The 6 Biggest Medicaid Long Term Care Mistakes
1. Not realizing the gargantuan cost burden on a family when a loved one needs assisted living or nursing home care.
- Medicare does not cover nursing home costs and only covers only up to 100 days of rehabilitation in a nursing home facility. This is especially important when an elderly person suffers an accident or medical emergency.
- The average monthly costs in a nursing home in Ohio are around $6,700. Will you or your family have a spare $80,000 per year lying around to pay for nursing home care?
- A family member only qualifies for Medicaid if they have under $2,000 in assets and have under $2,382 in monthly income.
2. Not planning ahead. Odds are someone in your family will need Elder Care with in-home help, assisted living or nursing home care. Consider the following:
- Americans are living longer and becoming vastly wealthier. A modest income over a single or double/married lifetime could mean a paid for house, a portion of (401)K/retirement savings and some money in the bank or investments, which could easily allow a couple to be worth $200,000 or more in their mid to late 60’s.
- Health care is becoming more expensive everyday. Living longer with higher medical costs means that costs for medical care in our autumn years is increasing exponentially.
- Elder caregiving by family members is decreasing rapidly over time due to varying factors, and fewer family members are around to provide the care a loved one may require.
- Higher costs for longer periods of time and less family caregiving means more regulations to stem the massive cost burden on the state and federal government. The pressure on the government to cut costs means more services are being sent to private companies, and therefore, more oversight is needed.
3. Listening to anyone who tells you to “spend down” before qualifying for Medicaid.
- They mean well but are not experts in your family’s financial situation or in-depth Medicaid regulations. Consider this story which happened to a friend in Southern Ohio:
My widowed dad had to go into a nursing home memory unit after his Alzheimer’s progressed and we could no longer take care of him. He had a nice retirement 401k and some savings. The nursing home business manager told us they would accept dad, he could private pay in a “spend down” and when his 401k and savings were depleted, he would qualify for Medicaid. I later talked to a neighbor who had previously worked with a Medicaid attorney and discovered it was not necessary to have spent down everything. Careful planning with an expert could have saved the vast majority of what dad had.
If you are single and you need assisted living or nursing home care, be aware of these asset and income savings techniques:
- The Disabled Child/Caretaker Home Allowance
- The (401)K or Pension Plan Payout Exemption
- The Intent to Return Home 6 month Exception
- The Gift Plus Annuity Special Planning Exemption
- If you are married and you or your spouse need assisted living or nursing home care, did the facility tell you about all of the above asset saving planning techniques, or the Well Spousal Allowance of over $100,000?
- If you were not told about any of the above, you should seek out advice from an Elder Law attorney.
4. Giving away a house or a large amount of money to children.
- Some think giving away the house and cash to children avoids Medicaid asset limits. This is false and may cause all kinds of problems.
- Medicaid asset calculations take into consideration any large gifts made within the last 5 years. If you have transferred a house to your children, Medicaid considers this a gift and depending on the value of the house, could declare you 100% ineligible for any benefits.
5. Thinking an Elder Law attorney is too expensive.
6. Not understanding or planning for Medicaid Asset Recovery.
- Here is a story I read recently about a very common occurrence: My mom needed a nursing home and my dad was still with us. We were told dad got to keep the house. But after mom died, dad died shortly after and our probate attorney told us that Medicaid had a $72k lien on our house. We never knew this.
- Advance and crisis planning takes into account Medicaid Asset Recovery which is the attempt by the Medicaid administration to recoup costs. Many people perform acts which unknowingly expose assets which otherwise would go to children or other family members.
Careful planning with a qualified Elder Law attorney can help to shield your hard earned life savings.