Medicare vs Medicaid And Other Issues Concerning Nursing Home Expenses

Many people think that Medicare will cover their long-term care if they need to go into an assisted living or skilled nursing facility, however that may not be the case.

What Does Medicare Cover?
Medicare will pay for rehabilitation in a skilled nursing facility if the individual is transferred to the skilled nursing facility after spending three nights in a hospital. It will cover up to 100 days of coverage per year.

What Does Medicare Not Cover?
Although Medicare will cover up to 100 days of skilled nursing care after an individual spends three nights in a hospital, this coverage will stop as soon as the nursing home determines that the individual is no longer progressing in rehabilitation. At that point, whether or not the individual needs continued care, the patient now has the option of either private pay or applying for Medicaid.

Long-Term Care Costs:
The average long-term care or skilled nursing facility in Colorado now costs an average of $6,500 per month. This amount varies depending on the region and the care facility. Due to this high cost, many people end up needing Medicaid to supplement the cost of their care.

Qualifying for Medicaid:
Medicaid is by definition a poverty program. However, with the high cost of skilled nursing care, many people become eligible. In order to qualify as an unmarried individual for Medicaid, the total “countable” assets must be under $2,000 – $3,000 for a married couple who both need to qualify. If there is only one spouse entering skilled nursing care, the spouse staying in the home (community spouse) may have “countable” assets up to $109,560 for the year 2011. There are assets that are not “countable” when qualifying for Medicaid. For example, the home that you live in is not a countable resource. There are also other various uncountable resources.

The Look Back Period:
In this day and age, there is not a lot of things people can do in order to become qualified for Medicaid by transferring assets out of their estate prior to going into a skilled nursing facility. There is a five-year look back period. Medicaid assumes that anything and everything that an individual has given away in the past five years was done solely to qualify for Medicaid. This is a rebuttable presumption. If Medicaid sees that you have for example given your child a significant amount of money within this time period, this will be held against the individual giving away that money, and there will be a penalty approximately equal to that transfer.

Possibilities For Medicaid Planning:
Really, the only way to plan for Medicaid is to give away assets at least five years prior to entering a nursing home. This is difficult to do mostly because people do not know that far in advance that they will, in fact, need skilled nursing and most people do not want to give away their property.

One way to effectively plan for Medicaid is to create an irrevocable trust five years or more before needing skilled nursing assistance. The irrevocability of this trust means that the person creating the trust has given up all control of their assets and can never get them back. Although the trust would name the person (people) creating the trust as beneficiaries, one of the requirements is that the trust may not be obligated to make distributions. Also, the creator(s) or settlor(s) of the trust may name their trustee. This trustee may not be the settlor but may be the settlor’s child. But again, this child trustee is not ever obligated to make distributions for the benefit of the settler(s). This can work for some families, but many people feel uncomfortable giving away and giving up any power over the assets that they have worked long and hard to create.

Spending Down In Order To Qualify For Medicaid:
After it is determined that the individual or both spouses will be in need of Medicaid most likely at some point in the near future, assets may be spent down in order to qualify. Again, the rules still apply regarding giving assets away. So the way to spend down is to buy anything and everything (within limits) that the individual may need now or in the future. This is the time to buy the hearing aids or new wheelchair. This is also the time to purchase the assets that are not “countable” for Medicaid purposes.

There are some transfers of property that are allowed. For example, if one spouse is on the title to the house and this is the spouse that will be under skilled nursing care, the spouse can certainly transfer the house to his spouse, who will not need skilled nursing care at least at that time. There are additional transfers that are allowable for Medicaid purposes

Consult An Elder Law Attorney
For additional information and counsel regarding Medicare, Medicaid, and other benefits for seniors consult with an elder law attorney. Our firm offers free consultations and the availability to meet outside of the office in the comfort of your home. Contact us today.