Each year the government modifies the amounts allowed in determining eligibility for federal or state benefits and the tax rates. Despite the confusion of numbers, I will attempt to outline the new numbers in place effective January 1, 2015.
Of notable concern to most individuals is the ability to qualify for Medicaid should the need for long-term care arise. Currently under the Medicaid laws in New York, an individual is allowed to have assets of up to $14,850.00 and a spouse living in the community is entitled to have assets up to $119,220.00 and still be considered eligible for Medicaid. In addition, the individual monthly income allowance is $50.00 for an individual in a long-term care facility and all remaining income would be required to pay for the cost of care. If an individual residing in a nursing home has a spouse in the community, then the spouse in the community can retain the first $2,981.00 of monthly income, whether it is earned by the spouse in the nursing home or the spouse in the community. In summary, the spouse in the community gets to keep all of the marital income up to $2,981.00. Regarding the protection of a home, Medicaid still provides that the home is exempt from Medicaid eligibility if a Medicaid applicant is married and retitles the home into the name of the spouse that resides there. If an individual applying for Medicaid benefits is single, then the home is exempt up to a value of $828,000.00. While exempt during your lifetime, Medicaid can and will assert a lien against your home for reimbursement of all Medicaid benefits paid on your behalf during your lifetime.
Estate and Gift Tax
Other numbers to consider regarding individuals concerned with estate planning is the 2015 estate tax exemption. In 2015, the federal estate tax exemption remains the same at $5,430,000.00 per person, or $10,860,000.00 for a married couple. If an individual or couple has less than these amounts they will not be subject to any federal estate tax. Similarly, the New York estate tax limit in 2014 increased to $2,062,500.00 for an individual or $4,125,000.00 for a married couple. Effective April 1, 2015 the New York State estate tax exempt amount will rise to $3,125,000.00 for an individual and $6,250,000.00 for a married couple. The gift tax exclusion remains at $14,000.00 for 2015, allowing each individual to convey up to $14,000.00 per person, per calendar year, without triggering any gift tax.
Maximum deductions for long-term care insurance in 2015 begin at $380.00 (for individuals younger than 40) and up to $4,750.00 for individuals over age 70. Medicare Part B premiums remain the same as the 2014 amount of $104.90 per month for married couples with $85,000.00 of taxable income or less, with premium increases for individuals with higher incomes. Medicare Part A premiums will increase in 2015 to $1,260.00 from $1,216.00 in previous years. Additionally, co-payments required for hospital stays for Medicare beyond the 60-day complete coverage period are $315.00 per day, up from $304.00 in 2014. Similarly, co-payments for stays in long-term care facilities for Days 21 through 100 of a rehabilitative stay have increased to $157.00 per day from $152.00 in 2014.
So what does all of this mean? Quite simply; don’t go it alone. Make sure you’re advised on how all these numbers affect your personal estate plan and how they impact your family. The assets allowed by Medicaid are often less than the amount outlined above. Even more important to understand is the conveyance of assets does not necessarily mean you are ineligible for 60 months, nor do estate tax rules have anything to do with Medicaid laws and vice versa. Estate planning is a complex interaction of several different areas of the law (Medicaid benefits law, tax law, trust law, probate law, and others). While the typical consumer hears bits and pieces in each of these different areas of law, the actual integration can be overwhelming. I encourage you to attend our two (2) hour complimentary workshop, “How to Protect ‘Your Stuff’ in 3 Easy Steps,” that simplifies all of laws and how they affect your own family so you know how to effectively protect yourself and those important to you.