When you work and you examine your pay statement, you invariably see this pesky FICA deduction. It can seem like money going out the window, but you do get something in return for your contributions if you are fortunate enough to attain senior citizen status.
You earn retirement credits when you pay this tax. It is possible to earn up to four credits in a year, and once you have accumulated 40 credits, you will qualify for Medicare and Social Security as a senior citizen.
Accumulating the maximum four credits in a calendar year is something that just about every working person is going to do. There are periodic increases to account for inflation, but during the current calendar year, you earn one credit for every $1260 that you earn.
Medicare will help with things that are covered, but there are gaps and out-of-pocket expenses. There is a deductible for hospital stays, and there can be co-payments for extended stays. There is a monthly premium that must be paid for Part B, which is the portion of the program that pays for visits to doctors and outpatient care. There are also out-of-pocket expenses that accompany the prescription drug plan.
One very big gap in the Medicare program is the lack of long-term care coverage. If you ever need living assistance, you cannot count on Medicare to help you pay for the care that you need.
This is a very significant fact of life, because the majority of seniors will someday need living assistance. In fact, the figure 70 percent according to the United States Department of Health and Human Services.
Nursing homes are extremely expensive. Nationally, the average cost for a private room in a nursing home is over $90,000 per year, and people often spend multiple years in nursing homes before they pass away.
New Jersey Medicaid Planning
For many people, the solution to the long-term care dilemma is Medicaid. This is another government health insurance program, and it does pay for long-term care. You may be surprised to hear that Medicaid pays for most of the nursing home care that seniors are receiving.
Since Medicaid is a need-based program, there is an asset limit. For an individual applicant, this limit stands at $2000 in most states, but there are some things that are not counted when Medicaid is tallying up your assets.
Your home is not considered to be a countable asset, but there is a limit on the home equity. We practice law in the state of New Jersey. In our state, the home equity limit is $828,000 in 2016. These figures are updated annually to account for inflation, so you may see a somewhat higher number next year.
The program would not count one vehicle that is used as a primary source of transportation, and you can maintain possession of your personal effects and your household items. Your wedding ring and your engagement ring are not counted, and you can retain ownership of any heirloom jewelry that you may have.
The healthy spouse is also entitled to certain property rights. We stated that a Medicaid applicant can retain ownership of his or her home, but there is an equity limit in the state of New Jersey that stands at $828,000.
This equity limit does not apply to married couples. When a healthy spouse is remaining in the home, there is no equity limit at all.
There is also a Medicaid Monthly Maintenance Needs Allowance, and this allows the healthy spouse to continue to use income that is brought in by the institutionalized spouse if it is needed. During the current calendar year, the maximum Monthly Maintenance Needs Allowance in the state of New Jersey is $2,980.50. In the Garden State, the minimum Monthly Maintenance Needs Allowance in 2016 is $1991.25.
The spouse who is still capable of independent living is also entitled to a Community Spouse Resource Allowance. This would allow the healthy spouse to retain ownership of half of the shared countable assets, but there is a limit. The maximum Community Spouse Resource Allowance in New Jersey in 2016 is $119,220. There is also a minimum allowance of $23,844, and this would enable the healthy spouse to keep no less than this amount, even if it is more than half of the shared countable assets.
Schedule a New Jersey Medicaid Planning Consultation
If you take the right steps at the right time, you can qualify for Medicaid to pay for living assistance without losing a lot in the process. If you would like to discuss New Jersey Medicaid planning with a licensed professional, call us at (908) 222-8803 or send us a message through our contact page.
Alan Augulis, Estate Planning Attorney
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