Elder Care: Act early, plan now

Elder Care: Act early, plan now

elder care for women

Most people become frantic at the thought “the nursing home taking all of my assets.”

“Always be nice to your children because they are the ones who will choose your rest home.” – Phyllis Diller

On a regular basis, I have conversations with prospects and clients about the subject of aging and the cost of long term care. Most people become frantic at the thought “the nursing home taking all of my assets.” Many scheme at ways to protect their assets and still get services.

If you need assistance and you do not want to pay, the state steps in to pick up the tab; it’s called aid or Medicaid. Massachusetts’ Medicaid program is known as “MassHealth.” MassHealth is a joint federal and state program that provides medical care and long-term care for low-income, aged, blind, and disabled citizens.

If you want to qualify for assistance under the state of Massachusetts long-term care system, it’s simple, give up everything and become impoverished. In addition, you’ll need to volunteer to become a ward of the state — often giving up control for decisions about your future, because the state will determine what’s best for you at that point. Unbeknownst to most, the nursing home never “seizes” your assets. You are either impoverished or you spend down to that level.

In order to qualify for MassHealth long-term care, an individual must be a full-time resident of Massachusetts and have medical and financial needs.  Financially, an individual’s income and assets must fall within certain guidelines to qualify for assistance. The income limit is based on the federal poverty guidelines. In addition, your tax filing — single, married, dependents, etc. — will also impact the income limit formula.

Massachusetts imposes an asset limit of $2,000 for individuals who seek MassHealth for their long-term care. If your countable assets are more than $2,000, then you will have to deplete or spend down those assets until only $2,000 is left. Keep in mind, if you are applying, your jointly held assets are generally presumed to be owned by you. And, the $2,000 asset limit applies to most of the assets you own. Under the application formula, assets fall under two categories: countable or non-countable.

The following assets are examples of countable (this list is not exhaustive):

  • Cash, bank accounts with CDs, money market, etc.
  • Retirement assets, like IRAs and 401(k)s
  • Brokerage accounts with stocks, bonds and mutual funds
  • Property, like vacation property, or a second home
  • The following assets are examples of non-countable (this list is not exhaustive):
  • Residence and exceptions apply
  • Stuff like household and personal belongings, cars, furniture and clothing
  • Pre-paid funeral arrangements

As a general rule in Massachusetts, the home will not be a countable asset if its equity value is $750,000 or less and any of the following situations occur:

  • The individual intends to return home
  • The home is inhabited by a spouse, child under the age of 21, a disabled or blind child of any age
  • A child who cared for the applicant for at least two years before the applicant moved into a nursing home
  • Siblings with equity interest in the home
  • Dependent relatives

If aforementioned exceptions do not exist, then the home is a countable asset. And if you want assistance you will have to sell your home to qualify for long-term care benefits. Once your home is sold, the proceeds are countable and will then have to be spent down until the $2,000 limit is reached.

Even if a home is considered a non-countable asset, the home may still be subject to estate recovery upon the individual’s death. Put another way, the state may get the house. Upon the death of a MassHealth recipient, Massachusetts law provides for estate recovery from the estate for any benefits paid.

If an individual qualifies for MassHealth, virtually all of their income must go toward the cost of care. Recipients are allowed to keep a certain minimal amount, a whopping $72.80 per month, for personal expense items. Keep in mind, the law allows for some income to be diverted to a stay-at-home spouse.

Massachusetts law provides that a community spouse or stay-at-home spouse can retain up to a certain amount of the couple’s countable assets without affecting the other spouse’s eligibility for MassHealth. This is known as the community spousal resource allowance, or CSRA. The amount of the CSRA is subject to change every year; as of 2017, it was $120,900. With this allowance, the countable asset limit for MassHealth eligibility for a married couple is equal to the CSRA for the community spouse plus the $2,000 allowance for the long-term care spouse. Anything over this limit will need to be spent before qualifying for MassHealth. To some this may seem like a generous amount, to other couples, this will decimate savings.

As you can see, you need to be broke to get assistance. My opinion, we all need to rethink this subject. Strategies to hide assets in an effort to qualify for Medicaid could lead to some foolhardy decisions. Giving away assets is an irrevocable decision. As Americans, we work hard to be self-sufficient. We accumulate assets to take care of ourselves in a dignified manner and to avoid becoming a ward of the state. The best course for great care is plan, save and insure. With either decision, start as early as possible.