The Greatest Financial Risk for Seniors:
Paying for Long-Term Care –
Part V (Exempt Assets and the Medicaid Death Tax)
In the United States, unlike nearly all other developed countries around the world, we do not have a universal healthcare system – that is, one that provides health care and financial protection to all citizens. Instead we have a largely private system in which healthcare is view not as a right of citizenship but as a commodity best left to the private market, governing not by the democratic mechanism of one person = one vote, but by the market-based mechanism of one dollar = one vote.
The main exception to the market model in this country concerning healthcare is Medicare, a government-run healthcare program for seniors and people with disabilities. Medicare, however, was never meant to cover the cost of long-term nursing care. The primary public benefit program that will pay for long-term care is Medicaid. But, unlike Medicare, it is not enough that you be elderly or disabled and ill in order to qualify, you also have to be impoverished — that is, your “countable assets” have to be spent down to just a few thousand dollars. Thus, in order to understand Medicaid qualification, you first need to know how Medicaid treats your assets.
Basically, Medicaid breaks your assets down into two separate categories. The first are those assets which are exempt and therefore not countable, and the second are those asset which are countable.
Exempt assets are those which Medicaid will not take into account (at least for the time being). While the laws differ somewhat from state to state, in Pennsylvania the following assets are exempt:
For policies that do accumulate a cash value, Medicaid regulations exclude the entire cash surrender value if the combined face value of all policies does not exceed $1,500 for each insured person. If the life insurance policies owned by a Medicaid applicant have a total face value in excess of $1,500, the total cash surrender value in excess of $1,000 is a countable resource of the owner.
These are the principal assets that Medicaid will ignore, at least for now. But keep in mind that any exempt assets that end up in your probate estate at your death (that is, any assets in your name alone that do not have beneficiary designations) will be subject to the “Medicaid Death Tax.”
Nearly all other assets are “countable.” This includes bank accounts, certificates of deposit, stocks and mutual funds, savings bonds, annuities, the retirement accounts of the Medicaid applicant, second homes or other real estate, all motor vehicles except one, and so one. While there are some minor exceptions to these rules, in general all money and property not listed above as exempt are countable assets and subject to the harsh Medicaid spend-down rules:
However, it is important to keep in mind that the Medicaid laws currently permit single folks to protect anywhere from 30% to 60% or more of their assets otherwise at risk – and married couples with one spouse living at home 50% to 80% or more of their assets otherwise at risk – even if someone is already in a nursing home. But the rules are complicated and must be strictly followed, so seniors will need the advice of an experienced elder law attorney to help them navigate the bureaucratic Medicaid maze.
The content here is for general information purposes only and does not constitute legal advice. For specific questions about your own situation you should consult a qualified elder law attorney.
Kemp Scales is now retired, but elder-law attorney Schellart Los continues to serve clients throughout western Pennsylvania from offices in Erie and Titusville. She can be reached toll-free at (888) 827-2788 or by e-mail at firstname.lastname@example.org. The Law Offices of Schellart Joyce, LLC has an Internet presence at www.losscaleselderlaw.com.
Also exempt is all land “adjacent” to the home is listed on the same deed (which means an exempt residence could include not only a farm house but the surrounding 250 acres or more). ↑