Medicaid and Long-Term Care
Welcome to the third installment in our long-term care series. In week 1, we learned that long-term care encompasses a wide range of services focused on providing help for those who have cognitive issues or need help with the activities of daily living. Long-term care services can be provided at home, in the community, in an assisted living facility, or in a nursing home.
We also learned that as many as 70% of those turning 65 today will require some type of long-term care, which is an expensive proposition. So how does one pay for it? In last week’s installment we learned that for the most part, Medicare does not pay for long-term care (Medicare will cover up to 100 days of skilled nursing care following a qualifying hospital stay). This week, we look at Medicaid as a viable option for paying for long-term care.
How do Medicare and Medicaid differ?
Medicare is an insurance program that pays for care based on age and disability. Medicaid is an entitlement program that provides coverage if an individual meets the income and resource requirements. Medicare does not pay for long-term care. Medicaid does, when the person financially qualifies.
How does one financially qualify for Medicaid?
In NY, an individual age 65 and over can qualify for Medicaid if he or she has less than $32,396 in “available” assets. Luckily, in NY the primary home (with an equity value up to $1,097,000) and most retirement assets do not count as “available” assets and therefore, do not count towards the $32,396 allowance. So, for example, an individual can own a home worth $1 million, have a $150,000 IRA and $30,000 in checking and savings, and qualify for Medicaid.
Income limits with Medicaid
We discussed asset limits above, but Medicaid also has income limits. For Community Medicaid (care at home), a person 65 and over may keep $1,820 of his or her monthly income (ie: Social Security, rent, pension). Even if an individual’s monthly income is more, he or she can still qualify. Where income exceeds the allowable amount, we use pooled income trusts to shelter excess income. A pooled income trust allows excess monthly income to be used by the Medicaid recipient while still qualifying for Medicaid benefits. For institutional Medicaid (commonly known as nursing home Medicaid), the income limit is $50 per month for the Medicaid recipient; however, the community spouse (the one remaining at home) is allowed to retain $3,948 per month.
What about the 5-year lookback period?
Although there is a 5-year lookback period for institutional Medicaid, there are transfers of assets that can still be made within that 5-year lookback without the imposition of any penalty period.
What is Spousal Refusal?
Spousal refusal is often part of the strategy used to become Medicaid eligible. Assets are transferred out of the name of a sick spouse to the healthier spouse to achieve Medicaid eligibility. Medicaid allows the non-applying (healthier) spouse to have up to $157,920 in assets in his or her own name. Sometimes more than this amount in assets ends up in the non-applying spouse’s name after transfers are made. In that case, we have the non-applying spouse sign a spousal refusal statement saying that he or she refuses to contribute their own assets and income for the medical needs of the ill spouse as those assets and income are needed for their own care. Asserting the right of spousal refusal is the way most married people achieve Medicaid eligibility.
The bottom line
Medicaid is complicated, and the assistance of an experienced attorney is essential. We at Makofsky Valente Law Group, P.C. have been helping clients achieve Medicaid eligibility for over three decades. Stay tuned for the final installment of this series where we will look at self-insuring.
