Medicaid

On today’s blog we would like to break down the basics of Medicaid. Often, we get calls from families who aren’t able to pay for the average of $8,500 a month for nursing home care for their loved one. If they do not happen to have Long Term Care Insurance already, we need to determine their eligibility for Medicaid and other alternative means.

But what is Medicaid?

Medicaid is a benefits program that is primarily funded by the federal government and administered by each state. Rules tend to vary from state to state. The primary benefit of Medicaid is that unlike Medicare (which only pays for skilled nursing) the Medicaid program will pay for long term care in a nursing home once a person has qualified. Medicare does not pay for treatment of all diseases or conditions. For example, a long term stay in a nursing home may be caused by Alzheimer’s or Parkinson’s disease and even though the patient receives medical care, the treatment will not be paid for by Medicare. In that case, one will have to pay privately (e.g. using long term care insurance or other funds) or they’ll have to qualify for Medicaid.

To qualify for Medicaid, applicants must pass some fairly strict tests on the amount of assets they can keep. To understand how Medicaid works, we first need to review what are known as exempt and non-exempt (or countable) assets. Exempt assets are those which Medicaid will not consider (at least for the time being). In general the following are primary exempt assets:

•         Home, (equity up to $800,000). The home must be the principle place of residence. The nursing home resident may be required to show some “intent to return home” even if this never actually takes place.
•         Personal belongings and household goods.
•         One car or truck.
•         Income producing real estate.
•         Burial spaces and certain related items for applicant and spouse.
•         Up to $1,500 designated as a burial fund for applicant and spouse.
•         Irrevocable prepaid funeral contract,
•         Value of life insurance if face value is $1,500 or less. If it does exceed $1,500 in the total face amount, then the cash value is countable.

All other assets are generally non-exempt and countable. Basically all money and property, and any item that can be valued and turned into cash, is a countable asset unless it is listed above as exempt. This includes:

•         Cash, savings, and checking accounts, credit union share and draft accounts.
•         Certificates of deposit.
•         US savings bonds.
•         Individual Retirement Accounts (IRAs), Keogh plans (401K, 403B).
•         Nursing home accounts.
•         Prepaid funeral contracts that can be cancelled.
•         Trusts (depending on the terms of the trust).
•         Real estate (other than primary residence).
•         More than one car.
•         Boats or recreational vehicles.
•         Stocks, bonds, or mutual funds.
•         Land contracts or mortgages held on real estate sold.

Why seek advice for Medicaid?

As life expectancies and long term care costs continue to rise, the challenge quickly becomes how to pay for these services. Many people cannot afford to pay $8,500 per month or more for the cost of a nursing home. And those who can pay find their life savings to be wiped out in a matter of months, rather than years. Fortunately, the Medicaid Program is there to help. In fact, within our lifetime, Medicaid has become the long term care insurance of the Middle class. But the eligibility to receive Medicaid benefits requires that you pass certain tests on the amount of income that you have. The reason for Medicaid planning is simple. First, you need to provide enough assets for the security of your loved ones. Second, the rules are extremely complicated and confusing. The result is that without proper planning and advice, many people spend more than they should and their family security is jeopardized.

Many of our clients have expressed peace of mind knowing they have taken the necessary steps to protect their assets and not to leave their loved ones with the burden of responsibility. If you are in need of suitable facilities and don’t know where to begin, inquire about our senior placement services. For Medicaid application assistance, Medicaid planning advice, or to learn more about us, click here or feel free to call our office today at (201) 342-3300.