As life expectancies and long term care costs continue to rise, the challenge quickly becomes how to pay for these services. Many people cannot afford to pay $4,000 per month or more for the cost of a nursing home, and those who can pay may find their life savings wiped out in a matter of months, rather than years.
Fortunately, the ALTCS Program is there to help. In fact, in our lifetime, ALTCS has become the long term care insurance of the middle class. But the eligibility to receive ALTCS benefits requires that you pass certain tests on the amount of income and assets that you have. The reason for ALTCS planning is simple. First, you need to provide enough assets for the security of your loved ones. Second, the rules are extremely complicated and confusing. The result is that without planning and advice, many people spend more than they should and their family security is jeopardized.
Exempt Assets and Countable Assets: What Must Be Spent?
To qualify for ALTCS, applicants must pass some fairly strict tests on the amount of assets they can keep. To understand how ALTCS works, we first need to review what are known as exempt and non-exempt (or countable) assets. Exempt assets are those which Medicaid will not take into account (at least for the time being). In general, the following are primary exempt assets:
- Home, no matter what its value. The home must be the principal place of residence. The nursing home resident may be required to show some “intent to return home” even if this never actually takes place.
- Personal belongings and household goods
- One car or truck
- Burial spaces and certain related items for applicant and spouse
- Up to $1,500 as a burial fund for applicant & spouse
- Irrevocable prepaid funeral contract
- Value of life insurance if face value is $1,500 or less. If it does exceed $1,500 in total face amount, then the cash value in these policies is countable.
- Miller Trust (or Income Only Trust) – see our website for more information
All other assets are generally non-exempt, and are countable. Basically, all money and property, and any item that can be valued and turned into cash, is a countable asset unless it is one of those assets listed above as exempt. This includes:
- Cash, savings, and checking accounts, credit union share and draft accounts
- Certificates of deposit
- Savings Bonds
- Individual Retirement Accounts, (IRA), Keogh plans, (401K, 403B) (Exempt for the community spouse)
- Nursing home accounts
- Prepaid funeral contracts which can be canceled
- Trust (depending on the terms of the trust)
- Real estate (other than the residence)
- More than one car
- Boats or recreational vehicles
- Stocks, bonds, or mutual funds
- Land contracts or mortgages held on real estate sold
For assistance with qualifying for ALTCS please reach out to one of our specialists.