in place, the easier it will be. The process of reducing your assets is known as “spending down,” and there are various rules that must be followed in order to reduce assets while still remaining Medicaid eligible.
To be eligible for Medicaid, you must be able to show that you have exhausted all other means of payment. This includes selling your assets and using your savings accounts. Many people try to avoid having to sell their assets or use their savings accounts for healthcare by giving them away to family members and friends. Giving away your assets, while not illegal, could put you in risk of being ineligible for Medicaid for an extended time period.
The Deficit Reduction Act of 2005 (DRA) states that anyone who has given away assets within five years of applying for Medicaid benefits will be imposed with a period of ineligibility. This five-year period begins at the time the application is filed for Medicaid funding. Not all lengths of ineligibility will be the same. The penalty period will be determined by the amount gifted or the amount transferred. Medicaid determines this penalty period by dividing the amount transferred by the average monthly cost of nursing home care. For example, if you transferred a $20,000 car in an area where the average monthly cost for nursing home care was $10,000, you will be ineligible for only 2 months.
When planning for Medicaid coverage for your long-term healthcare, it is important to understand the DRA ineligibility penalties. Medicaid pays for the largest share of long-term care services, but only if the individual meets eligibility requirements. The Medicaid application and eligibility professionals at P&P Medicaid Consulting, Inc. assist Nassau County, Suffolk County, and Queens residents in preparing applications for Medicaid, while taking advantage of programs and planning options that will protect their income and assets. For more information or to schedule a consultation call our Long Island, New York Medicaid consulting office at (516) 541-4770 or fill out our contact form.