Planning for long-term care can include trying to qualify for Medicaid but that isn't always easy. Each state has different requirements for its residents to get Medicaid and these requirements often change.
Only certain people will qualify, although there are actions you can take to help you qualify.
Why should seniors engage in long-term medical planning?
Long-term Medicaid is often sought by adults as an option for future healthcare. At the time of publication, it's projected that more than two-thirds of Americans 65 and older will need some type of long-term care in their lifetimes, while about half of Americans who are 65 and older will need long-term Medicaid or some other paid plan, such as private long-term care insurance.
Nursing homes and assisted living facilities are extremely expensive. They can range anywhere from just a few thousand dollars a month—in some states—to anywhere between under ten thousand to well over ten thousand, depending on your state.
It makes good sense, then, to plan for long-term care for your future. This way, you can have assets left for your heirs when you pass and you can enjoy a lifestyle where, if you need something, you'll be able to get it.
What is Medicaid?
Medicaid is a federal and state program that aids millions of Americans. For seniors, it provides payment for some, or all, of their long-term care costs. While it often provides complete coverage of nursing home expenses, it usually doesn't provide complete coverage of assisted living expenses.
The Medicaid program is for low-income seniors or seniors with limited resources. It's the largest fund for healthcare in the United States. Many seniors need Medicaid to cover long-term care because Medicare doesn't cover more than a short-term stay in a rehabilitation facility. Medicare also doesn't cover the costs of staying in a nursing home, in assisted living, or in a similar type of senior living.
Medicaid is, therefore, the vehicle that can help seniors with limited resources afford their nursing home or assisted living apartment. Usually, however, Medicaid requires you to stay in specific nursing homes, as not all nursing homes accept Medicaid, and it's likely you'll have a roommate in either a nursing home or in an assisted living facility, so there are drawbacks to the program.
Who is eligible for Medicaid?
Medicaid eligibility is extremely complicated and varies among states. Generally, applicants are more than 65 years old, are U.S. citizens or legal permanent residents, and have an income below a certain threshold amount per month.
As a senior, you'll need to decide which type of Medicaid you want to apply for, such as:
- Home and Community Based Services, which can include funds for assisted living, at-home services, or even adult daycare in some states
- Medicaid for nursing homes exclusively
- Medicaid for the aged, blind, or disabled, which can include assisted living or at-home care
Next, see if you're automatically eligible for Medicaid or if you qualify in another way. Each state has different requirements, but there are federal requirements you must meet as well. Check the government sites for Medicaid, as the threshold income limits for automatically qualifying change often.
You may also qualify by the number of assets you have, but figuring out whether you meet these requirements is tricky. You'll want outside help, such as from an attorney, an online company, or a Medicaid planner to assist you in determining whether you're eligible for Medicaid based on your assets. You can also work with an elder law attorney or another entity to include your long-term care goals in your estate plan.
Another way to automatically qualify is by showing that you qualify by your "level of care"—that is, that your medical condition requires a more advanced level of care.
'Spending-down' assets and 'look back' period
It's possible for you to qualify for Medicaid, if you have assets in excess of the threshold amount, by "spending down" non-exempt assets. Exempt assets are things such as your primary home and one automobile.
Ways to spend down your assets to get to the threshold amount include making improvements or repairs to your home, fixing your car, purchasing medical equipment such as hearing aids or glasses, and paying off debt—including credit cards, loans, and your mortgage.
Spending down your available assets to qualify could be complex as well, so you may want to get legal advice before doing so. You can't make gifts to family members or friends or sell something for less than fair market value in order to spend down your assets.
The government will look back by reviewing your financial statements for the past 60 months (30 months in California) to see if there were gifts, sales, or giving away assets that could have otherwise paid for your long-term care.
Applying for Medicaid
It's wise to have an elder law attorney or a private Medicaid planner help you fill out your Medicaid long-term care application. They can tell you whether you qualify or what you may have to do to qualify. They can also help you fill out the long-term Medicaid application.
You may also want to check your state's agencies on aging for assistance with the Medicaid application. You can usually find them on your state's government site.
Private long-term care insurance
Many people believe that Medicaid will pay for all their nursing home or assisted living costs. That's often not the case, as first, you may not qualify, and second, Medicaid won't pay for the entire cost of assisted living. If you have the means, it's a good idea to consider private long-term care insurance for seniors.
Long-term care insurance varies in the amount of time the policy covers, the terms of the policy, as well as the cost of premiums. These variables can depend on your age when you apply for the insurance and on your medical history.
Still, having long-term care insurance, when you're not sure you'll qualify for Medicaid, is truly helpful because the policy will likely help you stay at home if you can—or provide you with optional coverage that you can't get from Medicaid.
When considering your long-term care planning goals, consult an elder law attorney to help you determine whether you'll be able to qualify for Medicaid or whether purchasing private long-term care insurance is what you'll need to protect you in the future.