New 2021 Medicaid Nursing Home Asset and Income Rules

hey there estate planning attorney paul rabelais here and in this video we're going to talk about what are the new 2021 nursing home long-term care medicaid rules in other words you know what are the new rules that apply when somebody gets sick they need long-term care often in a skilled nursing home facility and they seek to have their state's medicaid program pay for that care all right so before we get into those numbers and how expensive the care is and when one qualifies for medicaid and when one has to you know fork that money out out of pocket to cover the thousands of dollars of monthly expenses let me give you a little commentary so here's what i've seen all right so pre-2020 this is this is a before covet and uh during and after covid analysis so pre-2020 the general public's concept of needing nursing home care in the future for that kind of middle class you know most of them would tell me something like paul we don't want to go to a nursing home we don't like nursing homes we don't feel like we're going to get good very good care if we go into a nursing home but paul there may come to a point where because of a condition who knows what the future holds paul there may get to a point where it's just not feasible for me or us you know depending upon whether a single person or married couple it just may not be feasible as much as we'd like to stay in our home for the rest of our lives it may not be feasible for us to stay home and it may be necessary one day for us to go into a nursing home we don't want that to be the case and that's the last last resort but if it's necessary we get it and we'd like to see if we can protect what little we have in the event that nursing home care is necessary that was people's opinion in general everybody has their own opinion but that was the opinion in general for people before 2020. now that covet has hit and it's still hit hitting people's opinions have changed it's gone from we don't want to go to a nursing home we want to stay at home but you know our circumstances may warrant us having to go to a nursing home one day so we want to be prepared it's gone from that to we're going to do everything in our power to stay out of our nursing home or to keep you know mom or dad out of the nursing home or keep our grandparents out of the nursing home or keep ourselves out of the nursing home because look what kovi did you know covet really hit the senior citizens the most it spread like crazy a lot of people in nursing homes passed away unfortunately terrible terrible terrible so it's really increased people's awareness or desire to stay out of those facilities where things like covid can can spread so rapidly and have just terrible consequences all right so now with that being the case let's start gradually getting to one of those what are some of the brand new current 2021 rules and again to give you a little background um you know nurse nursing homes under most people's standards are very expensive depending on where you live it may cost anywhere from about six thousand dollars a month to ten thousand dollars a month or more just to reside in a nursing home and if you're a married couple watching this and both spouses go into the nursing home you can double those numbers so that's anywhere from twelve thousand dollars a month to to twenty thousand dollars a month or more really just married couples just get slammed when they have to go into a nursing home and also in general the rules are you gotta you gotta pay for that yourself you've got to use all of the money in the bank you've got to sell all of the assets that you have other than your home and your car you've got to sell all those non-home non-car assets in order to cover that expense and oh by the way after you've spent everything other than the home in the car which they let you keep then after you die or after you and your spouse die if you're married they force the estate to sell the home in the car to be paid back for what medicaid did spend after you spent all of your other assets so it's just an awful set of circumstances you the idea here is you know you're encouraged to save but um you're going to get a a feeling as i go through this video you're going to probably at some point you're going to say something like as i go through the rules and go through how single people and married couples are affected at some point you're probably going to say to yourself something like hmm this just doesn't seem right the people who spend everything they make or never make anything and never accumulate anything they just spend they act irresponsibly all their care is going to be taken care of by medicaid because they would qualify for medicaid to cover the long-term care expense under the asset and income rules that i'm about to go over with you so that's one uh way that you'll look at it for the people who act irresponsibly and then on the other end you might say well if somebody has millions of dollars they're not likely to lose everything if they if they need long-term care but they can pay out of pocket for what care that they have because perhaps they have significant income or perhaps they have significant resources and investments so the wealthy people don't get hurt typically too bad from long-term care but that middle class that so many americans out there who have worked their tails off raised families maybe but struggled and may have now saved you know may have a home that's paid far and they may have two three four five hundred thousand dollars of life savings they're still you know scrimping and saving those are the people who really get slammed as a result of long-term care expenses those people will lose everything they have okay so with that being said let's start going through some of the rules what are the rules and i will have to warn you rules can vary from state to state i live and work in the state of louisiana and the way long-term care medicaid works is congress makes the rules and then they tell the states states you can administer your own uh medicaid program as long as you fit within the guidelines that congress requires so they give states some leeway as long as they follow the the federal medicaid rules so this can vary so first let me go through some of the asset rules you know what can you have in terms of assets and have and if you go into a nursing home have medicaid cover that six to ten thousand dollar expense or what is too much assets where medicaid doesn't cover the expense and you've got to you know pay that expense out of your own pocket so for a single person a lot of people are familiar are familiar with a single person rule the asset limit is 2 000 and you may think big whoop that doesn't go very far and it doesn't so oh by the way there are things called exempt assets the main ones are your house and your car and then if i went a little further i talked about prepaid funerals and a few other little things but um so the the two thousand dollars does not count the value of your home and your car so for example if uh grandma goes into the nursing home and she has a home and she has a car and she has a hundred thousand dollars in her bank accounts she'll have she won't qualify for medicaid she'll have to spend the hundred thousand dollars that's in her bank accounts until she spends at least ninety eight thousand dollars of that and has less than two thousand dollars remaining and then grandma would qualify for medicaid and once she spent all of those assets down then let's say grandma had some monthly income let's say it was uh fifteen hundred dollars a month maybe some social security maybe a small pension once she qualified based on the asset test then she would assign her income to the nursing home and those monthly income payments that she would she would have been getting would have gone straight to the nursing home she would get to keep 38 dollars of that each month which is called her personal needs allowance but other than that all of the income goes to the nursing home and then medicaid picks up the difference between what her income covers and the cost of the care so that's the lovely single person rule that didn't change from 2020 to 2021 that asset limit for single people of two thousand dollars has been the case for a long time now let's look at the worst scenario which is the married couple and both spouses are in the long-term care facility together that's the double whammy so the asset limit for a married couple when both spouses are in the nursing home together and i'm going to go ahead and just mention it right now which is a different scenario than the married couple when only one spouse goes into the nursing home that's very common i'm gonna get to that next but the married couple when both spouses go into the nursing home the total assets that they can have other than their house and car is a whopping three thousand dollars so if that married couple has uh 250 000 other than their house and their car because there's two of them in the nursing home facility at the same time like i said earlier they'll be spending 12 to 20 000 each month because both of them are in the nursing home and they've got to spend what i've mentioned as their 250 000 of accountable resources assets other than their house on their car and they'd have to spend all that down until they had less than three thousand dollars of accountable resources and then medicaid would uh pay for the nursing home there subject to them having to use their income and assign it to the nursing home they get to keep the 38 personal needs allowance and then medicaid picks up the difference oh by the way i mentioned it earlier under that scenario where they had a house and a car in 250 000 and they spent their two hundred and fifty thousand dollars down to less than three thousand dollars started qualifying for medicaid assigning their income to the nursing home medicaid picks up the difference now medicaid is going to have its estate recovery rights so that after both spouses pass away medicaid can force the sale of that home to be reimbursed for what medicaid pay for after the couple spent all of their accountable resources so that's that's a that's a double whammy there because for married couples what married couples kind of middle class could even envision having to spend 12 to 20 000 a month to you know get the kind of care that people get in a nursing home facility but it's a it's so maybe even more reason to get yourself informed and maybe even take some action to get yourself prepared but those are the rules all right and the three thousand dollar for rule for married couples when both are in the nursing home that didn't change from 2020 to 2021. now we go through a couple of rules that have changed a lot of these how much you have in assets how much can you have an income those rules get adjusted annually for inflation so now i'm going to go through the very common scenario of a married couple and only one spouse needs the long-term care in let's say a nursing home facility the other spouse can stay at home can stay in their apartment perhaps can stay in an assisted living facility which is different from a nursing home but only one spouse is in a nursing home institution for medicaid purposes that spouse who is in the nursing home institution is called an institutionalized spouse and the other spouse who is not in the nursing home but is in the home or is in an apartment or is in an assisted living facility they're living out in the community oh by the way they're called a community spouse because they're living in the community and they're not living in a nursing home institution okay so those uh there's a little bit of a break a little more leniency there oh great you might say so the the reason for the leniency is because you've got a spouse who's not in the nursing home and they've got to have something to live off of so the it's called the community spouse resource allowance so it's how much how much in assets can a spouse who's living in the community have and the institutionalized spouse would have medicaid cover the nursing home expense let me just give you the number real quick for 2021 this what i call community spouse resource allowance is hundred and thirty thousand three hundred and eighty dollars for two thousand twenty it was one hundred and twenty eight thousand six hundred and forty dollars let me give you an example let's say you have a married couple and one spouse gets sick that spouse has to go to the nursing home to get the kind of care that they need and that couple has a home and a car and they have 250 000 is medicaid going to pay for that spouse who went into the nursing home is medicaid going to pay that six to ten thousand dollar nursing home expense no they're not it's gotta be paid entirely by that couple because they have two hundred and fifty thousand dollars accountable resources and the community spouse resource allowance for 2021 is one hundred and thirty thousand three hundred and eighty dollars so they'd have to spend that two hundred and fifty thousand dollars down to less than the one hundred and thirty thousand three hundred and eighty actually one hundred and thirty two thousand three hundred and eighty because the spouse who's still at home can have a hundred and thirty thousand three hundred and eighty and the spouse who's in in the institution can have up to two thousand dollars so they would have to pay for that care out of their own pocket until they spent their resources down to that limit and then medicaid would cover that expense or a portion of that expense and i say a portion because now maybe the last complicated rule stay with me has to do with the income that that couple has and so we have something from an income standpoint that's called the spouse's maintenance needs or maintenance needs allowance uh i'm gonna call the spouse's maintenance needs it's how much income can the spout can the community spouse keep without having to you know send it to the nursing home so let me give you a number and then let me give you an example for 2021 the amount of income that is allowable for the spouse's maintenance needs totals 3 259.50 for 2020 it was you know it's gone up a little bit from three thousand two hundred and sixteen dollars of monthly income all right so let's go back to our example kind of put it all together uh under this married couple with an institutionalized spouse and a community spouse let's use the same example i just used a moment ago married couple 250 000 accountable resources plus they have a home in a car and one spouse goes into the nursing home one spouse stays at home under the asset test do they qualify nope because they have 250 000 they can only have 130 380. so one spouse goes into the nursing home they spend those assets down to less than 130 380. and now the institutionalized spouse qualifies for medicaid so now under the asset rule now we have to look at the income rule and the income rule which is based on the name on the check as far as which spouse does that income get allocated to under our spouse's maintenance needs rules the community spouse the spouse at home gets to keep um get well gets to keep all of the income that is payable to that community spouse it takes about ten times for people to understand this so if the community spouse has a pension in social security whether it's one thousand dollars or whether it's seven thousand dollars a month the community spouse gets to keep all of the income that's payable to the community spouse and then if the if the community spouse's monthly income is less than 3259.50 each month then the community spouse gets to keep enough of the institutionalized spouse's income to get that community spouse up to the 3259.50 monthly limit so if the community spouse had three thousand dollars of monthly income and the institutionalized spouse had two thousand dollars of monthly income the community spouse would get to keep all of their income because the community spouse always gets to keep all of their income but since the community spouse's income was three thousand dollars which is less than the 32 59.50 then the community spouse would get to keep 259.50 of the institutionalized spouse's income and then the rest of the institutionalized spouse's income would be assigned to the nursing home and then medicaid would cover the remainder of that monthly nursing home expense for the institutionalized spouse boy is that a mouthful you may need to watch this one two three four five six ten times to really get it but you know we're doing the best we can and oh by the way if you don't like these rules i'm gonna ask you don't don't blame the messenger my goal here is just to introduce these rules to you so that you can get yourself informed and then if you choose to do so take some appropriate action if necessary and if permissible and if the rules allow it so that you can better keep what you have and protect what you have and and uh arrange things so that an illness doesn't uh bankrupt you okay so a couple of other rules that i think are important one is the i keep talking about it's okay to have a home in a car you can qualify for medicaid with your home and your car and so if if you have a home and you're single and you only have a thousand dollars of other assets you're gonna qualify for medicaid however there are some home equity limits so this really um doesn't apply very often because often those people who are applying for medicaid they don't have a very expensive home but they could and i've seen it where they do sometimes so there's a a limit they tell you know you can't go out and buy a million dollar home and then have medicaid cover your nursing home expense not a bad thought but it just doesn't work so we have home equity limits how much equity can having can you have in your home and still qualify for medicaid so for for 2021 the home equity limit is six hundred and three thousand dollars for 2020 it was 595 thousand dollars so just be aware of that we do have a limit as to how valuable your home can be or really you know what are what are the home equity limits or how much equity can you have in your home all right a couple of other rules some some rules that people thought changed but didn't i'm going to talk next real quick about the uncompensated transfer rule so for the last oh boy probably uh let's see at least a dozen years um we've had rules that say if you transferred assets out of your name it's called an uncompensated transfer if you did that within five years of applying for medicaid it's gonna cause a medicaid eligibility problem a lot of people talk to me during the past year and say paul i know that the five-year penalty period rule that changed it got lengthened to seven years and they came in just adamant about it so adamant that i was like jesus they seem so certain of themselves i have to go double check and triple check the rule but it didn't change and it's five years and it's still five years for 2021. so uh there's no new law on that but it's just something that a lot of people don't know about i'm throwing it in on this video because even though it's not new for 2021 a lot of people don't know about it so i want to kind of throw it out there when somebody applies for medicaid there's a medicaid application process that the that the person who's going into a nursing home or perhaps a family member for them completes to attempt to qualify for medicaid part of that lengthy medicaid application process involves a question that says have you or the medicaid applicant has the medicaid applicant made any transfers of assets out of their name you know for less than fair market value in the previous five years and if the answer that question is yes then you got a problem with medicaid eligibility and this is where tax laws and medicaid laws people get them confused because sometimes people say we'll say well um well yeah i uh during the last five years every year i give my children fifteen thousand dollars each because that's what my accountant said i could do without any consequences and the account was right there aren't any tax consequences to transferring fifteen thousand dollars to as many people as you want to every year but that causes some major adverse medicaid consequences the idea behind trying to protect assets for medicaid is it doesn't do any good to try to get things out a little at a time fifteen thousand dollars at a time because if you're transferring fifteen thousand dollars out of your name every year to as many people as you want to at some point you're gonna try to apply for medicaid in a nursing home they're gonna ask you if you transferred anything out of your name in the last five years and you're gonna say yeah i've been making these fifteen thousand dollar transfers and then that causes a huge problem for medicaid so for medicaid purposes you gotta get it all out of your name and then you and then you gotta wait five years so you gotta get it all out of your name before you're sick and then just you know have things titled correctly and then just let it sit there and then uh five years later or beyond if you go on a nursing home have you made any transfers out of your name in the last five years you could say no and perhaps you'll qualify for medicaid so now what does it mean to give it out of your name that makes people worry because and it shouldn't make people worry because people think justifiably so that if you're taking everything out of your name then you're losing control over that and who knows you know if you put it in your child's name your grandchild's name who knows what's going to happen to it after you get it out of your name and put it in their name they could spend it they could do something stupid they could pass away they could get divorced so lots of problems there so instead of what most people do from a medicaid planning standpoint standpoint of just instead of putting things in their children's name outright as i call it they often create certain what i'll call family trusts just in order to retain more control over those assets after those assets are transferred out of your name quick note there the typical avoid probate revocable living trust isn't the kind of trust you can transfer assets to to get this medicaid or long-term care protection there have to be it must be other you know fairly customized and personalized trusts that prohibit you from removing the principle from that trust and putting it back in your name so that's a whole nother video that i'll have to do and have done and you could search on my channel for more on that so just wanted to give you an update of these key rules that change for 2021 the community spouse resource allowance the monthly maintenance needs again both of those rules apply to married couples when one spouse goes into a nursing home the home equity limit now of 603 thousand dollars a lot of the other rules stayed the same the two thousand dollar amount for single person assets the five-year rule rule for transferring assets out of your name hope that helps stay tuned as things change and i have a feeling there's gonna be a lot of changes in 2021 make sure you subscribe so you don't miss anything give it a like and we'll see you next time y'all take care

Channel: America's Estate Planning Lawyers

Views: 130,679

Keywords: 2021 Medicaid rules, 2021 Long Term Care Medicaid, CSRA 2021, Community Spouse Resource Allowance 2021, Louisiana Medicaid 2021, Louisiana Long Term Care Medicaid 2021, Baton Rouge elder law, Louisiana elder law attorney, Monthly Maintenance Needs 2021, How much assets for Medicaid 2021, Medicaid asset limit for 2021, New Medicaid law for 2021

Id: UoKt2WPLnno

Length: 24min 49sec (1489 seconds)

Published: Sun Jan 10 2021