Nothing contained in this publication should be considered as the rendering of legal advice for specific cases. This publication is intended for general informational purposes only.
The costs for long-term nursing home care can devastate a family's financial resources. We work with the client to provide the best plan for their circumstances, be it protecting resources for the spouse at home, protecting the family farm, protecting the family cottage, or obtaining government assistance for the cost of care. As members of the National Academy of Elder Law Attorneys, we are honored to provide legal advocacy, guidance, and services to enhance the lives of people as they age.
DEFICIT REDUCTION ACT NOTICE:
The Deficit Reduction Act of 2005, signed into law on February 8, 2006, contained significant changes to the Medicaid eligibility rules. Special care in record keeping is needed for any person who may need nursing home assistance in the next 5 years.
In particular, the manner in which divestment penalties are assessed is changed. Any Medicaid applicant who has given resources away will be ineligible for Medicaid nursing home assistance by the amount of time that resource would have paid for nursing home care. For example, suppose Grandpa Jones paid $10,000 of grandson’s college expenses in March 2006. In April, Grandpa Jones has a debilitating stroke and placed in the nursing home. Grandpa Jones pays for his care until March 2007, when he runs out of money. Grandpa Jones now has no money for his care and, the Medicaid penalty is assessed for the $10,000 he gave for his grandchild’s college education. Grandpa Jones is out of money to pay for his care and, ineligible for Medicaid for 1 month and 24 days. The only way to rectify Grandpa Jones’ situation is if grandson returns the $10,000. But of course, the $10,000 has long been spent on tuition, books, and other such frivolous expenses of college students.
But don’t despair. Not all is lost. The Deficit Reduction Act of 2005 did retain important protections for the spouse and disabled children of the nursing home resident. Family members who once gratuitously assisted a loved one, may now have a stronger reason to be paid for their care.
It is now more important than ever to consult with a knowledgeable Elder Law attorney if you anticipate a spouse or parent may need nursing home care in the not so distant future. Remember, earlier is better than later, but late planning is better than no planning at all.
The average nursing home cost for a year of care can top $80,000.00 per year. Therefore, many people are concerned with paying for the costs of nursing home care should they or a family member need it. Medicare pays for nursing home care in certain circumstances and for a limited period of time. Most health insurance policies do not cover any long term care. Medicaid is often the only assistance program available to help pay for nursing home care. However, Medicaid will only pay for the costs of nursing home care if the patient is impoverished. The Medicaid eligibility rules define what assets must be included and what may be excluded. The rules also address what married couples may keep so that one spouse will qualify for Medicaid without also completely impoverishing the spouse living in the community.
ELIGIBILITY REQUIREMENTS - There are primarily four requirements in order for Medicaid to pay nursing home costs.
A. NON FINANCIAL REQUIREMENTS: A person must be at least 65 years of age, blind or disabled, and be a U.S. citizen or a resident alien.
B. MEDICAL NECESSITY: The applicant must meet the medical eligibility requirement for Medicaid.
C. INCOME: Monthly income cannot exceed costs of long term care and other medical expenses.
D. ASSET ELIGIBILITY: The maximum in assets a person may own is $2,000.00 subject to many exceptions. A person should not think that if their amount of assets greatly exceeds $2,000.00 that nothing can be done. There is usually an array of techniques available for legally preserving assets without losing it all. The base amount for both spouses entering a nursing home and applying for Medicaid is $3,000.00, also subject to many exceptions.
SPOUSAL IMPOVERISHMENT - A typical spousal impoverishment case is one in which one spouse is headed for the nursing home and the other will remain in the community. The community spouse is entitled to a certain level of asset protection which at the minimum is $23,844.00 and the maximum is $119,220.00 for the year 2015.
The amount the community spouse is allowed to keep is known as the Protected Spousal Amount (PSA). However, what many individuals who go through the Medicaid process do not discover is that there are federal regulations and state rules that can be utilized to preserve in many, if not most, cases a significant amount of assets for the community spouse which far exceeds the published maximum stated above.
SPENDING DOWN - "Spending down" is a phrase that is used to describe the process of spending one's assets in order to become eligible for Medicaid by bringing the countable resources below the $2,000.00 limit of assets allowed.
Spending down should only be done in an informed manner. Otherwise, money may be needlessly spent on goods or services that could be preserved.
PENALTY PERIOD - A penalty period may result when a resource is transferred out of the patient's control within 60 months from the date of the Medicaid Application. This is called "divestment" and Medicaid will not pay for the costs of long term care during the penalty period. Divestment can occur whenever property is given away, a name is taken off a bank account, or a name is placed on a deed.
Divestment should only be done in an informed manner. Some divestment may leave the patient without any funds and without any way to pay for nursing home cost. The Deficit Reduction Act of 2005 drastically changed the manner in which divestment penalties are calculated. The new law can cause severe Medicaid penalties against anyone who has given resources away after February 7, 2006.