Medicaid actually pays for a majority of the nursing home costs in the United States; however, to qualify for long-term care, a person or couple must meet specific financial criteria, which varies by state.
What are the Medicaid guidelines for Colorado? Income guidelines for eligibility is based on the number of people in your household. Current income requirements are found at Benefits.gov. In addition to income requirements, the value of assets you and/or your spouse own must not exceed a specific amount. The following assets, however, do not count:
- A home valued under $560,000
- One car
- Term life insurance policies
- Burial policies that are irrevocable
- Jointly owned property (dependent on when the property became jointly owned)
It should be noted that while Medicaid pays for long-term health care, Medicare does not. Medicare will automatically cover you for most of your health care when you turn 65, but if you do not have a separate policy for long-term health care, you will end up paying out of pocket should you need to go in a nursing home. Nursing home costs can quickly rob you of your savings and investments, force you to take out a second mortgage or leave your loved ones with no inheritance.
What can I do? Plan ahead to qualify for Medicaid. You can find ways to shelter your assets from being counted. Make them exempt by placing them in an irrevocable trust for your loved ones. You can also use savings to pay off your home or make home improvements. Purchase items that can be placed in a trust, pay for your burial, or purchase term life insurance with your spouse or children as beneficiaries.
Find someone to advise you who is experienced in sheltering and preserving assets. Keep in mind that this kind of planning should be done early, and not after you become advanced age. When qualifying for Medicaid, a review is often done going back five years to ensure that you haven't transferred your assets to another party just to qualify. In such cases, you may be required to wait a period of time before Medicaid will begin paying for coverage.
Source: 360 Degrees of Financial Literacy, "Medicaid Planning Basics," accessed Nov. 14, 2017