Medicaid: A Reasonable Option for Long-Term Care Coverage?

Medicare generally covers only about three months of nursing home care immediately following a hospitalization, but you have other options, including Medicaid.

To be eligible for Medicaid’s long-term care coverage, you must exhaust many of your personal resources. In general, the person entering the nursing facility may have no more than $2,000 in “countable” assets.

Believing this, many couples purchase long-term care insurance, which can be expensive. But middle-income married couples may be able to bypass long-term care insurance and rely on Medicaid for long-term care due to spend-down exclusions.

While the person entering the nursing facility may have no more than $2,000 in countable assets, in 2021, a nursing home patient’s spouse can keep half of the couple’s countable joint assets up to certain limits (around $100,000). Some states are even more generous.

And not all assets are counted against this limit. Excluded, for example, are the couple’s principal residence, if the spouse not entering the nursing home or another dependent relative lives there; one motor vehicle of any value; personal possessions, such as clothing, furniture and jewelry; prepaid funeral plans; a small amount of life insurance; and other assets that are considered inaccessible for one reason or another. Plus, the spouse does not have to use his or her income to support the nursing home spouse receiving Medicaid benefits.

Say you and your spouse have a home worth $400,000, a car worth $20,000 and savings worth $200,000. If you enter a nursing home, your spouse would keep the house and the car, but for Medicaid to kick in, you’d have to spend down your savings and investments to roughly $100,000.

Of course, this is only the tip of the iceberg. If you need help understanding Medicaid spend-down rules, we can provide additional input. Please call or email us.