By David Munn, CFP
One of the primary concerns for many retirees is the financial impact of an extended long-term care need. For starters, it is helpful to understand the safety net that is in place if you require long-term care in Ohio and run out of money, as there are several options and government programs that may assist. However, the process can be complex, and it’s important to understand how your finances will be affected and what resources are available to ensure you continue to receive care.
Medicaid as a Safety Net
Medicaid, a federal and state program, is the primary safety net for individuals who need long-term care but cannot afford to pay for it. In Ohio, Medicaid covers nursing home care, home health services, and other long-term care options. However, Medicaid has strict financial eligibility requirements, meaning you must deplete your assets to a certain level to qualify. This process is often referred to as "spending down."
Medicaid Spend-Down Process
In Ohio, for 2024, individuals applying for Medicaid must meet both income and asset limits to qualify for long-term care coverage. The income limit for an individual is $2,742 per month, and they cannot have more than $2,000 in countable assets. Countable assets include bank accounts, stocks, bonds, and certain retirement accounts. However, some assets, such as your home (if it is valued at less than $688,000 and you plan to return to it), one vehicle, personal belongings, and some burial funds, are excluded.
If your income or assets exceed these limits, you must "spend down" your assets before you can qualify for Medicaid. This means using your own funds to pay for your care until you meet Medicaid's eligibility requirements. During this period, many individuals exhaust their savings, sell non-exempt assets, or use long-term care insurance if they have it.
Transfer of Assets and Look-Back Period
One important aspect to be aware of is Ohio’s Medicaid "look-back" period. This rule prevents individuals from giving away or transferring assets to others to qualify for Medicaid faster. Ohio’s Medicaid program has a 5-year (60-month) look-back period. If you transfer assets for less than their fair market value within this period, you may be subject to a penalty, which delays your eligibility for Medicaid. The penalty is calculated by dividing the amount transferred by the average monthly cost of nursing home care in Ohio, resulting in the number of months you’ll have to wait before Medicaid will begin covering your care.
Home and Estate Recovery
If you own a home, Medicaid does not require you to sell it while you’re receiving care, as long as you intend to return to it or if a spouse or dependent is living there. However, after you pass away, Medicaid may seek to recover the costs of your care through estate recovery. This means that your home or other remaining assets could be sold to reimburse Medicaid for the expenses it covered. If your spouse or another qualified individual still lives in the home, estate recovery may be delayed until they pass away or no longer reside there.
Alternatives to Medicaid
In some cases, other options may help cover the cost of long-term care:
- Long-Term Care Insurance: If you purchased a policy before needing care, it can cover some or all of your long-term care expenses, potentially delaying or eliminating the need for Medicaid.
- Veterans Benefits: If you are a veteran, you may be eligible for benefits through the Department of Veterans Affairs to help with long-term care costs.
- PACE (Program of All-Inclusive Care for the Elderly): This is a Medicare and Medicaid program that helps seniors remain in their homes while receiving the care they need. It is new to Ohio in 2024 and will be gradually expanding throughout the state.
Conclusion
If you need long-term care in Ohio that will take a significant financial toll, Medicaid can provide essential support. However, qualifying for Medicaid involves spending down your assets and navigating complex rules, such as the look-back period. Planning ahead with various financial strategies can help protect assets, provide more resources for care, and ease the transition.
This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. This material is not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. Munn Wealth Management, LLC, is registered as an investment adviser (RIA) with the United States Securities and Exchange Commission. Registration as an investment adviser does not imply any certain degree of skill or training. 1323GRM