As our loved ones age, they may begin thinking about the eventuality of requiring long-term care such as a home health aide, assisted living care or nursing home care. Unfortunately, there is a great deal of misinformation about Medicaid and long-term care, as well as the available ways to pay for it. In this article we will endeavor to clarify some important facts about the Medicaid program and how to become eligible for services.
Medicare and long-term care
When an individual is admitted to a nursing home for rehabilitation after a hospitalization and within 30 days of a hospital stay — and he was admitted to the hospital for at least three days — Medicare may pay a portion of the individual’s expenses in the rehabilitation facility. Medicare may cover up to 100 days of skilled nursing care per period of illness. The patient must start paying a co-pay from the 21st to the 100th day unless he or she has supplemental insurance that will cover the copayment. Once the patient no longer needs the “skilled nursing care” and his or her condition requires “custodial” care, Medicare will stop paying. This can happen well in advance of the 100-day mark. Thus, it is very important to note that Medicare does not pay for long-term care.
Who is eligible for Medicaid?
Medicaid is a means-tested program. As of 2018, an individual is permitted to “keep” $15,150 in non-exempt resources in order to qualify for Medicaid. In addition, retirement accounts of any amount will be exempt if they are in a periodic payout status. These distributions from retirement accounts will be counted as part of the applicant’s income for Medicaid purposes. “Community-Based Medicaid” covers home care services and “Institutional Medicaid” covers nursing home services. The rules differ for each of these types of Medicaid. In addition, it is important to note that, if an individual is married, there are specific eligibility and income regulations which may allow the “well” spouse of the applicant to retain additional assets, which protects the well spouse from becoming financially destitute.
Spouses are considered by Medicaid to be legally responsible for their Medicaid applicant spouses. Thus, Medicaid will not recognize a prenuptial agreement which states that each spouse will not be financially responsible for the other spouse vis-à-vis Medicaid eligibility.
Divesting oneself of assets
Medicaid planning is certainly important and beneficial, especially when done well in advance of a long-term care need. However, under the Medicaid rules, a gift of any significant amount within a five-year period prior to a nursing home Medicaid application may trigger a penalty period during which Medicaid will not cover the nursing home stay. For example, on Long Island, every $13,053 “gifted” during that five-year period will create one month of ineligibility. However, it is important to note that Community Medicaid (Home Care) does not have a look back period.
These are just some of the important facts about becoming eligible for Medicaid. Of course, one should consult with an experienced attorney before engaging in a Medicaid Plan.
Ronald A. Fatoullah, Esq. is the principal of Ronald Fatoullah & Associates, a law firm that concentrates in elder law, estate planning, Medicaid planning, guardianships, estate administration, trusts, wills, and real estate. Elizabeth Forspan is managing attorney of the firm. The law firm can be reached at 516-466-4422. Ronald A. Fatoullah is also a partner with Advice Period, a wealth management firm, where he can be reached at 424-256-7273.
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Senior planning forum on April 19 in Lawrence
Ronald Fatoullah & Associates has scheduled a free forum on “Using Trusts in Estate and Medicaid Planning,” at the Coffee Bar in Lawrence on Thursday, April 19, at 9:30 am. The event will feature an interactive discussion on protecting assets and preparing for the future, and a complimentary kosher breakfast will be served.
For more information or to register, contact 516-466-4422 or JGoodbinder@fatoullahlaw.com.