In general terms, Medicare provides coverage for all hospital expenses. However, the service is not endless. Medicare only pays for a limited number of days for stays in a nursing home. After those days covered by Medicare have expired, the individual must pay out of pocket unless they are able to qualify for Medicaid.
Medicaid is a complicated and little understood program. Because of this there is a lot of misinformation in the public and on the Internet that can confuse or mislead people. For example, most people have the common belief that in order to qualify for Medicaid, you must spend all or most of your assets. Even the customer assistance professionals at Medicaid may tell you this on the phone. However, that is not true.
Congress did not intend for couples to lose their life savings in order for one spouse to qualify for Medicaid Long Term Care assistance. To that end, Congress has provided methods that allow couples to keep all of their assets and still qualify for Medicaid Long Term Care Assistance.
Consider the following hypothetical example: Linda and James are married and each of them are in their 70’s. James had a stroke and will need nursing home care for months, if not years. James was recently sent to a nursing home from the hospital. The nursing home told Linda that Medicare would discontinue paying for James’ care in 5 days. At that time Linda would be liable for the $7,500 a month cost to keep James in the nursing facility.
Here is a common break down of Linda’s and James’ Assets and Income. James and Linda each receive $1,200 each from Social Security. Their assets include the following:
- The home sitting 100-acre tract of land with a total Tax Value of approximately $400,000;
- They also own 2 Automobiles each with a tax value of approximately $10,000;
- In addition, they have cash assets of $100,000 in a CD, Linda has an IRA of $100,000.00, and they have $10,000.00 in their checking account.
When combined, their total assets are valued at approximately $630,000.00. From what we have often been told from Medicaid and other advisors is that Linda and James have too much money and too much property to qualify for Medicaid.
In determining eligibility in this particular example, Medicaid does not count the value of the home and land ($400,000) and one of the cars - $10,000. Therefore, Medicaid only counts $210,000 in determining eligibility.
From this amount, then Medicaid will allow James and Linda to keep a substantial amount of these assets, but will require them to “spend down” part of their assets in order to qualify for assistance. Remember, all situations are different, and you should consult with an attorney before determining your eligibility. In this situation, however, and at this time, Medicaid will allow them to keep
$107,000.00 but the must spend down $103,000.00. There are a number of different ways to achieve this.
In one possible solution, Linda could “spend down” some or all of the required $103,000 on certain approved expenses, such as certain nursing home costs. Please consult with us to determine which expenses are applicable. Linda may also purchase certain annuities that would pay her tax-free annuity payments over time. Choosing the correct annuity depends on a number of factors and it is important that your lawyer help you choose one a Medicaid compliant annuity which is considered “spend down” for Medicaid eligibility purposes. If done correctly, James immediately qualifies for Medicaid Long Term Care assistance which pays for all of nursing home and medical related expenses. Once the Medicaid Compliant Annuity pays out, Linda will be allowed to keep not only her Social Security, but also James’ social Security as well.
John Bennett has over 30 years of experience helping clients qualify for Medicaid Long Term Care Assistance. He has taught in the Wake Forest School of Law and the has provided numerous continuing education classes for attorneys in the area Medicaid Long Term Care Eligibility and Planning.