May 09, 2021
MEDICAID Exemptions | Countable Assets vs. Exempt Assets
Will you qualify for Medicaid?
What is the difference between Medicare and Medicaid?
What are countable assets and exempt assets?
Attorney and Advisor Chris Berry answers these questions in this episode of Daily Wisdom!
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Episode Transcript
Medicaid Exemption
Hey, today we’re going to talk about Medicaid and what are countable assets versus exempt assets. This is Chris Bayer with Castle Wealth Group. If you like this information, make sure to subscribe to our YouTube channel.
Christopher Berry is a leading estate attorney and advisor in the area of retirement and legacy planning. He has been featured in publications, such as Forbes, Kiplinger’s, Crain’s Detroit, and more. He’s the host of the weekly radio show and podcast The Chris Berry Show. He’s a national thought leader as it relates to retirement and legacy planning, and as author of the Amazon best selling book, The Caregiver’s Legal Guide.
So I was meeting with a client the other day, and his mom was going into a nursing home. She had spent time in the hospital, she had fallen, broken her hip. She was 90, fallen, broken her hip, went into the hospital for three days. She was admitted under observation, and then she was discharged to a nursing home, and there’s questions of whether Medicare was going to cover that or Medicaid. And then if Medicaid was going to cover it, how would she qualify for Medicaid? Because there’s some confusion about that.
So we need to first talk about the difference between Medicare and Medicaid. Medicare pays for short-term rehab. So typically if you go into the hospital because you have some type of event and you’re in the hospital, and you’re admitted for three days, not under observation, but actually admitted, then you could be discharged to a nursing home, which typically runs about eight to $12,000 a month. But as long as you’re rehabbing in that nursing home for the first 20 days, it’ll be covered by Medicare. Now there’s no asset test, there’s no income test for Medicare. Medicare will cover the first 20 days of rehab as long as you’re rehabbing and you’re in a nursing home.
Medicare
But what happens is after 20 days, then Medicare may run out and you might have a copay, unless you have supplemental insurance. If you have supplemental insurance along with Medicare, then you’re going to have up to 100 days. Now you need to be continuing to rehab to qualify during that time period. So if you have a loved one that’s suffering from dementia and they’re just not participating in the rehab, they’re not going to qualify. Or if they’re giving physical therapy, or any type of therapy or rehab and it’s not helping, then Medicare may run out sooner than that 100 days. So when Medicare runs out, either because your loved one is not rehabbing anymore, or because the 100 days have run their course, then Medicare is going to end.
And now we need to focus on Medicaid, which is a different type of program. Medicaid. So the way Medicaid works is it an asset test, where they look at your countable assets. So for a single individual, if they have more than $2,000 worth of countable assets, and countable assets are everything other than a home small, cash value of life insurance, $1,500, prepaid funeral up to about 11,000, automobile and personal belongings. Everything else is a countable asset, and so a single individual can only have $2,000 worth of countable assets. So they can have a home personal belongings, prepaid funeral, small cash value of life insurance, 500 and an automobile. Everything else is a countable asset, so that includes 401ks, IRAs, second pieces of real estate, homes valued at more than $500,000. So they put a cap on when the home can be exempt.
And then if you are over in assets, you’re not going to unqualify until you spend on those assets. And you can not, can not, give those assets away, because Medicaid has a five-year lookback period where they’re going to look back five years, and if you’ve gifted or moved any money away, you’re not going to qualify. So for example, I had a client’s mom went in a nursing home in February, he moved $40,000 out of his mom’s name into his name as an idea to help her get Medicaid qualified. Well, that’s within the five-year lookback period so what I instructed him to do was to give that money back, to cure the gift, because otherwise mom would not qualify for Medicaid because she divested herself, she had given money away.
Understanding Medicaid
Now what you can do is you can spend the money for mom. So we talked about fixing up the house, paying off any debt on the house or the car. We talked about maybe painting the house. We talked about paying down debt. So if there’s a mortgage, you could pay down the debt. We talked about prepaying for final expense, looking at what’s called an irrevocable funeral contract. You could also pay for her care, pay a couple of months to get her into that nicer nursing home, and then you could flip over to Medicaid. And then Medicaid, again, has that five-year lookback period. So if we look back five years from the time we submit that application and your loved one has given assets away, not spent it, but given assets away, then they might be penalized.
So the Medicaid rules are confusing, hard to understand very draconian, very difficult for people who are not familiar with the rules. There’s a lot of different potholes or pitfalls for those who don’t spend all of their time in this area. So if you do have questions about Medicaid, reach out to our firm, we’re here for you. Give us a call at (844) 885-4200, reach out to us at castlewealthlegal.com, and make sure to subscribe to our videos, and make sure to like and comments down below. Thank you so much.
Castle Wealth Group has clients across the nation, and helps families plan, protect, and preserve what is important by creating a retirement and legacy blueprint.