Friday, August 27, 2010

Trying to find answers regarding how Medicaid helps pay for a nursing home stay in Michigan? Have you asked ten people and received ten different answers? If you or a loved one is entering a nursing home, an understanding of the following “basics” could make an significant difference in dollars saved for the patient.

The difference between “Countable Assets” and “Exempt Assets”

Have you ever heard someone say, “If I go into a nursing home, they’ll take all of my assets!” I hear it every day. Luckily, the common fear is simply not true.

A “countable asset” is any asset considered by Medicaid rules to determine eligibility. A savings account, mutual fund, non-homestead real estate (like hunting property or a lake cottage) are examples. Generally, a nursing home patient is allowed to have only $2,000, or less in countable assets. If countable assets exceed $2,000 during a month the Medicaid benefits may be terminated.

But (and this is a very important “but”!) a nursing home patient is allowed to have certain “exempt assets” which are not counted towards the $2,000 limit. In other words, the nursing home patient (or spouse) may own these assets and still qualify for and receive Medicaid benefits.

The following assets are exempt:

  1. A home, including adjacent land, if the beneficiary lives in it or intends to return to it; (equity value of up to $500,000); Household goods (furniture, furnishings, household equipment, household supplies), and personal effects (toiletries, items of personal care and education, clothing and jewelry;
  2. One vehicle;
  3. Life insurance with a cash surrender value, if its face value is less than $1,500, and all term life insurance;
  4. A burial plot, or other burial space, worth any amount; and
  5. A prepaid funeral contract.

Surprised? Many people are pleasantly surprised to learn about exempt assets after hearing for so long that a nursing home stay automatically means you lose “all of your assets.” As you can see, understanding the difference between countable and exempt assets is crucial to understanding Medicaid eligibility.

In my next post, we’ll discuss how spouses of a nursing home patient may keep assets in addition to the excluded assets mentioned above. I’ll look forward to having you join me!