Buying long-term care insurance as early as possible is critical, but if you missed that opportunity and you or a loved one is now facing long-term care, you need to know what your options are, including Medicaid requirements. As recently explored in NJ.com’s article, “Spending assets before Medicaid kicks in,” there are certain assets that will have to be drawn upon before you or a loved one is considered eligible for Medicaid.
Unfortunately, many people fail to consider the cost of long-term care until it is too late. Then on top of already dealing with the stress of needing long-term care, having not planned ahead leads to the additional pressure of figuring out how to afford the care while being unwell. This care can cost more than $150,000 a year in Massachusetts. Long-term care facilities are paid using a resident's assets in order for them to move in and remain at the facility. Those assets include Social Security, pensions, investments, real property, and any other assets.
There is the option of purchasing long-term care insurance to help offset the cost of services. However, if sufficient coverage is not purchased, then the entire expense may not be covered. As a result, residents in long-term care facilities must use their assets for the remaining portion of the resident fees. Therefore, residents must "privately pay" with all of their assets.
Once a resident's assets are exhausted, he or she can apply for Medicaid.
To be eligible for the Medicaid program, the applicant’s assets must be valued at less than $2,000. These assets comprise of bank accounts, investments, real property and all other assets.
Medicaid looks at each application with what is known as a five-year “look back” to determine whether an applicant has made any transfers of property or gifts in an effort to gain eligibility. This can lead to their being ineligible or having a penalty period imposed.
As to the main concern about losing your home while receiving long-term care, as you determine your Medicaid eligibility, know that your primary residence is an exempt asset provided that you or your spouse (if any) reside in the house or intend to return to the house to live. However, Medicaid will have an automatic lien on any interest in a residence in your name that’s equal to the amount of Medicaid funds you receive. When the home is sold after you pass away, Medicaid will execute the lien, unless your spouse remains an owner of the home.
Yet the harsh but complete truth is: nursing care facilities are not required to accept every Medicaid approved resident. There are wait lists for “Medicaid beds” at many facilities. A resident will often need to spend down their assets for a set period before the facility will even consider offering them a Medicaid bed. This is why advance planning and purchasing long-term care insurance far in advance of your needing it is so important. It may not solve every problem, but it does provide more options.
To start preparing, consult with an elder law attorney to help you get a clear picture of the average home care and nursing home care costs in your state, have a better understanding of what kind of coverage you need, and make long-term care planning part of your overall estate plan. Knowing you have a financial plan in place will give you and your family reassurance.
For more information on how Family Estate Law Planning Group can help you achieve this peace of mind and avoid exhausting your assets, explore our website and contact us to schedule your consultation today!
Reference: nj.com (November 6, 2017) “Spending assets before Medicaid kicks in”