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Medicaid Planning FAQs

Aren’t Medicare and Medicaid the same thing?
No.  There are two important differences.  First, Medicare is a federal program only; Medicaid is a federal and state-funded program.  Second, Medicare is not an entitlement program.  Medicaid, created in 1965 as part of President Johnson’s War on Poverty, was initially to be a health insurance program for low resource and low-income Americans; however, Medicaid has become the largest public or private health insurance program in the United States.  Although Medicaid eligibility rules vary from state to state, they must observe federal minimum standards and guidelines.

Don’t Medicare and Medicaid both pay for nursing home care?
Yes but in very differing amounts.  Medicare (Part A) covers up to one hundred (100) days of “skilled nursing” care per illness. However, the definition of “skilled nursing” and the other conditions for obtaining this coverage are stringent, meaning that few nursing home residents receive the full 100 days of coverage. Hence, Medicare pays for about nine percent (9%) of nursing home care in the United States

Medicaid covers about two-thirds of nursing home residents, one in five persons under age 65 with chronic disabilities (including about 70 percent of poor children), one-third of all births, and half of spending for states mental health services.  This year, about 53 million people use Medicaid.

What is Medicaid Planning?
Medicaid Planning, like Tax Planning, is the lawful means to help protect property of tax-paying citizens.  Many folks have, over the course of their lives, accumulated a home, a vehicle, and other assets; they usually hope and plan that these valuables be used to provide for themselves and other loved ones.

Long-term nursing home care often forces people to liquidate their belongings prior to Medicaid will assist with the expenses of such care.  A year in a nursing home costs about $75,000 nationwide, so it’s easy to wipe out a lifetime of savings.  For some individuals, long-term-care insurance may not be an option.

Assets and monthly income must each fall below certain levels to qualify for Medicaid.  Indiana may count only the income and assets that are legally available for paying bills.  Assets (which may include the family home) and a certain amount of income may be exempt or not counted.

Medicaid planning helps make assets and income inaccessible.  Along with qualifying for Medicaid benefits, Medicaid planning seeks to accomplish the following goals:

    1. Sheltering countable assets
    2. Preserving assets for loved ones
    3. Providing for a healthy spouse (if married)

Do you need an attorney for even “simple” Medicaid planning?
Yes, in most cases.  The social worker at your mother’s nursing home assigned to assist in preparing a Medicaid application for your mother knows a lot about the program, but maybe not the particular rule that applies in your case or the newest changes in the law. In addition, by the time you’re applying for Medicaid, you may have missed out on significant planning opportunities.

Our attorneys meet with both individuals and married couples to explain the Medicaid application process and provide peace of mind.  There are often options available for people, thus allowing them to retain their dignity, sense of worth, and values, as well as the opportunity, while they can, to provide for loved ones.  This can also mean significant financial savings or better care for you or your loved one through the use of trusts, transfers of assets, purchase of annuities or increased income and resource allowances for the healthy spouse.  It is generally never too early to meet with an attorney to take steps to preserve assets.

Medicaid is a welfare program originally created to provide health care to our nation’s poor.  With the help of attorneys, those needing long-term care artificially impoverish themselves in order to qualify and preserve their savings either for their healthy spouse or their children. Is this practice ethical?
Medicaid has become recognized as the long-term care insurance of the middle class. Congress implicitly accepts this result through rules that protect spouses of nursing home residents and permit others to qualify after spending down and transferring some of their savings. To plan ahead and accelerate qualification for Medicaid is no more unethical than planning to reduce or eliminate unnecessary gift, estate and inheritance taxes.

Remember too that Medicaid is not an ideal solution even if you can protect some assets.   Medicaid often comes up short in protecting freedom of choice. You or your parent would probably have to go into a nursing home to receive government-financed care, rather than remain at home, which most people prefer.

 

[1] Sources for these answers include www.aarp.org, www.elderlawanswers.com  www.Kiplinger.com,

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