Asset Test for Medical Assistance

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After you turn 65 you may no longer qualify for medical assistance, even if you were receiving assistance prior to age 65. This is because after you turn 65 you qualify for Medicare. In order to get you off of medical assistance, most states require an asset test in addition to an income limit when you turn 65. For 2024 in Minnesota, prior to age 65, the income limit is $19,391 for an adult without children. After you turn 65 the income limit is $14,820 with a $10,000 asset limit. My girlfriend just turned 65 in February. She had no annual income in the prior year, but because she has $20k in her checking account (her only assets), she no longer qualifies for medical assistance. It gets worse if you need long term care. In that case, the asset limit drops to $3000.

She is not happy about switching to Medicare because she will have to pay a monthly premium to get part B (medical expenses) and part D (drug) coverage. This was included with her medical assistance prior to turning 65. She will have to apply for social security in order to pay her Medicare insurance premium. Unfortunately, her social security payments will be very low because of her work history. She plans on applying for spousal benefits, but her ex-husband has a sketchy work history as well. I will face the same medical assistance roadblock in a few years. The income limits and asset tests change every year, but I don’t see it getting any easier to qualify for medical assistance in the future, especially after age 65. I’ve had a fear all along that after years of saving for retirement, most of it will end up being used for healthcare.

Yes, you can get long term care insurance that can help pay for nursing home expenses. But that is another monthly bill that most people can’t afford. Creating a trust to shield your assets is another option, but those are complicated, and you have to set it up five or more years in advance. I know a little about estate trusts because I am a fiduciary on my parent’s family trust. That just means that I have to sign the tax forms each year and advise on investment allocations and disbursements. With that knowledge, I don’t know if I want to put my own assets in a trust. It makes sense if you have a medical condition, and you don’t need the assets to generate income to pay your monthly expenses.

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