Almost 70% of Americans age 65 now will need some type of long-term care in the future. If you have not planned how you will live as you age, you could end up disabled and exploited. There are certain legal documents you need to prevent losing your savings to long-term care. Medicaid may cover all of your long-term care costs if your income and assets are below the set levels in North Carolina. But how do you hold onto your savings and qualify for Medicaid at the same time? Let’s look at how to do Medicaid planning in North Carolina.

How Do Seniors Qualify for Medicaid?

The NC Medicaid Eligibility Unit determines whether you qualify for Medicaid coverage for long-term care. They use an application specifically designed for the aged, blind, or disabled

You may qualify for Medicaid coverage for long-term health care services if your monthly income is $1,041 ($1,410 for two people). Your Supplemental Security Income must be under $2000 ($3,000 for two people). 

However, if you or your spouse is in a nursing home facility, the spouse at home may have protected monthly income that does not count toward your limits for eligibility. Your spouse can keep their monthly income from $2057.50/mo up to $3160.50/mo, depending on their housing expenses.

And you may keep some of the assets you own with a spouse. Medicaid counts the total assets you own together and allows the spouse to keep ½ of the total value. The amount your spouse can keep without affecting your eligibility may be as much as $126,420.

What is Medicaid Planning?

Making a Medicaid plan can help you meet financial goals and still get the care you need in the future. Meeting the requirements to qualify for Medicaid while also maximizing your standard of living as you age is the key. 

Assisted living and nursing home expenses cost as much as $8,000 per month for a single room and board. You will pay out of pocket for your long-term care unless you make a plan at least five years before you need care. Your hard-earned money will go to your nursing home care instead of your heirs.

Medicaid planning is a way of using legal tools to maximize the assets and income you make now so that you can qualify for Medicaid in the future while saving an inheritance for your heirs.

What If I Don’t Plan?

If NC Medicaid denies eligibility because your assets are over the income or total asset limit, you may be able to “spend-down” your assets on “qualified expenses.” As long as you spend all of your extra money on qualified expenses, you may become eligible for Medicaid once your assets are below the limit. 

However, there are extensive rules about which expenses qualify for your Medicaid spend-down. You may not just give away expensive items or money to your family or friends. Medicaid eligibility personnel see this type of behavior as proof of ineligibility. 

To qualify for Medicaid coverage, you must be careful about giving away resources or selling them for less than market value. Your eligibility may suffer penalization when you give away resources and do not receive equal compensation. 

Medicaid Eligibility Has a 5-Year Lookback Period

Medicaid looks at the 5 years before you apply for Medicaid to see what you’ve given away or sold for less than market value. 

Others may tell you to hide your assets in a trust. However, during the 5-year lookback period, you also may not conceal assets in a trust. If you open a trust during the 5-year lookback period, Medicaid will count the assets in the trust against your eligibility.

It is crucial to take action 5 or more years BEFORE you need Medicaid help. Doing so can maximize your assets for the future. The important thing to remember is to start preparing five or more years before needing long-term care. 

Irrevocable Trusts Hold an Answer

If you and a trusted attorney draw up the documents to set up an irrevocable trust before the 5-year look-back period, the assets in the trust no longer count against your eligibility for Medicaid. 

An irrevocable trust can enable you to keep your assets even while receiving Medicaid coverage. With proper planning, Medicaid can meet your long-term care needs while your assets remain under the control of an appointed trustee. If you start Medicaid planning at least 5 years before needing Medicaid, you will not need to “spend-down” your assets to qualify for coverage. 

We Can Help

If you have savings you’d like to protect, talk with our Estate Planning attorneys at Hogan, Edwards, and Blue. We help you hold onto your nest egg instead of paying it all for future care needs. Leaving an inheritance to your children and grandchildren is possible with the right kinds of planning, but you must put a plan in place at least 5 years before you will need Medicaid. Contact us today and find out how we can help you.