Exempt Assets: Retain Medicaid Eligibility

New reports released in 2013 from Genworth, a financial security and long term care insurance provider, revealed that the minimum private room monthly cost for a nursing home in North Carolina is $4,050. In the Chapel Hill area, the cost tends to be much higher. The median cost of nursing home care in North Carolina runs $71,723 per year for a semi-private room, and $77,471 per year for a private room. These rates are forecast to grow 6% annually.

Medicaid helps to supplement nursing home costs. Medicaid eligibility is determined by assessing an individual’s exempt and non-exempt assets. Knowing how assets are categorized can help seniors and their families make better decisions about managing money and assets before and after a senior needs nursing care. A North Carolina elder law attorney is a fantastic resource for reviewing your assets and determining the best way to preserve Medicaid eligibility:

Exempt assets include a house that is the primary residence and adjoining land, household items, personal belongings, a single vehicle, jewelry, medical devices, burial plots, term life insurance, and life insurance policies with a combined face value of $10,000 or less.

Non-exempt assets include liquid funds in checking and savings accounts, money markets, IRAs, 401(k)s, stocks, savings bonds, mutual funds, certificates of deposit, cash, additional vehicles, cash value of life insurance policies with combined face values exceeding $10,000, and additional real estate (some exceptions may apply where ownership is shared).

Prior to applying for Medicaid, seniors may attempt to spend down their non-exempt assets and acquire exempt assets. They likely consider gifting. This causes problems if not done properly; Medicaid applicants may face gifting penalties, depending on when the gift was made. Even transactions such as paying a child for caregiving can create gifting penalties if not documented with a proper caregiver agreement. Review assets with an elder law attorney in North Carolina, ask about Medicaid trusts, annuities, and discuss more than asset exemptions—ask about exempt asset transfers as well. For instance, if a senior owns a home and their child moves in as a caregiver for a period of at least two years before the senior moves into a nursing home, the senior may be able to give the house to the child with no penalty, so long as proper documentation is in place.

There are also allowances married seniors may not be aware of, like the community spouse resource allowance, the monthly maintenance needs allowance, and others. Aging Americans and their families should take advantage of every possible avenue of funding, and an elder law attorney is a way to learn about these resources.