Qualifying for Medicaid Long-Term Care Benefits in Louisiana

My previous blog post focused on the Louisiana Medicaid Long Term Care income rules. As discussed in that post, there are both income and resource rules to qualify for Medicaid Long Term Care. In addition to attaining age 65 and being in need of long-term care, one must not have too much monthly income or too many assets. Here are the basic resource rules for single people and married couples in Louisiana.

In addition to the income test, Medicaid applicants must also pass a resource (asset) test to qualify for Medicaid. You cannot qualify for Medicaid if you have resources in an amount greater than $2,000. If you and your spouse are institutionalized, your combined resources cannot be greater than $3,000. Resources include cash, bank accounts, real estate, investments, retirement accounts, and all assets or possessions which can be converted into cash.

The resources of both spouses are counted when you apply for Medicaid. For Medicaid purposes, there is no distinction between separate and community property. Therefore, all of the resources of both spouses are considered at the time of applying for Medicaid. If your resources exceed $2,000, you will be required to spend-down the excess resources by paying for your long-term care expenses out of pocket. After you spend-down your excess assets, you may qualify for Medicaid.

Basically, Medicaid will take a resource snapshot of both spouses at the time of application. If the asset and income tests are satisfied at that time, assets and income received solely by the community spouse subsequent to qualifying for Medicaid will not disqualify the institutionalized spouse for Medicaid.

Income and/or principal distributions from trusts paid to either spouse are considered income in the month received. Furthermore, income that is not spent is considered a countable resource as are assets in trust that may be paid from the trust for the benefit of either spouse.

Exempt Resources

Certain assets are exempt resources and are not included in the $2,000 resource limitation. These exempt assets include

Your home if you intend on returning home or if your spouse or a dependent resides in your home. Up to 160 acres of surrounding contiguous land may be included with your home. Proceeds from the sale of your home remain exempt if reinvested in another family home within three months. The institutionalized spouse may have no more than $500,000 of equity in their home (fair market value minus home equity loans, mortgages and reverse mortgages) to qualify for Medicaid. The limitation on home equity does not apply if the community spouse, a child under the age of 21 or a blind or disabled child is living in the home.

Household furnishings not exceeding $2,000.

Personal effects not exceeding $2,000.

Wedding and engagement ring regardless of value.

One vehicle per household if used for transportation by anyone in the institutionalized spouse’s household.

The cash value of permanent life insurance with a face value of up to $10,000. Term insurance is not a resource.

Burial contracts that are irrevocable or cannot be sold without significant hardship.

Burial funds (cash, securities, cash surrender value of life insurance policies or revocable burial contracts) which are clearly designated as burial funds. A maximum of $10,000 is allowed for each spouse. The face value of excluded life insurance and excluded burial contracts are applied first to this limit.

A fully paid burial space or agreement which represents the purchase of a burial space held for   the burial of the individual, his or her spouse, or immediate family. This exemption is unlimited and is in addition to the burial fund exemption. Burial spaces include: burial plots, gravesites, crypts, mausoleums, caskets, urns, vaults, headstones, plaques, burial containers and arrangements for opening and closing the gravesite.

Property used in a trade or business and all property used by an employee in connection with employment as property essential to self-support. Property must be in current use or was in use, and there must be a reasonable expectation that the use will resume. Trade or business property includes real estate, buildings, inventory, equipment, tools, motor vehicles and livestock.

The Community Spouse Resource Allowance

The Community Spouse Resource Allowance enables your community spouse at home to retain assets to maintain his or her standard of living if you enter a nursing home. If you enter a nursing home and qualify for Medicaid, your spouse at home (the community spouse) is allowed to retain $117,240 (2014) of nonexempt assets. Assets in value over this amount must be spent down prior to qualifying for Medicaid. After you qualify for Medicaid, your community spouse’s resources may increase over the Community Spouse Resource Allowance without disqualifying your (the Medicaid recipient’s) benefits. However, your (the Medicaid recipient’s) resources may not exceed $2,000 at the time of applying for and while receiving Medicaid long-term care benefits.

These are the basic resource rules for Medicaid Long-Term Care benefits in Louisiana. If you have questions about qualifying for Medicaid Long-Term Care benefits in Louisiana, contact attorney and Certified Financial PlannerTM John Sirois at 985-580-2520 or email him.

You can also find more information about Louisiana Medicaid in his recently revised book, Louisiana Retirement and Estate Planning, 2014 Edition available by contacting John or through Amazon.com. Additional information is available by visiting the Medicaid and Long-Term Care section of John’s website at www.houmaestateplanningattorney.com/medicaid-ltc-info-center/