At some point during your retirement years there is a good chance that you will need long-term care (LTC). The cost of that care could deplete a lifetime of savings in a short period of time if you failed to plan ahead and include Medicaid planning your overall estate plan. Why is Medicaid planning necessary? Because Medicaid may be the only option that offers assistance covering the high cost of LTC. Qualifying for North Dakota Medicaid for the aged, however, can be challenging given the extremely low assets limit imposed by the program.
North Dakota Medicaid Eligibility
Because Medicaid is a “needs based” program, applicants must have a proven financial need for benefits in order to be approved. Medicaid uses both an income and an asset, or “countable resources” limit when determining eligibility. The income test is tied to the Federal Poverty Level (FPL) for your area and is subject to change each year. Because most seniors are on a fixed income, the income limit is not typically an obstacle to approval. The countable resources limit is where many seniors have a problem if they failed to plan ahead. In North Dakota, for example, a person who is blind, disabled, or age 65 or older can have up to $3,000 in countable assets (such as savings accounts, checking accounts, stocks, bonds, or other type of asset) to qualify for Medicaid. The limit for couples is $6000. For each additional person in the household, $25 can be added to the asset limits.
Fortunately, Medicaid does exempt some assets from consideration when determining eligibility, including:
- Your home
- One automobile
- Burial plans (with limits)
- 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.
- Other miscellaneous assets
The Medicaid Five-Year Look-Back Rule
Another asset related obstacle to eligibility for Medicaid as a senior is the five-year “look-back” rule Medicaid uses when determining eligibility. In essence, the look-back rule allows Medicaid to review your finances for the five-year period prior to applying for benefits. If you made any asset transfers for less than fair market value, Medicaid will likely discount that transfer and impute the value of the asset involved back into your estate for eligibility determination purposes. The purpose of using the look-back rule is to prevent you from transferring your non-exempt assets to someone else and then immediately applying for Medicaid benefits.
What Happens If Your Assets Are Over the Limit?
If your countable resources exceed the program limit, Medicaid will impose a waiting period during which time you will be expected to “spend-down” your assets. The length of the waiting period is determined by dividing your excess assets by the average monthly cost of LTC in your area. For example, imagine that you have non-exempt assets valued at $85,000. After deducting the $3,000 in allowable assets, your excess assets are valued at $82,000. The average monthly cost of LTC in Grand Forks, North Dakota is $12,000. Therefore, you would divide $82,000 by $12,000 which equals 6.8, rounded up to 7 months. Therefore, you would have to wait for seven months before Medicaid would step in and start covering your LTC expenses. During the waiting period, you would be expected to use your excess assets to cover your LTC expenses. Your entire retirement nest egg could be depleted in a matter of months.
How Can Medicaid Planning Help?
Medicaid planning involves using legal tools and strategies to protect your non-exempt assets far enough in advance so that you will qualify for Medicaid when you need it. One common Medicaid planning tool, for instance, is a Medicaid trust. By transferring assets into the trust, those assets are removed from your estate for the purpose of determining eligibility.
If you have additional questions or concerns regarding North Dakota Medicaid eligibility for the aged, contact the experienced North Dakota Medicaid planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.
- 10 Things to Do When an Elderly Parent Gets a Terminal Diagnosis - October 4, 2022
- Updating Your Life Insurance - September 29, 2022
- What’s Estate Planning Got to do with Interest Rates – Part II - September 27, 2022