Terry Savage: 5 Savage Truths about Medicaid and long-term care
BY TERRY SAVAGE - TRIBUNE NEWS SERVICE
02/27/2015
The oldest baby boomers are now turning 70. Suddenly, the possibility of needing long-term
care looms, despite the medical advances in joint replacement, heart surgery and
pharmaceuticals. Boomers now must face the increasing possibility of needing care with
activities of daily living - things like dressing, bathing and toileting.
Medicare does not cover these basic services, beyond a limited number of days of "skilled"
nursing care required, for example, after a surgery. The U.S. Department of Veterans Affairs
does cover some care, primarily restricted to VA nursing homes. Long-term care insurance is
the obvious solution - yet less than 10 percent of seniors have such a policy.
Consequently, many seniors who need daily custodial care are forced to turn to state Medicaid
programs. And in these days of dwindling state budgets, that's not likely to be an appealing
solution - despite some federal matching funds recently added to some state budgets under the
Affordable Care Act.
Here's what you should know if you're counting on Medicaid as a last resort for custodial care:
1. Medicaid care takes away choice. The majority of custodial care provided by Medicaid is
given in an institutional setting. That structural bias takes away the chance to remain at home
and have limited care for several hours a day. It also takes away your choice of nursing homes.
Given increasing demand and low Medicaid reimbursement rates, most facilities have a limited
number of Medicaid beds, instead opting to serve those who pay through private savings or
long-term care insurance.
2. Medical and financial qualification is necessary. Each state sets its own criteria to qualify for
Medicaid custodial care. For example, Illinois provides long term care services for 55,000
eligible residents in 738 nursing facilities. Those facilities take all but $30 a month from your
Social Security or other income to pay for your nursing home care.
3. There are exemptions for spouses remaining "in community" outside the nursing home. Each
state sets its own limitations for how much of your income will be retained by your spouse. For
example, in Illinois in 2015, the non-Medicaid spouse could keep up to $2,980.50 of income per
month from the Medicaid spouse. The federal maximum for property retained by the
community spouse is $119,220, in addition to the family home (up to a value of $552,000, or
higher in some states), car and household furnishings. But your state exemptions might be
lower than the federal limits, which are adjusted yearly.
4. Avoid Medicaid planning and transfers. It obviously is tempting to transfer assets to children
in order to qualify for your state's Medicaid long-term care program. In fact, an entire industry
has sprung up to plan for this eventuality. But states are getting tougher - creating a "look back"
period, typically five years, to examine such asset transfers. And as their budgets are squeezed,
some states are moving more aggressively to recover payment from sale of the home after the
community spouse residing there dies.
5. Consider long-term care insurance. Although it's estimated that 70 percent of seniors will
need at least some assistance with basic activities of daily living during their lifetimes, the
average stay in a long-term care facility - the dreaded nursing home - is only 2.43 years.
So you may be better off purchasing a short-term long-term care insurance policy - one that
allows the flexibility of choosing benefits for home health care, assisted living or a nursing
home, as needed. Once you become a resident in your nursing home of choice by paying for the
initial months of care, you are likely to be allowed to stay as a Medicaid-paid resident.
If you have questions about these items, or want to know the Medicaid income and asset
exemption levels for your state, go to ElderLawAnswers.com.
Growing older is better than the alternative. And realistically planning for the possibilities of
needing care in your later years gives peace of mind for you - and your family. That's the Savage
Truth.
ABOUT THE WRITER
(Terry Savage is a Registered Investment Advisor, blogger and the author of four best-selling
books, including "The Savage Truth on Money." Terry responds to question on her blog at
TerrySavage.com.)