Medicaid & Long-Term Care Planning
Arizona Elder Law
Elder law is another aspect of estate planning, focusing primarily on the needs of families and individuals as they age. Issues of aging include senior housing and home care, long-term (or nursing home) care, guardianships and health care documents, Medicare and Medicaid.
Senior Housing & Long-Term Care Options
The Long Term Care Dilemma
As our population ages, more and more of us confront elder law-related issues, whether for ourselves or our parents. One of the most pressing issues is long-term nursing home care, which usually is not covered by traditional health insurance. Depending on where you live and the level of care needed, nursing home care can cost from $35,000 to $150,000 a year. The average stay is slightly more than three years. Most people end up paying for nursing home care until their personal (or family) assets are depleted, then they may qualify for Medicaid to pick up the cost.
Careful planning, however, can help protect your assets, whether for your spouse or for your children. The belt-and-suspenders approach is to purchase long-term care insurance while you are healthy enough to qualify, and to make sure you receive the benefits to which you are entitled under Medicare and Medicaid.
Clients are frequently confused over the differences between Medicare and Medicaid. Though their names are very similar, the programs are quite different. Medicare is an entitlement program, a federal health insurance program in which most people enroll when they turn 65 years old. There are no financial qualification rules. Medicare has two primary parts: Part A and Part B.
Medicare Part A covers in-hospital care, extended care after a hospital stay, some home health care services, and hospice services. The rules for nursing home coverage are very strict and, in fact, Medicare pays for less than 9 percent of nursing home care in this country.
Medicaid, is a joint federal-state program, subject to certain federal requirements, each state implements its own regulations on how the program is managed. Medicaid is not an entitlement program like Medicare, but rather a form of welfare. Medicaid eligibility is determined after the proper application is submitted to the state. There are many Medicaid insurance programs available in Arizona, from basic medical coverage to nursing home programs.
The Arizona Division of Aging and Adult Services provides a wealth of information for seniors and care givers.
We assist seniors and their families in making the tough decisions regarding long-term care planning, including whether Medicaid eligibility may be an option.
Senior Housing Options
Helping a parent move to senior housing can seem more intimidating than orchestrating a rocket launch. The death of a spouse, declining health or safety concerns can trigger the need to move. The first phase comes with the realization that what has been home is no longer suitable. Emotional ties to a place are hard to overcome. Finding a new home that is appealing and appropriate is no easy task, and neither is culling through a lifetime’s accumulation of “stuff.”
Here are some tips to help make the transition easier:
- Plan ahead. Don’t wait for a health crisis to start the process. The smoothest transitions occur when the person moving is in the driver’s seat.
- Get a full assessment of the current situation. Physical care needs and financial resources are where to start. Consider the costs of staying in place, including renovation and ongoing maintenance. Add the cost of rising utility bills and taxes, and don’t forget transportation and food. Make a list and decide whether it’s cheaper to stay or move to a community designed for seniors.
- Take a multi-phase approach. Seniors often take longer than a year to actually make the move.
- Fully explore new housing options. Senior living offers a broader range of options than ever before.
Medicaid Crisis Planning
Sudden Changes and Big Decisions
Change is life’s only constant. Sometimes these changes strike without warning. If you or a loved one has experienced a sudden illness or serious accident, you understand how abruptly everything can change. Are you or a loved one suddenly in need of nursing home care? Finding and affording quality care on short notice can be stressful and draining. We can help you determine the best options for care and how to qualify for Medicaid to help finance them.
Long-Term Care: Counting the Cost
Long-term care is expensive, and these costs only continue to increase as baby boomers age. Although the range varies depending on where you live, according to the American Association for Long-Term Care Insurance, the annual cost of care will double in the next 20 years, increasing from $73,000 to $131,800. With improved medical care, the average life span of adults also is increasing; this translates into more years of care at increasingly higher rates. Without some sort of financial assistance, these costs could be financially devastating. In fact, your entire life savings could be quickly depleted within a few years of needing long-term care. This is where Medicaid can help.
Medicaid is a joint federal and state program to assist those with low income and limited resources. While Medicare provides very limited long-term care coverage, Medicaid is much more extensive. However, because of its restrictions, qualifying for Medicaid can be extremely difficult. But paying for a nursing home without it could be all but impossible.
The Medical Maze
Although Medicaid requirements vary from state to state, they all share one common element: complexity. Each state specifies a maximum allowed income for individuals and couples in order to qualify for Medicaid. Also, the applicant’s total assets cannot exceed a specified amount called the Individual Resource Allowance, which is consistently very low, often less than $2,000*. Although certain possessions, like your home and automobile, are “exempted” for purposes of determining Medicaid eligibility, this figure is still alarming. If the applicant is married, the process becomes more complicated. For the recipient to qualify for Medicaid in any state, the applicant’s spouse can keep only half the couple’s assets up to a Maximum Community Spouse Resource Allowance of $119,220. So, if a couple has $119,220* in assets, they must “spend down” to all but $61,610 – $2,000 (or whatever the state Individual Resource Allowance is) for the applicant and $59,610 for the spouse – on long-term care.
What can you do if the value of your “non-exempt” assets exceeds the $119,220* Maximum Community Spouse Resource Allowance? If you give your extra assets away, which seems like an obvious choice, you will encounter greater problems. Violating this “Transfer Penalty Rule” could disqualify you from receiving Medicaid for months or years, depending on how much you gave away.
If your need for nursing home care is immediate, time is not something you can afford to lose. Why? If you wait too long and your non-exempt assets fall below the maximum $119,220 limit, then the applicant’s spouse can only keep half of what is left… with $23,844* as the Minimum Community Spouse Resource Allowance. In other words, $59,610* truly is the Maximum Community Spouse Resource Allowance!
The Medicaid Qualification Process= Legally Protecting the Maximum Amount the Law Allows
This is only a brief and oversimplified review of a few Medicaid rules, of which there are myriad more. Navigating them on your own could be a nightmare at best and subject you to penalties at worst. Fortunately, though, our experienced professionals can guide you through the Medicaid maze. We can advise you throughout the application process, ensuring that you retain the maximum income and total assets allowed by law.
*Since these amounts (e.g., the “Community Spouse Resource Allowance,” etc.) are adjusted annually, these numbers may vary slightly depending on when the most recent figures are released.