People sometimes get confused when they hear the Medicaid program mentioned in an elder law context. Most senior citizens are going to be qualified for Medicare coverage. Why would Medicaid be relevant?
This is actually a very good question, and it is at the core of the most pressing elder law issue that we have today. Medicare will not pay for long-term care. Medicaid will cover these expenses. This is why it is relevant to senior citizens.
The majority of senior citizens are eventually going to need assistance with their day-to-day needs. Some of them will be able to accept the assistance in their own homes. However, in-home caregivers are not free unless they are friends or family members willing to chip in.
Many people who need living assistance cannot receive the care that they need at home. A significant percentage of senior citizens are residing in nursing homes and assisted living communities. Because this is considered to be custodial care, Medicare won’t help with these expenses.
Long-term care is extremely expensive. Most people can’t pay out-of-pocket without spending everything that they have saved. For many, Medicaid is the solution. In fact, most of the long-term care expenses that are accumulated in the United States are paid for by the Medicaid program.
Only for the Poor?
How could most of the long-term care expenses be paid for by Medicaid? Isn’t Medicaid only available to people who have very limited financial resources?
Medicaid is in fact a need-based program. You could qualify for Medicaid, even if you were never poor throughout your life, by spending everything that you have paying for long-term care. At the risk of sounding flippant, you would essentially become poor paying for the care. You could then qualify for Medicaid to pay for long-term care for the rest of your life.
This is not a very pretty picture, but it is a reality that many people have faced.
Medicaid determines your eligibility based on your financial need. The rules are complex, but in general you may not be in possession of more than $2000 in countable assets.
Medicaid planning can involve divesting yourself of assets in advance of applying for Medicaid. However, you have to look well ahead, because there is a five year look back period. If you give away assets within five years of applying you will temporarily be deemed ineligible.
The length of the penalty is calculated by looking at the amount of the divestitures as they compare to the average cost of long-term care in the state of Iowa.
Elder Law Consultation
After digesting all of this information you probably have questions. If you would like to learn more about long-term care costs and Medicaid, simply take a moment to contact our firm to request a free consultation.