Paying for Long-Term Care: Medicaid
The financial burden of figuring out how to afford nursing home care can be daunting and stressful to say the least. Ensuring finances are organized well in advance can ease the transition from independent living to facilitated nursing care.
Most insurance plans, including Medicare, are not designed to pay for long-term care. Medicare will pay for 100% of skilled nursing care for acute illnesses or injuries (no chronic conditions) for the first twenty days after admission and 80% for the following eighty days (the remaining 20% may be covered by a supplemental insurance plan) until the 100-day limit is reached. Any additional days spent after the 100-day limit is reached will be paid for out-of-pocket unless eligible for Medicaid.
Medicaid, the largest payer for nursing home care, covers 100% of care at certified nursing facilities, but individuals must meet a strict set of guidelines to apply. To qualify for Medicaid, you must be age 65 or older or have a permanent disability as defined by the Social Security Administration and have limited income and assets (longtermcare.gov). Income includes but is not limited to Social Security, disability, veterans’ benefits, pensions, salaries and wages, interest from bank accounts and certificates of deposit, and dividends from stocks and bonds. Most states also elect to cover people who fall under the general Medicaid requirements and have been in a nursing home or long term care facility for at least 30 consecutive days. People included in this special income group may be required to share the cost and pay part out of pocket because they have a higher level of income (up to two to three times more than the FPL). This is because residual income that would generally be used to pay for basic needs of life is being provided by the nursing home. More often than not, assets may need to be reduced before income will reach a qualifying level for Medicaid.
There are special considerations in place for nursing home residents who are married called spousal impoverishment rules. These rules aim to protect the spouse of someone in a long-term care facility who is still living in the community by allowing said spouse to keep a portion of the couple’s assets rather than depleting them all to pay for the institutionalized spouse. Generally speaking, the community spouse is able to retain half of the couple’s assets with a maximum of up to $115,920 in 2013 (longtermcare.gov). A couple’s home is not considered an asset as long as it is the primary place of residence for one of the spouses. In a single residence home or if both parties are institutionalized, Medicaid may place a lien on the home to recover the amount of money spent on nursing home care. Transferring a home may incur a penalty period where Medicaid will not pay for services unless it is transferred to one of the following: a spouse, a child 21 years or younger who is disabled or blind, a brother or sister who holds an equity interest in the home and who has lived there in the year prior to institutionalization, or a caretaker child who provided in-home care that avoided institutionalization for two years prior.
Don’t wait until it’s too late. Planning for unforeseen institutionalization well in advance could mean the difference between unnecessarily expending your assets and protecting them. Medicaid guidelines vary by state. More information can be found by visiting www.medicaid.gov or www.longtermcare.gov. For questions and help with estate planning, a full list of elder care lawyers by state can be found at www.elderlawanswers.com.