ELDER LAW / MEDICAID PLANNING

With many Americans living longer and the cost of insurance skyrocketing, planning for long-term care is now more important than ever. There are three options for covering these long-term care expenses:

1. Self pay:  The average monthly cost of a nursing home room in Colorado Springs is around $7,000.  This makes self pay nearly impossible for many.
2. Long-Term Care Insurance:  Most people don't even think about long-term care insurance until they actually need it. By then, the yearly premium amounts are unaffordable.
3. Medicaid

Q: What is Medicaid?

Medicaid is a joint state and federal program that will pay for nursing home care. Medicaid is not to be confused with Medicare, which in most cases, will not pay for extended nursing home care. Medicaid is a needs-based program intended to help impoverished Americans with medical expenses.

Q: Doesn’t Medicare provide coverage for long-term care?

No.  Medicare does not provide coverage for long-term care in a nursing home. Medicare will pay for up to 100 days of skilled nursing care. A patient must be hospitalized for the illness, and the patient must receive care in a nursing home that couldn’t be provided at home or on an outpatient basis. After 20 days of nursing home care, there is a large copayment required of the patient for the remainder of the stay.

Q: What are the Medicaid eligibility requirements? 

There are three tests to determine eligibility:

1. The medical test--the applicant must require a nursing home level of care.
2. The income test--the applicant's monthly income cannot exceed $2,199. If the monthly income exceeds this amount, the creation and use of an income trust is necessary.
3. The asset test--this is by far the most confusing and misunderstood requirement. Applicants are only allowed to have up to $2,000 in non-exempt assets. There are a number of assets that don't count towards this amount ("exempt assets"). These include: a primary residence, one vehicle, personal property, life insurance policy with a cash value less than $1,500 and irrevocable burial insurance.

If there is a spouse, there are are additional requirements concerning income and assets. 

Q: How long will it take to become eligible for Medicaid?

There’s no simple answer as to how long it might take an individual to qualify for Medicaid. There are many variables in every situation that must be taken into consideration, including your assets, income, expenses and any gifts you’ve given five years prior to applying for Medicaid.

Q: Can't I just give all of my assets to my children to become eligible?

No. This is the most common misconception about becoming Medicaid eligible and usually does more harm than good.  Medicaid has a “look back” period on gifts and transfers of assets for less than full value made 60 months before applying for Medicaid. Any gift made during that time will be assessed a penalty, based on the value of the gift. For approximately every $7,000 gifted, a one-month penalty will be assessed, during which time the applicant is ineligible to receive benefits. Talk to an attorney with expertise in Medicaid planning before making any gifts.

Q: Can't I just do this myself?

You could, but that doesn't mean that you should. Medicaid rules are confusing and constantly changing. Dealing with the Medicaid office can be frustrating. I use strategies that will protect as many of your hard-earned assets as possible. You have a loved one to take care of. Save yourself the headache and stress, and let me handle the process for you.