The Medicaid program is a health insurance program that is run by the government. It is administered by the federal government in conjunction with each state government. You may be aware of the fact that Medicaid is only available to financially needy individuals.
If you have worked throughout your life, you may well have health insurance through your job. Short of this, you have probably acquired health insurance on your own through a direct relationship with an insurer. When you are on stable financial footing and fully insured through your own efforts, you wouldn’t qualify for Medicaid, and you wouldn’t need it.
All of the above makes sense, but many people are surprised to hear that Medicaid becomes relevant to people who were never poor at some point in time. This is because of the fact that the program pays for long-term care, and most senior citizens will need living assistance eventually.
While it is true that you will qualify for Medicare as a source of health insurance when you’re 65 if you paid into the program sufficiently, Medicare does not pay for custodial care. This is the form of care that you would receive in a nursing home or assisted living community.
Obtaining Medicaid Eligibility
As you might imagine, since Medicaid is a need-based program, there is an asset limit. When it comes to countable assets, the limit is just $2000, but some things that you own do not count. Your home is not a countable asset, but there is an equity limit of $828,000 in New Jersey in 2015.
One vehicle that is used as a primary form of transportation is not counted, and your wedding ring, your engagement ring and your heirloom jewelry are not countable assets. Personal effects and household items are not counted, and you can have unlimited term life insurance.
When you think about countable assets, you may wonder if you can convey assets into a living trust to get them out of your name so that you can qualify for Medicaid. Unfortunately, this is not possible, because assets in a living trust would be counted.
A living trust as a revocable trust, so you can dissolve the trust and take back the assets at any time. Since you are retaining incidents of ownership, the assets would be counted if you were to apply for Medicaid coverage.
However, in addition to revocable trusts, there are also irrevocable trusts. If you were to convey assets into an irrevocable Medicaid trust, they would not be counted if you were to submit an application for Medicaid coverage.
Contact Our Firm
We would be glad to help if you want to prepare yourself for possible long-term care costs. To set up a case evaluation, send us a message through this page: Warren NJ Elder Law Attorneys.
Alan Augulis, Estate Planning Attorney
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