What Is Medicaid?
Medicaid is a need-based medical assistance program administered by federal and state governments. It provides a wide range of medical services to the aged and disabled. You cannot exceed certain income and resource limits if you wish to qualify for Medicaid; you will probably need to “spend down” your assets until you reach required minimums before you are eligible for Medicaid.
State and federal governments continue to tinker with Medicaid eligibility and spend down rules. Planning opportunities are available now (even though a spouse may already be in a nursing home) that may not be available in the future. Even better planning opportunities exist if neither spouse is in a skilled care facility.
What kind of restrictions can Medicaid put on my assets and me?
Medicaid will take a large portion of your assets in return for paying your skilled care costs. The amount left to you for personal expenses is called a “countable resource allowance.” It is based on your “countable resources,” which include all of your assets except the following:
- Your residence (if you have a non-disabled spouse or you plan to return to your residence from the nursing home)
- A motor vehicle, within certain parameters
- Personal effects and household goods within certain parameters
- Life insurance (within severe parameters; for example, you are limited on whole life insurance to a policy with a face value of $1,500 or less)
- Property used in an operating business or trade
- A community spouse’s retirement funds
- Non-home real property listed for sale
- Non-home real property jointly owned with another (exempt when the other owner refuses to sell or a sale would cause “undue hardship” to the other owner)
- Funds received to replace lost, damaged or stolen excluded resources
- Burial spaces and arrangements
In Wisconsin, the individual countable resource allowance is $2,000. The countable resource allowance for the community (non-disabled) spouse is somewhere between $50,000 and $119,220 depending on the amount of countable assets owned by husband and/or wife. Countable assets over this amount usually must be spent before the disabled spouse is eligible for Medicaid.
Medicaid is not available to you before your 65th birthday.
What about Medicare? Won’t Medicare help?
Many people mistakenly believe that Medicare will cover the cost of a nursing home stay. In fact, Medicare pays less than 5% of nursing home costs. Furthermore, Medicare only provides coverage for skilled care, with up to 100 nursing home bed days available. Additionally, Medicare does not provide any coverage for the most common type of nursing home care, which is defined as “custodial care”.
What does Medicaid cover? What does it not cover?
Medicaid coverage includes the following:
- Inpatient and outpatient hospital services and clinic services
- Skilled and intermediate nursing home services and physicians’ charges
- Physical rehabilitation
- Psychiatric care
Medicaid also covers the cost of drugs, medical supplies, tests and X-rays, prosthetic devices, dialysis and transportation. Medicare supplemental insurance plan may have some gaps; Medicaid covers virtually all of them. Medicaid may also pay for deductibles and co-pays of Medicare Part A and Part B. Under Medicaid, most medically necessary services (including nursing home care) have no maximum stays.
Medicaid does not cover some personal expenses, such as haircuts, beauty shop charges, and clothing. However, once an individual is qualified for Medicaid, he or she may retain a portion of his or her monthly income to meet these expenditures. This allocation is defined as a “monthly personal needs benefit.” The monthly personal needs benefit for Wisconsin residents is $65.
My wife and I are in good health, and we have a good estate plan. Why do we need this?
It’s hard to ignore the implications of increasing long-term care costs and longer life spans. A 2003 study conducted by the Agency for Health Care Policy and Research projected that 43% of Americans who reach age 65 or older will spend time in a nursing home; 24% of the same group will spend at least one year. A 2003 congressional survey stated that 70% of single residents reached the poverty level (countable assets less than $2,000) after spending only 13 weeks in a nursing home, while 50% of couples, with one spouse in a nursing home, reached the same poverty level within only six months.
How do you best finance a long-term nursing home stay? When you consider (1) the likelihood of a nursing home stay; (2) the annual cost of a nursing home stay, which ranges nationally between $50,000 to well over $100,000; and (3) the many regulations which can make it difficult to preserve assets while making the disabled spouse eligible for Medicaid, it should be clear that some planning is necessary for every family.
Over and over again, we have seen instances where prior planning would have preserved assets, while permitting the full use of government benefits to cover long term health care costs. Alternative means still remain available to protect assets. Your assets may be protected if you plan. The best time to plan is now.
How can you help me protect my family members from long-term care expense?
Medicaid planning involves the development of a strategy to preserve your assets to the maximum extent possible. All plans are different because all clients have different assets and different needs. There are many options available to you to preserve assets and still become eligible for Medicaid. Some of these strategies include the following:
- Some forms of gifting
- Converting countable assets to noncountable assets
- Making capital expenditures on noncountable assets
- Irrevocable Trusts
- Life Estates
If you are interested in Medicaid planning, contact us today to set up your free initial consultation.
Source: New feed
