The Medicaid program is ultimately relied upon by a significant percentage of senior citizens who need long-term care. This comes as a surprise to many people who assume that Medicare will pay for everything once they become eligible for coverage at the age of 65.
Medicare will not pay for custodial care, and a stay in a nursing home or assisted living community is considered to be custodial care. Medicare will only pay for convalescent care, and there is a 100 day limit.
Medicaid will pay for a stay in a nursing home or assisted living community if you can meet the eligibility requirements.
Medicaid is a need-based program. You must be able to demonstrate financial need as it is defined by the program to be able to qualify. To meet the eligibility requirements you may have to divest yourself of assets.
You can do this in a few different ways. One possibility would be to pay for long-term care out-of-pocket until you are in significant financial need. You could then qualify for Medicaid to pay for your long-term care, but you would have exhausted everything that you intended to leave behind to your loved ones.
Another possibility would be to give away assets in advance of applying for Medicaid. However, if you do this you have to be aware of the five year Medicaid look back.
Divestitures Within Five Years of Applying
If you divest yourself of assets within five years of applying for Medicaid, you are penalized and your eligibility is delayed. The length of the penalty will be calculated based on the average cost of long-term care in your state of residence as it compares to the amount of your divestitures.
Because of the five year look back, you must plan ahead in advance if you want to be optimally positioned. If you take the right steps at the right times, you can potentially take care of your loved ones as you simultaneously aim toward Medicaid eligibility.
You should know the facts if you are thinking that you are not concerned about long-term care costs because it is unlikely that you will require living assistance. According to the United States Department of Health and Human Services, most of the American citizenry will eventually need long-term care.
If you are like most people, you cannot easily pay for long-term care out-of-pocket. Costs are rising year-by-year, but the average annual cost for a year in a private room in a nursing home at the present time exceeds $90,000. The average length of stay is over two years.
Many people who never thought that they would need it ultimately rely on Medicaid late in their lives. You may want to take the matter seriously and discuss Medicaid planning with a licensed elder law attorney.
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Ryan M. Denman and Dennis D. Duffy
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