Even if you have never before worried about qualifying for Medicaid benefits, you may find yourself facing the need to qualify as a senior. You may also be aware that Medicaid has very strict income and asset limits that are part of the program’s eligibility requirements. Does that mean you will have to cash in your life insurance policy? A Fargo Medicaid planning attorney at German Law Group discusses how Medicaid will treat your life insurance policy when evaluating eligibility.
Why Might You Need to Qualify for Medicaid?
For many seniors, the need to qualify for Medicaid stems from the need for long-term care. The reality is that the longer you live, the higher the odds that you will end up in a nursing home – and the cost of that care will be high. In fact, at an average of $140,000 a year for 2018, North Dakota has some of the highest LTC costs in the nation. With an average stay of three years, the cost of LTC can add up quickly. Although you may rely on Medicare to cover most of your healthcare expenses once you retire, you won’t be able to turn to Medicare for LTC expenses because Medicare won’t cover them. Neither will most health insurance policies. Because Medicaid does cover LTC expenses, over half of all seniors currently in a LTC facility rely on Medicaid for help paying their bill.
Understanding Medicaid Eligibility
Medicaid will cover LTC expenses; however, you must first meet the program eligibility requirements. That means meeting the program’s strict income and asset guidelines, among other criteria. There are several different categories of Medicaid, all of which have slightly different eligibility guidelines. For basic Medicaid for seniors, however, you cannot have “countable resources” (assets) that exceed $3000 if you apply as an individual in North Dakota. If you are married your assets cannot exceed $6,000. If your assets exceed the limit, your application will be denied and you will have to “spend-down” those assets until they fall below the limit. Some assets, however, are exempt when considering eligibility for Medicaid in North Dakota, including, but not limited to:
- Your home; however, the maximum amount of home equity allowed is $585,000 for 2019
- One automobile
- An irrevocable funeral trust with a value of $1,500 or less. Revocable burial contracts are considered countable assets, but if the applicant does not have an existing irrevocable burial contract he/she may put up to $1,500 towards one.
- Self-employment property (including tools, equipment and livestock)
- Non-saleable property, personal effects and clothing, household goods, and furniture
- Indian trust and restricted lands and per capita and judgment funds.
Also note that different asset rules apply if one spouse is in a nursing home and the other spouse remains at home.
Must I Cash in My Life Insurance Policy?
Although life insurance is not specifically listed as an exempt asset in North Dakota, that does not automatically mean you must cash in the policy. Because there are different types of life insurance, there is not one universal rule with regard to how it is treated when applying for Medicaid. The “cash value” of the policy will be important when determining if it is counted as a “countable asset.” If you have a life insurance policy and you foresee the need to qualify for Medicaid in the future, do not simply cash in the policy as that could trigger a waiting period because of the Medicaid five-year look-back rule. Instead, consult with an experienced Medicaid planning attorney to find out what your options are. By incorporating Medicaid planning tools and strategies into your estate plan you will likely be able to protect many of your assets while simultaneously ensuring that you will qualify for Medicaid if you need it down the road.
Contact a Medicaid Planning Attorney
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about qualifying for Medicaid in North Dakota, contact a Medicaid planning attorney at German Law Group by calling 701-738-0060 to schedule an appointment.