Medicaid When a Spouse Owns a Business – Part 2
In my blog post last week I wrote about a more frequent scenario we are seeing with married couple Medicaid applications. It’s one in which one or both spouses own a business from which they derive income. As I explained last week, Medicaid allows the healthy spouse to keep a certain amount of countable assets. The maximum this year is $137,400. In addition to that, however, there are certain non countable or exempt assets. The common ones are the principal residence and one car. But one exemption in particular applies to a business. Medicaid regulations specifically provide that non-home property that is used in a business or non business self-support activity that is essential to the means of self support of the Medicaid applicant or his/her spouse is excluded as an asset. Tools, equipment and other items that are used for trade or business and required for employment are assumed to be of a reasonable value and producing a reasonable rate of return and are excluded. That’s what the regulation says but what exactly does it mean? Equipment of the business is the only item specifically referenced. What about if the business is located on a piece of property that is owned by the applicant and/or spouse? The exception would appear to
Medicaid When a Spouse Owns a Business – Part 1
If you are a regular reader of this blog you know that in the case of a married couple where only one spouse is applying for Medicaid, the healthy spouse, known as the community spouse, is entitled to keep a certain amount of countable assets. The assets of both spouses are evaluated for eligibility purposes. It does not matter who owns them. They are totaled together then divided in half and the healthy spouse can keep one half, but only up to a limit of $137,400 (the limit for 2022) Certain other assets are exempt or non countable. The home and one car are the most common ones. Inaccessible assets are also not countable. We typically see that in the case of real estate owned with another person who refuses to sell. Income, on the other hand, is treated very differently. Only the applicant’s income is evaluated for eligibility purposes, not the healthy spouse’s income. Because both spouses are usually elderly and retired, the income tends to be limited to Social Security and pension. In the past few years, however, we have had several cases in our office in which the community spouse is still working. Again, that does not pose a problem since the community spouse’s income - no matter the amount
The Importance of Updating Your Will – Part 2
In last week’s post, I talked about two recent estate administration cases in our office. In each instance the decedent left a will but no living executor was available to serve. In the first case, the two children who inherited the estate equally were not named because at the time the will was executed they were too young to serve. They told me they wished to now serve as administrators together. This wouldn’t be a problem since as the closest relatives, under the New Jersey statute they each had first right to serve. The home is the primary asset, which they do not want to sell for the moment. There also is a small amount in a bank account. We applied on their behalf but they were upset when I informed them that they would need to post a bond to back up the assets. “But, we are the only heirs”, they replied. “Why do we have to pay several thousand dollars for a bond?” I explained that the court typically insists on it to protect any creditors. If the creditors don’t get paid, the surety company will make payment. The two children insisted that the estate debt was small and had already been taken care of. The court, however, doesn’t know that
The Importance of Updating Your Will – Part 1
A will is something everyone should have, but just as important is to update a will when it is clear that changes are necessary. No will can be designed to last forever, no matter what happens. By way of example, we have had two recent cases in our office in which the decedent (person who died) did have a will but it was 20+ years old. In each case, because the will was so old ,the chosen executors had died. In the first case the decedent left two children. He didn’t choose either of them as executor at the time he executed his will because they were minors. Presumably, had he prepared a new will before he died he would have chosen either or both children as executor. He left his estate equally to both of them so that would have been logical. But he never did. In the second case, the decedent chose his two daughters as executor and alternate but both predeceased him. He had not chosen an alternate and never updated his will to choose a replacement even though his only son in law said his father in law had talked about naming him. Both wills were validly executed wills that needed to be probated in order
2022 VA Aid and Attendance Numbers
In this week’s post I will review the updated numbers for 2022 for the VA program that provides a benefit to wartime veterans and their spouses. Known as the VA Aid and Attendance program, this benefit provides a special pension to eligible applicants who need long term care. The maximum pension amount is tied to the same cost of living adjustment as Social Security. For a single veteran with no dependents the maximum pension one can receive goes up to $2050 per month. For a married veteran the maximum for 2022 will be $2431. For a widowed spouse who needs care the 2022 max will be $1318 per month. The Aid and Attendance program is a needs based benefit. This means that to be eligible one must meet a financial test. Different than Medicaid, the VA uses a net worth test. It calculates the applicant’s (in the case of a married couple both spouse’s) annual income and adds that to the countable assets. This is known as the net worth. For 2022 the net worth must be no more than $138,489 to qualify for this benefit. Existing VA A&A recipients should have received a letter from the VA informing them of the new amount they will receive which is actually effective 12/1/21.
2022 Medicaid Numbers
Last month in this blog I updated you on some of the new Social Security and Medicare numbers for 2022. With a cost of living adjustment (COLA) of 5.9% as a result of higher inflation, next year’s increase is the largest in some time. 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 2022 Medicaid numbers. Medicaid’s programs that cover long term care have a strict income cap or limit. For 2022 that number is $2523 per month. Anyone with more than $2523 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 2022 the limit is $955,000 of equity. Anything above that amount is countable. For a married couple where at least one of the spouse’s 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