Q. I was taking my daily exercise walk the other day when I ran into a neighbor who said that his wife with dementia recently qualified for Medicaid and will be entering a nursing home next month. I live in a somewhat affluent neighborhood in Burke where houses go for half a million dollars. This couple worked most of their lives at decent jobs, raised three college-educated children, and have two nice cars. There is no way they can be poor enough to qualify for Medicaid. Can you explain? And if they do qualify for a government program meant for poor people, how is it ethical?
A. Medicaid was designed for the poor during Lyndon Johnson’s War on Poverty and still serves as a program for millions of low-income Americans. But it also benefits many middle to upper class seniors, primarily by covering the catastrophic costs of nursing-homes so families like your neighbors don’t have to deplete the assets it took a lifetime for them to earn.
Nursing homes in Northern Virginia cost $12-$15,000 a month. Many people assume that Medicare will cover long-term care, but at most it covers 100 days of rehabilitation, and does not cover help with activities of daily life, like eating and bathing, that the aged can need for years. With baby boomers and their parents living longer than ever, few families can count on their own money to go the distance. Stagnant incomes, declining savings, and rising debts make the costs of long-term care an increasing threat to the security of current and future middle-class families.
Did you know that only a small percentage of people are covered by private long-term care insurance? As we age, medical care will only get more expensive, and for many of us, the cost of long-term care will outstrip our families already stressed financial resources. This is why, for many seniors over the age of 65, Medicaid is the main way we finance long-term care in this country.
Medicaid is the primary payer for more than a million nursing home residents (Source: Forbes/AARP). And these aren’t the indigent –many of them are the result of middle-income people who have already run through their own money paying for their nursing home costs, and then become eligible for Medicaid. Why wait for that to happen? Life Care Planning and Medicaid Asset Protection is the process of protecting assets from having to be spent down in connection with entry into a nursing home, while also helping ensure that you or your loved one get the best possible care and maintain the highest possible quality of life, whether at home, in an assisted living facility, or in a nursing home. Life Care Planning and Medicaid Asset Protection can be started any time after a person enters the “long-term care continuum,” meaning that a person is starting to need assistance with Activities of Daily Living (eating, dressing, bathing, toileting, transferring, and walking) or Instrumental Activities of Daily Living (such as cooking, cleaning, caring for pets, paying bills and managing finances).
Congress accepts the realities of Medicaid Planning through rules that protect spouses of nursing home residents, allow Medicaid Asset Protection via the purchase of qualified Long-Term Care Insurance policies, allow the exemption of certain types of assets, and permit individuals to qualify even after transferring assets to a spouse or to a disabled family members or to a caregiver child. To plan ahead and accelerate qualification for Medicaid is no different than planning to maximize your income tax deductions to minimize your income taxes. It is no different than taking advantage of tax-free municipal bonds. It is no different than planning your estate to avoid estate taxes.
To qualify for Medicaid, applicants must have minimal assets–no more than $2,000 in cash and cash equivalents such as bonds and IRAs. For married couples, the spouse staying at home may have assets worth an additional $115,920, the annually adjusted Social Security cap for 2013. Does this mean that if you need Medicaid assistance, you’ll have to spend nearly all of your assets to qualify? No — there are dozens of Medicaid asset protection strategies that can be employed with the help of a Certified Elder Law Attorney, such as Evan H. Farr.
Money that is protected through proper planning can be used to:
• provide a nursing home resident with an enhanced level of care and a better quality of life while in a nursing home and receiving Medicaid benefits.
• to purchase things for the nursing home resident or disabled child that are not covered by Medicaid — such as special medical devices, upgraded wheel chairs, etc.
• can be left to your children or grandchildren, particularly if there is a disabled child or someone who needs special financial help.
You asked if Medicaid Planning is ethical. If you or a loved one become a client of the Farr Law Firm, you may rest assured that everything that we do is absolutely, unquestionably, 100% legal and ethical. Attorneys in general have the highest ethical rules of any profession, and as a member of NAELA and a Certified Elder Law Attorney, we and our Elder Law colleagues subscribe to the NAELA Aspirational Standards for the Practice of Elder Law, which articulate ethical standards that raise the level of practice above the floor established by the basic rules of professional conduct. See http://www.naela.org/pdffiles/AspirationalStandards.pdf. Read more on our website about Why Medicaid Planning is Ethical.
To discuss strategies specific to your situation, please call 703-691-1888 to make an appointment for a consultation at The Fairfax Medicaid Protection Law Firm of Evan H. Farr, P.C.
Copyright 2013 Farr Law Firm, P.C. All rights reserved. Ask permission to use any portion or reprint article.
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