Consumer's Guide to Medicaid Planning

As the founder of the Elder and Estate Planning Law Firm, I specialize in helping Michigan families protect their estates. Whether you are worried about nursing home expenses that cost an average of $9,000.00 per month, assisted living expenses, having your estate avoid probate court or planning for a special needs child or grandchild, I have helped thousands of families obtain peace of mind when faced with such issues. Often this involves qualifying for Medicaid or VA benefits, creating a trust for an estate or a special needs trust for a disabled loved one.

This Guide to Medicaid Planning is designed to provide you with information and answers to some common Medicaid questions. These are questions that I, as a Certified Elder Law attorney, deal with on a daily basis. My clients have found this guide to be a valuable resource, and I trust you also will.

Introduction:

The decision to move a family member or loved one into a nursing home is one of the most difficult decisions you can make. Perhaps the move is being made because the family member can no longer care for himself or herself...or has a progressive disease like Alzheimer’s...or has suffered a stroke or heart attack. No matter the reason, those involved are almost always under great stress.

At times like these, it’s important that you pause, take a deep breath and understand that there are things you can do. Good information is available and you can make the right choices for you and your loved one. This Consumer’s Guide to Medicaid Planning is designed to help provide you with information and answers to some of the questions you will encounter. These are questions that I, as an Elder Law attorney, deal with on a daily basis. My clients have found this guide to be a valuable resource, and I trust you also will find it useful.

Americans are living longer than ever before. At the turn of the 20th century, the average life expectancy was about 47 years. Now in the 21st century, life expectancy has increased significantly. As a result, we face more challenges and transitions in our lives than those who came before us. One of the most difficult transitions people face is the change from independent living in their own home or apartment to living in a long term care facility or “nursing home.” There are many reasons why this transition is so difficult. One is the loss of home...a home where the person lived for many years with a lifetime of memories. Another is the loss of independence. Still another is the loss of the level of privacy we enjoy at home, since nursing home living is often shared with a roommate.

Most people who make the decision to move to a nursing home do so during a time of great stress. Some have been hospitalized after a stroke, some have fallen and broken a hip, still others have a progressive disease, like Alzheimer’s, and can no longer be cared for in their own homes. Whatever the reason, the spouse or relative who helps a person transition into a nursing home faces the immediate dilemma of how to find the right nursing home. The task is no small one, and a huge sigh of relief is experienced when the right home is found and the loved one is moved into the nursing home. For many however, the most difficult task is just beginning: How to cope with nursing home bills that average about $9000.00 per month.

How to Pay for Nursing Home Care:

One of the things that concerns people most about nursing home care is how to pay for that care. There are basically four ways that you can pay the cost of a nursing home:

1. Long Term Care Insurance –

If you are fortunate enough to have this type of coverage, it may go a long way toward paying the cost of the nursing home. Unfortunately, most people facing a nursing home stay do not have this coverage.

2. Pay With Your Own Funds –

This is the method many people use at first, even though with proper planning, they may not have to. Quite simply, it means paying for the cost of a nursing home out of your own pocket. Unfortunately, with nursing home bills averaging about $9000.00 per month, few people can afford a long term stay in a nursing home.

3. Medicare –

This is the national health insurance program primarily for people 65 years and older, certain younger disabled people, and people with kidney failure. Medicare provides very short term assistance with nursing home costs, but only if you meet the strict qualification rules.

4. Medicaid -

This is a federal and state funded and state administered medical benefit program which can pay for the cost of the nursing home if certain asset and income tests are met. Since the first two methods of private pay (i.e. using your own funds) and long term care insurance are self-explanatory, our discussion will concentrate on Medicare and Medicaid.

What About Medicare?

There is a great deal of confusion about Medicare and Medicaid. Medicare is the federally funded and state administered health insurance program primarily designed for older individuals (i.e. those over age 65). There are some limited long term care benefits that can be available under Medicare. In general, if you are enrolled in the traditional Medicare plan, and you’ve been hospitalized for at least three days, and then you are admitted into a skilled nursing facility (often for rehabilitation or skilled nursing care), Medicare can pay for up to 100 days.

If you qualify, traditional Medicare may pay the full cost of the nursing home stay for the first 20 days and can continue to pay the cost of the nursing home stay for the next 80 days, but with a deductible that is more than $170.00 per day. Some Medicare supplement insurance policies will pay the cost of that deductible. In order to qualify for this 100 days of coverage, however, the nursing home resident must be receiving daily “skilled care” and generally must continue to “improve”. While it’s never possible to predict at the outset how long Medicare will cover the rehabilitation, from our experience, it usually falls far short of the 100 day maximum. Even if Medicare does cover the 100 day period, what then? What happens after the 100 days of coverage have been used? At that point, in either case you’re back to one of the other alternatives...long term care insurance, paying the bills with your own assets, or qualifying for Medicaid.

What is Medicaid?

Medicaid is a benefits program which is state and federally funded and administered by each state. Sometimes the rules can vary from state to state. One primary benefit of Medicaid is that, unlike Medicare (which only pays for skilled nursing), the Medicaid program will pay for long term care in a nursing home once you’ve qualified. Medicare does not pay for treatment for all diseases or conditions. For example, a long term stay in a nursing home may be caused by Alzheimer’s or Parkinson’s disease, and even though the patient receives medical care, the treatment will not be paid for by Medicare. These stays are called custodial nursing stays. Medicare does not pay for custodial care. In that instance, you’ll either have to pay privately (i.e. use long term care insurance or your own funds), or you’ll have to qualify for Medicaid.

Why Seek Advice for Medicaid?

As life expectancies and long term care costs continue to rise, the challenge quickly becomes how to pay for these services. Many people cannot afford to pay $9000.00 per month or more for the cost of a nursing home, and those who can pay for a while may find their life savings wiped out in a matter of months rather than years. Fortunately, the Medicaid Program is there to help. In fact, in our lifetime, Medicaid has become the long term care insurance of the middle class. To be eligible to receive Medicaid benefits requires that you pass certain tests on the amount of income and assets that you have. The reason for Medicaid planning is simple. First, you need to provide enough assets for yourself and your loved ones – they too may have a similar crisis. Second, the rules are extremely complicated and confusing. The result is that without planning and advice, many people spend more than they should and their financial security can be jeopardized.

Legal Assistance

Aging persons and their family members face many unique legal issues. As you can tell from our explanation of the Medicaid program, the legal, financial, and care planning issues facing the prospective nursing home resident and family can be overwhelming. If you or a family member needs nursing home care, it is clear that you should seek expert legal help. Where can you turn for that help? It is difficult for the consumer to be able to identify lawyers who have the training and experience required to provide expert guidance during this most challenging time.

Generally, Medicaid planning is an aspect of the services provided by Elder Law attorneys. Consumers must be cautious in choosing a lawyer and carefully investigate the lawyer’s credentials. How do you find an Elder Law attorney that has the knowledge and experience you need? You may want to start with recommendations from friends who have received legal help with nursing home issues. Who did they use? Were they satisfied with the services they received? Hospital social workers, Alzheimer and other support groups, accountants, and other financial professionals can also be good sources of

recommendations. In general, a lawyer who devotes a substantial part of his or her practice to Medicaid planning should have the knowledge and experience to address the issues properly. Don’t hesitate to ask the lawyer what percentage of his practice involves Medicaid planning. You may want to ask how many new Medicaid planning cases the attorney handles each month. There is no correct answer. But there is a good chance that an attorney that assists with at least 3-4 nursing home placements each month is likely to be more up-to-date and knowledgeable than an attorney that helps with two placements a year. Ask whether the lawyer is a member of any Elder Law organizations. Is the lawyer involved with committees or local or state bar organizations that have to do with Medicaid planning? Does the lawyer lecture on Medicaid planning? If so, to whom? (For example, if the lawyer is asked to teach other lawyers or professionals about Elder Law and nursing home planning, that is a very good sign that the lawyer is considered to be knowledgeable by people who should know.) If the lawyer lectures to the public, you might try to attend one of the seminars. This should help you decide if this is the lawyer for you.

In the end, follow your instincts and choose an attorney who knows this area of the law, who is committed to helping others, and who listens to you and the unique wants and needs of you and your family.

In next week's blog, I will explore the basics of qualifying for Medicaid. Stay tuned!

This blog post is written by Brett A. Howell, Certified Elder Law Attorney. The blog is written as a service of The Elder and Estate Planning Law Firm, P.L.L.C. This information is for general informational purposes only and does not constitute legal advice. For a consultation to address specific questions, please call (810) 953-3846.