Medicaid Eligibility for Nursing Home Care
One of the most common economic and social fears of today’s senior citizens is that they will require some sort of nursing home care and their entire life savings will be wiped out to pay for it. Especially for those who struggled through the Great Depression it is a fear that is very real indeed. Many have sacrificed and saved so as to own their home and set aside a nest egg for a comfortable retirement. After all, the enjoyment of the golden years is part of the American Dream.
Unfortunately, an illness or disability can sidetrack such plans and create the need for Nursing Home care. Most people do not like to think about needing nursing home care, but the fact is that nearly half of us will require some long term care during our life times. The cost of such care will rapidly deplete the life savings of most middle class families.
Quality Nursing Homes in the Capital District region can cost as much as $13,000.00 per month, a staggering amount.
Obviously, one can privately pay for his or her care or that of a loved one for so long as the funds last, and many do just that. However, for all but the most wealthiest of us our life savings would be depleted in a very short period of time.
Another way of paying for long term care is through the use of long term care insurance purchased years before it is needed. The purchase of long term care insurance is becoming much more common based on tax incentives and has increased awareness of the public to this product. When purchasing long term care insurance, it is important to obtain as much information as possible prior to you committing to a policy.
For those who qualify, the cost of long term care will be paid by the Medicaid Program. Most senior citizens have heard of the Medicaid Program and have some information as to the rules of eligibility and transfers of assets. As with most subjects a little knowledge can be a dangerous thing.
The Medicaid Program was initially enacted in 1965, but has undergone many changes over the years. It is not to be confused with Medicare. Medicare is essentially government sponsored health insurance for our senior population. All seniors qualify regardless of assets or income levels. On the contrary the Medicaid Program is a “means tested” program in that one must show financial need in order to qualify for the benefits. Additionally, Medicare and Medicaid pay for different types of Services.
It is important to note that with a possible 100 day exception Medicare will not pay for nursing home care. It is the Medicaid Program that pays for the majority of the nursing home care. This program is funded through the Federal, State and County Governments, but is administered by the Counties.
The rules of eligibility for Medicaid are very complex and intricate. Those with any assets whatsoever should never make a Medicaid application without consulting an Elder Law specialist first. The filing of the application can be very significant with regard to the retention of assets, transfers of assets and eligibility. If done incorrectly, the results can be catastrophic and irrevocable.
In general, to qualify for Medicaid benefits for nursing home care, one must have “spent down his or her assets such that they have no more than $14,400.00 left. There are additional exemptions for prepaid funeral plans and a small amount of life insurance, but the total still remains a relatively insignificant amount.
Also, there are what is commonly referred to as “spousal protection provisions” that help to prevent a community spouse from using all their assets for the care of the other spouse. Generally in New York a community spouse may retain the home and between $74,820.00 and $115,920.00 in other assets and have the spouse receiving the care qualify for Medicaid benefits. Additionally, a community spouse may keep up to $2,898.00 of monthly income and the spouse in the nursing home may keep $50.00 per month. Even in such a circumstance, the death or disability of the community spouse could cause all assets to be lost.
Some people facing the uncertainties of older age simply want to transfer or give away their assets to a child or other loved one. This is dangerous and can also be very poor planning. While most children are loving and well intentioned, the transfer of your assets to him or her can affect the quality of the relationship. In addition that child may have unfortunate circumstances that can jeopardize the assets that constitute your financial security. Divorces, bad business dealings, bankruptcies and personal injury auto accidents are just a few of the problems that can befall even the most loving and caring child. Such creditors will care little that the assets in your child’s name are in reality yours, and they may be lost forever. In addition, the transfer of assets which have increased greatly in value over the years such as a home will create an enormous and unnecessary capital gains problem for your child upon the sale of the asset in future years.
The use of a trust enables one to use or receive the income from investments or residential property, and to maintain a great deal of control over these assets, while sheltering them from nursing home costs. In addition the trust protects the assets from any other creditors of yours or your children.
In February, 2006 President Bush signed what is known as DRA 2005 which was a deficit reduction act that encompassed all aspects of governmental benefits including student loans, Medicare and Medicaid. The changes that occurred in the area of Medicaid and payment for nursing home care were very dramatic including changing the look back period from three years to five years and also changing the way in which transfers of assets are treated. It has made protection of assets and qualification for Medicaid much more complex.
It is almost always possible to preserve a portion of one’s assets, even if he or she is already in a nursing home. As with all planning, however the earlier a plan is undertaken the greater the benefit. You should never make an application for Medicaid benefits without proper legal advice.
The stakes are high and a thorough knowledge of the Law and rules of the local department of Social Services is essential.