27 Oct
Seniors who find themselves or a loved one needing costly medical procedures or a move to a nursing home fear they will deplete their estate assets to pay the bills. And they realize the high cost of long-term care will mean that they have to find a way of safeguarding the estate without losing their Medicaid eligibility.
One misplaced fear is that they will have to sell their home or “pay down” in order to qualify. Because these concerns can seem overwhelming for seniors to handle, it is essential to get experienced advice on how to plan ahead and be able to qualify for Medicaid in Texas.
Qualifying for Medicaid
Medicaid is administered at the state level, so the minimum income needed to qualify varies, as well as the options available to individuals if they exceed that minimum. The federal Medicaid monthly income limit in 2020 is $2,349.
Seniors who are eligible for Medicaid may have monthly income through social security or pension that exceeds the monthly maximum set by each state. For example, monthly Social Security or pension checks totaling $2,500 would put them over that limit.
If one spouse becomes ill, how can the healthier spouse hold onto some assets and not become impoverished while paying the nursing facility bills?
A Miller Trust is one type of qualifying income trust (QIT) available to seniors that protects their excess income while allowing them to qualify for Medicaid. With this type of trust, income in excess of a set limit is diverted to this trust to maintain the recipient’s eligibility.
In Texas, the funds can be used to pay a personal needs allowance to the recipient, and a community spouse designation allocates a minimum monthly maintenance allowance to their spouse. Excess funds then cover medical bills, with Medicaid paying the remainder.
It is important to remember that this type of trust is irrevocable and can be set up only for the Medicaid recipient. Pension or other income sources cannot be split between this account and another.
Preserving the estate after death
After death, the state will collect as many estate assets as possible to pay back Medicaid expenses. There are ways of divesting as long as you start planning early. Gifting of as much as $14,000 a year to heirs will diminish the estate.
With a Ladybird deed, Texas allows a Medicaid recipient to retain the right to live in the family home while keeping the asset in the family through a deed transferal to an heir. Plan early though, as the state will look back five years to see if the estate has been purposely divested.