Recently, I’ve had a number of inquiries from family members of elderly parents who need to figure out how to pay for nursing home care without draining their life savings.
This is a complex and tricky area of the law, and if done incorrectly, can lead to a lot of problems. For that reason, I’ve reached out to another elder law attorney in Raleigh to assist me with some of these issues.
Yesterday, he was kind enough to allow me to sit in on one of his seminars and learn more about the process of paying for nursing home care.
While this was not a completely new topic to me, (it was a basic seminar, and I did know quite a bit of the material they covered), I felt it would be helpful to review some of the highlights in this post today.
Medicaid Is Not as Simple as You Would Think
The first part of the seminar went over the various “types” of Medicaid and how to qualify for each. You would be amazed at home many different programs there are that are available to seniors. Here is a quick rundown of each of the programs that were discussed:
The PACE program is a fantastic program but is limited in geographic scope (i.e. it is available if you live in Wake or Durham counties, but not Johnston County), and there is a waiting list to get onto it.
Medicaid for Nursing Home Care
This is the predominant program to assist seniors in paying for their nursing home care. However, there are limits to the amount of assets and income you may have to qualify for this program. For example, you may own a home and one car, and the custodial spouse (i.e. the “well” spouse) may have up to $120,000 in assets in their name. The institutionalized spouse may have no more than $2,000 in assets, and their income cannot exceed the monthly cost of care.
Tri-Care for Life
This is a benefit that is offered to retired military that are drawing a pension. It’s an unlimited benefit for skilled nursing care for the remainder of the patient’s life.
If you are on Medicare, you have a long-term care benefit of 100 days, but you must be admitted to a hospital for three days before Medicare will cover you. Be careful, you must make sure your loved one is admitted to the facility for three days, not just put on “observation status”. Raise hell with the staff if you need to. Note that there is a co-pay associated with Medicare, but this is still less than paying full price for skilled nursing care.
Special Assistance is frequently confused with Medicaid, they are not the same thing. Special assistance is for assisted living only (which is not the same as skilled nursing care). There are strict income limits to this benefit, and if you make even one cent higher than the limit then you are disqualified from this benefit.
One big takeaway here is that there is no Medicaid program available for assisted living, there is only special assistance available. So if your loved one needs to go into a facility and there is a question about the level of care they will need, you must talk to their doctor about the difference between assisted living facilities and skilled nursing facilities. The facility the doctor recommends will dictate the type of programs they may (or may NOT) be eligible for.
VA Improved Pension
This is another program available to veterans. I am in the process of becoming VA Certified so that I can competently discuss these programs with my clients. Beware, there are a lot of financial professionals who are NOT VA Certified that attempt to sell various products to veterans that may or may not be helpful.
The biggest issue here is that you need to be able to “unwind” a VA plan and put it into a Medicaid plan. Some of the financial products available for Veterans do not allow this flexibility.
Using Medicaid to Pay for Nursing Home Care
Some people are either too scared or too proud to plan to use Medicaid to pay for nursing home care. Their rationale is that Medicaid is only for the poor, and they worked hard to acquire wealth, so they should be “private pay”.
The problem with this logic is that nursing care is expensive, and unless you are Warren Buffett, chances are you will spend all your money paying for nursing home care, leave you spouse and children with nothing, and then end up on Medicaid anyway.
So why not just plan to get on Medicaid sooner rather than later, and protect your assets now so that you can leave them for the benefit of your loved ones when you are gone?
Assuming you want to structure your assets so that you can qualify for Medicaid, here are a couple of things you need to know:
- Your assets must be structured carefully. If you mess up the titling of assets, you could be penalized.
- If you do nothing, there is a high likelihood that you will end up on Medicaid anyway.
- If you are married, either you or your spouse will end up in poverty while paying for the other’s long-term nursing care.
- The rules are designed to protect the “well spouse” from going into poverty.
- It is easier to protect assets if you are married than if you are not.
That being said, what can you do to properly structure your estate so that your spouse and beneficiaries are taken care of? Here are a couple basic planning options.
First, you can transfer or gift as many assets as you want to your spouse without concern that you will be penalized by Medicaid. But once you do transfer your assets to your spouse, their estate plan will need to be adjusted to make sure that if they were to predecease you, they would not transfer all those assets back to you and get you kicked off Medicaid!
Second, there is a 60-month look-back period for gifts to a non-spouse. That includes kids, friends, charities, etc. However, you can undo the gifts and cure the problem if this becomes an issue. Equity in real estate is not considered a countable asset for Medicaid purposes.
Finally, and most importantly, it is never too late to shelter assets. Many people think that if they are already admitted to a facility, or will be soon, that it is too late to do anything to protect their assets. This is not the case. Your options are more limited than if you had planned ahead of time, but you still have options.
First, I’ll be supplementing this blog post with additional information on what happens if you fail to plan, and specific tactics to help you qualify for Medicaid in the next few days, so check back next week.
Second, if you or a loved one is faced with going into a nursing facility in the near-term, you should schedule a time to meet with Jim Hart, a North Carolina Elder Law Attorney, as soon as possible. You may call us at (919) 883-4861 or fill out our online contact form.