This is the third and final part on how to pay for long-term care for an individual. As discussed in the prior posts, there are three ways to pay for long-term care: 1. Self-pay, 2. Long-term care insurance, 3. Medicaid. We have discussed the first two previously. Today we will look at Medicaid.
What is Medicaid? Medicaid is a program implemented by the states, but essentially mandated by the federal goevernment. Medicaid is different than Medicare. The main difference with Medicaid is that you have to meet certain qualifications to be able to receive Medicaid. Medicare will not cover long-term care costs, but may cover certain expenses if less than 90 days and the care “rehabilitative” rather than just sustaining your standard of living.
What are the qualifications for Medicaid? To qualify for Medicaid, an individual has to meet three tests: 1. Medical qualification test, 2. Income qualification test, and 3. Resource qualification test. If the individual does not meet all three tests, he will not be qualified for any assistance through Medicaid.
The Medical Qualification Test is usually the simpliest to meet. To qualify a person must be at least 65 years of age, or blind or disabled and have a medical necessity to be in a nursing home. If you are not able to do the ordinary tasks of daily living (dressing yourself, preparing meals, etc.) without assistance, then you meet the medical qualification test. This usually isn’t an issue, because if someone is going into a nursing home, then they usually are going becuase of the need, rather than a “want”.
The Income Qualification Test is different for each state. For Oklahoma in 2012, the income qualification is $2,094 per month (or up to $3,000 if a special supplemental trust is created). The income that is considered is gross income, so deductions for Medicare or other health insurance and taxes from income are not considered. There are methods to legally avoid this cap, but you should seek advise from knowledgeable counsel about them.
The Resource Qualification Test is usually the toughest to meet for people seeking to voluntarily qualify for Medicaid. In Oklahoma, the nursing home resident must have less than $2,000 of countable assets. Some assets are exempt, but the exemption may only be temporary.
So, what are countable assets? About anything that can be accessed by the individual for his/her own use, like checking accounts, CDs, stocks, bonds, annuities, land, minerals, and notes recievable. As stated before, all of these assets, combined, must have a value less than $2,000 when the individual applies for assistance.
What qualifies as an exempt asset? If there is a spouse that can stay in the personal residence, then the home is usually exempt. If there is no spouse, then the residence will lose its exemption after one year. One automobile used for medical transportation is usually exempt. A life insurance policy with a face value less than $1,500 is exempt. A burial policy worth less than $10,000 is exempt. You can see, there are not many exempt assets.
In addition to having most assets as countable, there is also a transfer penalty for any asset that is transferred. This penalty, for Oklahoma, is $132.85 per day, meaning that for every $132.85 an individual transfers, her or she loses one day of Medicaid eligibility. The time for losing the elegibility starts at the time of the application for Medicaid and applies to any transfer within the previous five years.
Summary All of this is just to let you know that there is a governmental program that can cover an individual’s long-term care costs, but qualification is not something that is easy to obtain. But, you also should know that you may not need to deplete your life savings unnecessarily. If you seek advice from a qualified estate planning and elderlaw attorney, you can start planning to ensure a legacy will pass down generations. As with any planning, the sooner the better, because you do not know what tomorrow will hold.