When facing the prospect of long-term care, either for yourself or for your parents, it's important to consider how Medicaid can work for you. You likely know that the program was designed to provide medical coverage -- such as nursing home expenses -- to people who cannot afford to get pay for it on their own. As such there are hard limits to how much money a person on Medicaid can take in, as well as the value of their assets.
Your wealth is subject to what is called "The Resource Test", and it is an often-misunderstood part of the calculation for Medicaid benefits. Most of that misunderstanding stems from the language in the law that states that all people on Medicaid must not have "countable financial resources exceeding" $2000.
What are "countable resources"?
Countable resources are savings accounts, retirement benefits, pensions, annuities and almost all other valued assets. It is simpler to know what is not countable. Assets that are not countable when you are applying for Medicaid benefits include:
- Your home: The primary residence of someone on Medicaid is not going to be counted against someone in the resource test, unless the equity in the house is over $560,000. That equity limit can be exceeded if the home is shared by a spouse, minor or disabled child.
- Your car: All people on Medicaid are allowed to have a vehicle.
- Personal property: Jewelry, watches, clothes, antiques and other items of personal property do not count in the resource test.
- Insurance policies: Whole-life insurance policies are not countable as long as the face value of the policy is less than $1,500. The cash surrender value is not a part of this calculation. Term-life policies with any face value are also not countable. Burial insurance is also exempt if it is irrevocable or has a $1,500 limit if it is revocable.
How can this work for you
Now that you understand a little more about how resources are counted against you, take the opportunity to make a plan for your assets so that you or your parents can be covered. Do not be frightened by the tests or the hard limits set. Make sure you know your rights and what you're entitled to, and prepare for your long-term care with as little stress as possible.