Paying for Long-Term Care
Long term care, also called custodial care, is the living arrangements that include nursing home care, assisted living facility care, and some at home care circumstances. Not included is the up to 100 days available from Medicare for rehabilitative skilled care that may be provided in the same facility.
Long term care is paid for in one or a combination of 3 ways:
- Long-term care insurance
- Private Funds
If you have assets worth protecting, are young and healthy enough to qualify, and can afford the premiums, long term care insurance may be your best option. Otherwise, you will be required to draw from your own resources or Medicaid for payment of services.
Many courts have commented that Federal Medicaid laws are the most complicated laws that have ever been put into effect by Congress with the exception of the Internal Revenue Code. In addition, Florida has many special laws, rules, regulations and interpretations that increase the confusion.
Achieving Florida Medicaid eligibility can be an overwhelming challenge for anyone, even for attorneys who practice in this area every day! Yet, a knowledgeable elder law attorney can provide proper guidance when navigating this area. With that help, the rewards can be great.
In Florida there are a number of different Medicaid programs including a long-term care assistance program for the financially needy. If certain eligibility criteria are met, Medicaid virtually absorbs the entire cost of nursing home care that exceeds the resident’s income.
The income amount that must be paid to the facility depends upon the resident’s marital status and the spouse’s needs.
Protect the Spouse
In Medicaid terminology, when there is a married couple, the spouse in the nursing home is called the Institutionalized Spouse and the spouse staying at home is called the Community Spouse.
A married couple’s assets are all considered together. It does not matter if all the assets are held jointly or separately in each spouse’s name. Some assets can be specifically exempt for the Community Spouse, such as a home and its contents, a vehicle, and prepaid funerals as long as they meet certain criteria.
When the Institutionalized Spouse goes into the nursing home, that person’s countable assets must be less than $2,000, but the community spouse is entitled to keep much more. That amount changes each January.
The Florida Medicaid laws, regulations, interpretations and applications are complicated. The typical lay person is unable to determine what to do. Most people think their only option is to spend their life savings before they will be eligible to obtain Medicaid. But, if couples avail themselves of advice from attorneys who work in this area, they will find that it may be possible to save many dollars.
Although the basic rules allow a Community Spouse to protect a certain amount of countable resources, this is, in many cases, a fraction of what could have been preserved for the Community Spouse or the family if proper planning strategies were followed.
A knowledgeable attorney frequently can have the protected resource amount for the Community Spouse increased to a level that would be far above what the lay person would obtain, simply because the lay person does not know the laws and how to protect his or her rights to avoid spousal impoverishment.
There are several money saving planning strategies that may be considered. In order to develop a strategy a thorough review of the couple’s circumstances must first be done. For Florida Medicaid advice to be appropriate, the needed relevant facts about the couple include:
- Age, medical condition, mental condition, lifestyle, prognosis, and desires of each spouse
- All of the couple’s assets, ownership of each asset, values and tax cost basis
- All income sources, amounts and survivorship rights
- Full understanding of each spouse’s relatives
- Potential for veteran’s benefits
- and much more…
There are certain criteria for Medicaid eligibility that fall into three basic categories.
Basic and Medical Necessity
This includes criteria such as medical necessity, age, citizenship, and residency requirements. To obtain nursing home Medicaid benefits, a person must be at least 65 years of age, blind, or disabled, and have the medical necessity to be in a nursing home. For someone medically qualified for nursing home care but who is still at home, Florida also has certain pilot programs such as the Diversion Program and the Alzheimer’s Initiative, which provide certain specific services.
Florida is an Income Cap state, which means there is an income limit for Medicaid eligibility. A person’s income is the total they receive from Social Security, pensions, IRAs and all other forms of income. The income limit typically goes up by a few dollars each year. In many cases, one can use a particular trust called a Qualified Income Trust (also known as a Miller Trust) to legally solve the problem of too much income.
Income for Medicaid purposes is gross income. This means that all deductions are added back into the income before one can determine the total amount.
The nursing home resident must have less than $2,000 of countable assets. Some assets are exempt. Exempt assets may include a home and its contents, a vehicle, prepaid funerals, and cemetery lots. However, it is important to evaluate each asset carefully before one can know if the asset is countable or exempt.
Examples of countable assets are cash in the bank, cash, stocks, annuities, bonds, land, minerals, non homestead property, notes receivable, boats, and certain extra vehicles. Countable assets must be less than $2,000.
Even if spending down is part of the plan to obtain Medicaid, a knowledgeable attorney is able to counsel clients in a manner that is advantageous to the Medicaid applicant and to the family.
Generally, no. Those are your assets and countable even though the children have access to the money.
Most often not. If the Trust assets or income can be used for your benefit, then they are available to pay the Nursing Home or for your at-home costs.
Medicaid rules do not allow you to give away money within a certain time period called the lookback. If you give away money within that period you could make yourself ineligible for Medicaid for a long time.
Most often not. There is a type of gifting that applies to federal estate tax issues but not Medicaid issues. There are a few specific times when one can gift money without penalty.
People finding themselves in a situation where a family member is going into the nursing home are sometimes led to believe that the purchase of an annuity is the best or even the only way out. This is rarely the case. In fact, the use of annuities in Medicaid planning is useful in only a very small percentage of cases. Often, the case can be handled in other ways that are more advantageous to the Medicaid applicant and family.
An annuity, when purchased, leaves the person locked into what is usually a low-yielding investment, with the remainder possibly going to Medicaid.
Medicaid laws, rules and interpretations are constantly changing. Before you rely upon any Medicaid information or advice, you should make sure your advisor knows all the facts of your particular situation and the most current Medicaid laws, rules and interpretations.
The assets of a deceased person who has received Medicaid benefits are at risk of being taken by the state to repay for Medicaid services provided. Thorough consideration of Medicaid estate recovery should be part of good Medicaid planning by an elder law attorney.