Ways to Pay for Long-Term Care: A Recap
There are a number of ways to pay for nursing home or other long-term care facilities. As discussed in our last blog, you could utilize personal resources such as savings accounts, or the costs may be covered as part of a long-term care insurance policy. But what happens if or when the money you have set aside for nursing home care runs out? It’s a very likely possibility especially given the fact that costs for long-term care in our region averages $90,000 per year. Don’t panic just yet, as there are other options available to you to help cover the costs of long-term care. In order to prepare for any likely scenario, you should contact an attorney before you even enter a long-term care facility. An attorney can help you investigate the possibility of utilizing resources other than personal savings or insurance to help cover the costs of nursing home care in the event that the resources you’ve set aside run out. One of these options that may be available to you is Medicaid.
How Does Medicaid Work?
Medicaid’s long-term care benefits will supplement your income to help pay your nursing home bills if you don’t have enough money to do so. However, you shouldn’t wait until the money has run out before you consider Medicaid as an option. Applying for Medicaid is a time-consuming and very complicated process. If you wait until the last minute to apply for Medicaid, there could be a lapse in payment to the nursing home which has its own set of issues. Planning for Medicaid is crucial. While you are still healthy, you or your loved ones should meet with an elder law attorney to discuss your Medicaid planning and estate planning options; however, if you are already a nursing home resident, you should see an elder law attorney immediately before your funds run out and before you attempt to apply for Medicaid. You and your attorney will need to work through your local Department of Social Services (DSS) office, which processes all applications for Medicaid.
After DSS receives your application, they will begin assessing your eligibility to receive Medicaid coverage. First they verify your residency status and medical need for nursing home care. Next, they review your financial status by first looking at your income. If your income exceeds the monthly cost of care for your treatment, then you qualify on the income test. The most hiccups occur when DSS reviews your assets. Common assets counted are: cash, savings accounts, nursing home trust funds, annuities, real estate, boats, RVs, stocks, bonds, or mutual funds. If you have too many assets to qualify for Medicaid coverage, your application will likely be denied. To complicate the matter further, once you are “otherwise eligible,” DSS will “look-back” five years to see if you ever gifted any money to any person or organization. If they determine that you gave money away, DSS could implement a “penalty,” which is a number of months Medicaid will not pay for your care.
Hopefully, the DSS determines that you are eligible; if so, you will receive a Medicaid identification card. You should also receive a notice from your caseworker advising you of the amount you are required to pay toward the cost of your care while in the nursing home. This is called the Patient-Pay Amount or your “cost of care”. Each month thereafter, the nursing home will bill Medicaid for the portion of the bill you are not expected to pay.
Will Medicaid Try to Take My House?
If you receive help from Medicaid to cover the costs of your nursing home care, the state will attempt to retrieve from your probate estate whatever benefits it paid for your care. This is called “estate recovery”. According to the rules of Medicaid eligibility, the only piece of substantial property a person may own is his or her home. Except in certain circumstances, Medicaid may put a lien on your house for the amount of money spent on your care. If the property is sold while you are still living, you would have to satisfy the lien by paying back the state in that amount. The exceptions to this rule are cases where a spouse, a disabled child, a child under age 21, or a sibling with an equity interest in the house is living there. You should consider talking to your attorney before entering a nursing home or applying for Medicaid to discuss ways that you can protect your home.
There are a number of provisions in place that will protect your home from being recovered by Medicaid. For example, the state cannot recover your house if you and your spouse owned the home as tenants by the entireties. This means that you and your spouse share equal ownership of the house and, in the even that one of you dies, the surviving spouse becomes vested with 100% of the house ownership. There are other scenarios where the house may be protected, and you should seek out an elder law attorney to review those scenarios and to see if any apply to your specific situation.
To learn more about any of these options or what the best course of action would be for you and your family, consider contacting an attorney who focuses on areas such as Estate Planning or Elder Law. The attorneys of Ferrante and Dill’s Estate Planning and Elder Law group understand that planning for a future in which you are incapacitated and otherwise unable to care for yourself can be scary and tough. However, it is also one of the greatest gifts you can give to a family member or loved one by removing this burden from their shoulders. Let us help you and your family plan for the future. Give us a call today at (410) 535-6100 or send us an email at firstname.lastname@example.org.