It can come as a shock when you find out that Medicare will not pay for an extended stay in a nursing home or a long-term care community. What would you do if you were faced with long-term care expenses during the latter portion of your life? Most senior citizens who are receiving long-term care in the United States are getting assistance from the Medicaid program. In the state of Minnesota this jointly run federal-state program is called Medical Assistance (MA).
You may think of Medicaid as a government program that was put into place to help people with significant financial need obtain health care. Indeed, this is the original intent of the Medicaid program. However, because of the gap that exists with regard to Medicare and long-term care, it could be said that Medicaid has become a sort of de facto long-term care insurance.
The upper asset limit that you must stay within to be able to receive Medical Assistance is $3000. When you hear this, you may wonder how so many people can qualify when they have never been poor. The answer is somewhat multifaceted.
For one thing, all of your assets do not count when you are being evaluated for Medical Assistance eligibility. This figure is subject to change, but this year your home is not counted (up to $536,000 in equity) as your other assets would count. It should be noted that if your spouse was to remain in the home after you entered a long-term care facility, there would be no upper equity limit.
Your vehicle would not be counted, and certain personal possessions do not count.
When it comes to the rest, you could in fact give away assets to your children or anyone else in an effort to get within this $3000 upper asset limit. However, there is a caveat.
You have to plan ahead to be able to divest yourself of assets before applying for Medicaid or Medical Assistance coverage. This is because there is a five-year look back period. Your eligibility will be delayed if you give away assets within five years of applying for Medical Assistance.