2025 Medicaid Numbers
In a blog post in October, I updated you on some of the new Social Security and Medicare numbers for 2025. The recently announced cost of living adjustment (COLA) of 2.5% follows a 2024 increase of 3.2%. Many other federal programs are tied to the Social Security COLA. These include Medicaid and the VA Aid and Attendance programs. This week we will review the 2024 Medicaid numbers. Medicaid’s programs that cover long term care have a strict income cap or limit. For 2024 that number is $2901 per month. Anyone with more than $2901 per month of gross income (before taxes and Medicare and health insurance premiums are deducted) must use a Qualified Income Trust in order to qualify for Medicaid. Medicaid recipients must also have less than $2000 of countable assets. A home is an exempt asset up to a certain limit as long as the applicant is living in it. In 2025 the limit is $1,097,000 of equity. Anything above that amount is countable. For a married couple where at least one of the spouses is living in the home there remains no limit. In other words, the home is exempt in that case no matter the value. In the case of a married couple where only one spouse is applying for Medicaid,
Real Estate and Medicaid (Part 3)
In this third post of three, I discuss the impediment to qualifying for Medicaid when an applicant owns two homes. To review, only the primary residence is an exempt asset as long as the applicant or spouse is living in it. The second home is countable towards Medicaid’s asset limit. Selling the home and spending down the proceeds is obviously one option, however, if the desire is to keep that home in the family there are other options. Last week I explained that the equity from the second home can be converted to cash by borrowing against it and taking a mortgage. The cash then must be spent down. In the case of a married couple, the non-Medicaid spouse can then purchase a Medicaid compliant annuity which converts this cash to income under Medicaid rules. The spouse then receives monthly payments from the annuity that can be used to make the mortgage payments. In the case of a single applicant it is a bit more complicated but some part of the cash would be transferred and the rest used to purchase the annuity. In that case, the transferred cash would be used to pay the mortgage. This week I discuss a second option. This solution involves selling the second home or a
Real Estate and Medicaid (Part 2)
In my blog post last week, I addressed a common question about Medicaid when someone owns two homes. “Knowing that there is an asset limit in order to qualify for Medicaid but there are also certain exempt assets, can I exempt both homes and still qualify for benefits?” The answer is no, but that doesn’t necessarily mean you can’t keep both homes. The primary residence is considered an exempt asset. The second home is countable. For a single applicant assets must be below $2000 and for a married couple the non Medicaid spouse can keep 1/2 of the countable assets up to a limit of $154,140 (for 2024). Selling the second home and spending down the proceeds is one solution but not the only one. As I said, there may be a way to keep the second home. There are a couple of options. One is to borrow enough money against the equity of the home so that the remaining equity plus other countable assets drop the asset total below Medicaid’s allowable limit. The borrowed funds then need to be spent down. Paying down other debt is one way to do that if there is other debt, such as a mortgage on the primary residence or credit card balances. Another is to
Real Estate and Medicaid – Part 1
As I have written about many times on this blog, Medicaid is a needs based benefit. Assets must be spent down below $2000. Not every asset, however, is countable. There are exempt or non countable assets. These are assets that do not count against the $2000 limit. Additionally, in the case of married couple the non Medicaid spouse can keep as much as $154,140 in countable assets. The primary residence is the biggest exempt asset as long as the Medicaid recipient or the spouse is living in it. A number of people calling our office about Medicaid express a common concern. If they own more than one property, can they exempt all their real estate? The answer to that question is “no”. Only the primary residence is exempt and in the case of a single applicant the exemption has a limit of just over $1,000,000. For a married couple there is no value limit to the exemption for the primary residence. So, must the other homes be sold and spent down in order to achieve Medicaid eligibility? Not necessarily. There may be other options that will allow families to keep the other properties. I’ll discuss what I mean next week.
What is the Meaning of Per Stirpes? Part 2
In last week’s blog post, I explained the term “per stirpes”, which is typically found in a last will and testament. It is meant to cover the possibility that the person who I name in my will to receive a bequest has died before me. As I explained last week, the term is Latin and means “by branch”. If I leave $50,000 to Person A who has two children and dies before me, and if I have designated that bequest to be made “per stirpes”, it means that A’s children step up and split that bequest. They each receive $25,000. I could, however, also choose another designation, “per capita”. Per capita is also a Latin term meaning “by the head” or “by representation”. Property is to be divided into as many equal shares as there are surviving descendants in the generation nearest to the designated person and deceased descendants in the same generation who left surviving descendants. The people in the nearest generation get a share and then the descendants in the next generation split the rest. Looking at an example of this, let’s say I had 4 children, A, B, C and D. A and B survived me but C and D died before me. C has 2 children,
What is the Meaning of Per Stirpes? Part 1
Whenever I review drafts of a will we have prepared for a client there are certain terms and clauses that I can almost always guarantee will trigger questions. One of those is the term “per stirpes”. Per stirpes is actually a Latin term meaning “by branch”. It is used to describe how assets are distributed when someone dies. Let’s say I leave a bequest in my will to person A. What happens if A dies before me? The next question is “who then inherits what would have been A’s share? I have several options. I could decide that A’s share should go to another specifically named person. Let’s call him B. I could also decide that l want A’s share to lapse so that A’s share is to be distributed to the persons named to receive the residuary (ie. the balance) of my estate. I could also,however, choose to pass on A’s share to A’s descendants. That is done with a per stirpes designation. If A has 2 children, C and D, a per stirpes designation means C and D step into A’s shoes and split A’s share. Finally, I could choose a designation of “per capita”. I’ll explain more next week.