Medicaid planning…what does it really mean?
What is “Medicaid planning?” It can mean different things to different families. Here are some examples:
- I want my spouse to have resources to live on even if I end up needing expensive late in life care that uses up all of our savings.
- I have a disabled adult child who lives with me, and I do not want the child to lose the comfort of this home after I die even if I am in the nursing home a long time at the end of my life and Medicaid pays for some or all of that care.
- This farm has been in our family for four generations, I want to make sure it isn’t sold to pay for my nursing home care.
- I want to give all of my money and assets to my children and let the State pay for my nursing home care.
- I’ve heard that you only get $30.00 a month for personal needs if you are in a nursing home and Medicaid pays for all or part of the cost. That’s not enough! How do I get access to more money each month but also maintain eligibility for Medicaid assistance with nursing home costs?
- What if I am in the nursing home for a while and I need Medicaid assistance to pay for it, but there is a chance I will get better and go back home? Will the State take my house to pay for my care before I go back home?
Let’s start with a candid look at the end of life journey. What usually happens and who pays for it?
This graphic by Law Elder Law, LLP in Aurora, IL, illustrates the typical journey through the various types of services and settings we will need as we age. I had the pleasure of hearing Rick Law speak at the Illinois State Bar Association’s 2nd Annual Elder Law Boot Camp in Chicago this summer. His firm designed this graphic. Click here to see a larger version of it.
When you study this graphic, you may first be surprised that Medicaid typically enters the picture 4 to 8 years prior to death. Before that, most people will fund their care with personal resources, Medicare, and long term care insurance.
This article will address a few of the most basic questions and provide links to official resources for more detailed information:
You are eligible for Medicaid assistance with long term care costs if you have up to $2,000 as an individual or $3,000 as a couple in cash and/or non-exempt resources. Source.
Exempt assets do not count when your eligibility is determined. The most common exempt assets are your home, car, and some prepaid burial plans.
Some assets will count even if you don’t own them at the time of application. There is a 5 year look back period. That means, if you gave assets away or sold them for less than fair market value in the 60 months prior to your application for Medicaid assistance, your eligibility will be delayed by the number of months that those assets could have paid for long term care at average monthly costs. The current average monthly cost is $3,600.00. See the worksheet example here.
There are several allowable transfers, such as:
- purchase of a life estate interest in another person’s home, if the purchaser resided in the home for at least twelve consecutive months;
- charitable gifts and gifts to family members which are consistent with amounts and frequency of such gifts in the past;
- involuntary transfers due to bankruptcy, theft, elder abuse, death of a spouse, or because the person was mentally unable to handle their affairs;
- transfers for less than FMV that are returned to the person in full.
See more information here.
Keep in mind, if you gave your money to someone to get down to the resource limit with the plan that they will just hold it for you and give it back to you when you need it, that money is actually available to you. In the worst case scenario, it could be considered to be fraud. You have the option of having the asset returned to you in full to avoid a penalty period.
People are pleasantly surprised to find that the spouse is already protected by the Community Spouse Resource and Income Allowance. You can give your spouse $109,560.00 (for 2015) in assets and up to $2,739.00 per month (in 2015) in income and still be eligible for assistance. Source.
People are also happy to discover that transfers to an adult disabled child that lives in the home are allowable transfers. Source.
The rules for eligibility are complicated, but the DHS caseworkers are skilled and trained to answer your questions.
What can you do?
- You can get more information and apply for medical, nutritional, and cash assistance online.
- You can attend a free, local informational meeting hosted by attorneys who focus their practices on elder law. They are often advertised in the local newspaper.
- You can talk to your insurance agent about long term care insurance options.
- You can talk to a care coordinator at the Illinois Department of Aging who will identify your needs and help you locate services to meet those needs.
The more you know, the better prepared you will be for a smooth Elder Care Journey.
The more I have learned about the resources available for the elderly and disabled, the more respect and appreciation I have developed for government funded services and agencies who are there for people when they need help the most.
In an earlier article, I invited requests for content. Thank you to my friends who offered some suggestions.