Most people hope that when they retire, they will have no financial worries. The reality is, too many people are left without sufficient resources to provide for their healthcare needs. Medicaid was put into place to address this reality, providing coverage for certain medical needs to those without sufficient assets.
Medicaid does have certain maximum income and asset restrictions that need to be understood before you apply. If you have too many assets or too high of an income, you may be denied, or you may be forced to sell some of those assets to repay Medicaid or qualify for those benefits. This area can be fairly complicated to navigate, so it is a good idea to enlist the services of a Medicaid or Medi-Cal planning lawyer before you move forward.
Medicaid Asset Limits
Qualifying for Medicaid does not require you to sell everything that you own. There are certain minimal assets that will not be counted when determining eligibility. These include:
- Up to $2,000 in cash
- $500,000 of equity in your home
- One car, of any value
- Pre-paid funeral or burial plans or up to $1,500 in separate funds
- Cash value of a life insurance policy owned by the applicant
- Real or personal property deemed essential to self-support, including rental properties that provide a monthly income.
Income Eligibility Under the Affordable Care Act
For now, the government uses a methodology called the Modified Adjusted Gross Income (MAGI) method for determining whether an applicant meets the income eligibility requirements for Medicaid. This method takes into account:
- taxable income
- tax filing relationships
Certain individuals are exempt from this method of determining eligibility. Those individuals include those who are:
- blind
- disabled
- over 65 years of age
For these individuals, the government uses the testing methods used to determine eligibility for supplemental social security income.
Estate Recovery Requirements
While some assets may be protected while an applicant is alive, Medicaid must seek reimbursement from a deceased former Medicaid recipient for nursing home costs, home and community-based services, and certain pharmaceutical and hospital services. The state may impose liens on property for purposes of reimbursement as well.
Medicaid Planning
In order to protect your assets, both before and after death, there are tools out there that can help, if you plan in advance. These tools include:
- Transfers
- Trusts
- Spend Downs
- Annuities
- Community spouse resource allowance
- Spousal Refusals
Because the government imposes certain restrictions on when asset transfers can occur in relation to the application date, it is critical to plan well in advance of your application. It is possible to protect your assets for yourself and for your family, with early and solid Medicaid planning.
If you are thinking of applying for Medicaid, talk to a California elder law attorney for advice. Talk to the professional elder law attorneys at Horizonlaw today by calling 925.275.5509.