Changes to Ohio Medicaid Law: Is Your Retirement Account a Countable Asset?

If you have ever considered nursing home care for a loved one, you know that it’s costly. In Ohio, a private room in a long-term care facility can cost over $100,000 per year. Even if you have saved carefully for most of your life, it’s likely that you couldn’t afford to pay out-of-pocket for long-term care for very long. That’s where Ohio Medicaid law can come into play.

How do people pay for nursing home care in Ohio? Generally, they get help from Medicaid. You may be familiar with Medicaid as government-provided health insurance for low-income individuals. However, Medicaid is also available to help pay for nursing home care, assisted living, and in some cases home-based care, if a person qualifies.

Part of that qualification is not having income or assets above a certain amount. In order to determine if someone qualifies for Medicaid assistance to pay for long-term care, the government considers their “countable” income and assets. Medicaid has rules about how much an applicant can retain and still qualify for help.

On one hand, people who don’t need it should not be able to qualify for Medicaid. On the other hand, a nursing home resident and their family should not have to impoverish themselves in order to be able to get help paying for care. Rules about what assets count toward Medicaid eligibility are designed to help people get needed assistance without either abusing the system or depleting all of their resources. Medicaid planning can help preserve assets while allowing people to legally qualify for benefits.

What Are Available and Exempt Assets under Ohio Medicaid Law?

Most people think of Medicaid as a federal program, but it is administered jointly by state and federal governments. States can make their own decisions about certain aspects of Medicaid administration, including which assets are counted toward the allowable limit (available assets), and which will be exempt.

Historically, exempt assets have included up to $2,000 in liquid assets; up to $595,000 of equity in one home (if the individual is planning to return there, or a spouse, minor child, or disabled adult resides there); one car; a funeral trust; and non-saleable personal property.

Retirement accounts have generally been categorized as available assets, which must be “spent down” before an applicant can qualify for Medicaid benefits. The spouse of a married applicant might be able to keep a portion of the account, if the couple’s other combined assets had a low enough value. However, recent changes to the law have affected what is, and is not, categorized as available or countable assets for purposes of qualifying for Medicaid in Ohio.

Good News for Ohio Medicaid Applicants

The Ohio Department of Medicaid has adjusted its policies on the categorization of retirement accounts. This change will allow some Medicaid applicants to place their retirement accounts in the exempt, rather than available, category when determining eligibility for benefits.

Retirement accounts that are in payout status are no longer considered “countable” when calculating eligibility for Medicaid. Retirement accounts in payout status include, for example, Individual Retirement Accounts (IRAs) for which the owner must take required minimum distributions.

While this development is welcome news for those hoping to qualify for Medicaid assistance, there are some cautions. Distributions from retirement accounts may be considered unearned income. This may impact Medicaid eligibility in different ways, so it’s important to consider the big picture. An elder law attorney experienced in Medicaid planning can help you evaluate how recent changes in the law can affect your eligibility.

The COVID-19 pandemic has resulted in an increased need for long-term care and Medicaid assistance for many Ohioans. The Ohio Department of Medicaid has updated many of its rules so that Medicaid applicants and recipients have greater access to benefits and services during the pandemic.

If you have spoken with your estate planning or elder law attorney about Medicaid planning in Ohio, these new developments may make it worth revisiting your plan. The goal of Medicaid and long-term care planning is to legally maximize the assets available to your family while qualifying for benefits as soon as possible.

If you don’t anticipate needing to qualify for Medicaid in the near future, discuss with your planning attorney how the change in the law affects your existing plan. If you expect that you or a loved one might need Medicaid benefits in the near term, nursing home crisis planning may be appropriate. We invite you to contact Gudorf Law Group to schedule a consultation.