Have you thought about the possibility that you or your loved one may someday move into a nursing home? How are you planning to afford the high cost of elderly care? It’s unfortunate that many seniors are paying the full price for nursing home care out of pocket, thus draining their hard-earned life savings within months instead of years.
Don’t let this happen to you and your family. For your own peace of mind, read on to understand the basics of Medicaid planning and secure eligibility for long-term care benefits for the elderly.
What is Medicaid for Seniors?
Medicaid provides Texas’ poorest seniors with vital health insurance coverage and a safety net for long-term care when they have exhausted their own financial resources.
How is Medicaid different from Medicare?
Medicaid is a state program while Medicare is a federal health insurance benefit. Medicare covers many healthcare expenses including in-patient and out-patient care, and prescription drug coverage. It does not, however, cover long-term elderly care unlike Medicaid.
Medicaid is designed to provide comprehensive health care coverage for low-income seniors, children and people with disabilities. But you don’t have to be necessarily impoverished to become eligible for its benefits. In fact, many middle-class seniors rely on Medicaid to afford long-term care.
Monthly nursing home bills average between $7,500 to $12,500 a month in Texas. These costs could drive even seniors with a sizable income to financial ruin within months from entering a nursing home.
Thankfully, there are provisions within Medicaid that allow you to protect your assets, secure a financial cushion and still be able to qualify for its long-term care benefits.
How can you become eligible for Medicaid?
In demonstrating eligibility for Medicaid’s long-term care benefits, two things matter – your assets and your income. Understanding Medicaid’s prescribed limits will guide you with your planning.
Medicaid determines eligibility by assessing the value of your assets. Most assets such as bank accounts, stocks and bonds, real estate, cars and boats, and some trusts are considered countable assets. Below is a short list of assets that are exempt from being “counted”:
– Your home or your principal place of residence
– Your personal belongings such as clothing, jewelry, furniture and other household items
– Your one motor vehicle or your primary mode of transportation
– Your prepaid funeral plan
– Your life insurance policy
– Other assets deemed “inaccessible” because they are protected by a will or a trust
Medicaid’s 2020 guidelines state that a nursing home resident should have no more than $2000 in countable assets. A resident’s spouse who does not live in a nursing home can keep half of the joint countable assets with a maximum total value of $128,640.
Income Limits
Medicaid sets income limits to nursing home residents and their spouses. As of 2020, a nursing home resident and their spouse is allowed to have $35 each per month. The excess monthly income is paid to the nursing home to cover the cost of care.
Ideally, you should secure your eligibility for Medicaid long before you step foot in a nursing home. Pre-need Medicakd Planning anticipates the need for nursing home care in the future while you’re healthy.
An effective strategy in Pre-need Medicaid Planning is a long term care insurance policy. This allows you to avoid the Medicaid system altogether and remain in your home. The ideal age to begin this planning is 60 years of age. You should sit down with your insurance agent and have them look for plans that provide coverage should you need assistance.
Another possibility is an Irrevocable Trust. That means a trust that cannot be changed after it is created. It works by protecting your income and assets from being “counted” by Medicaid. In an Irrevocable Trust, your assets are owned by the Trust and not by you as an individual. Minimizing your countable assets allows you to qualify for Medicaid benefits when the need arises.
But not all Irrevocable Trusts meet Medicaid’s guidelines. For example, if your spouse is receiving payments from the Trust, then a portion of it would be considered “countable” and possibly disqualify you from Medicaid.
If your loved one suddenly falls ill and the doctor tells you that they will be needing full-time care in a nursing home, what do you do? Is it too late for MedicaidPlanning?
Where can you go for help with Medicaid Planning?
Engaging a legal professional can help you secure Medicaid benefits to mitigate the cost of expensive long-term care. They should be able to help you navigate the complexities of estate planning and elder law and ensure that you have the best Medicaid strategy in place.