Q. I recently came across an article on CNBC.com where I saw you were quoted as an expert. I’m confused about something in the article, and I’m hoping you can clear it up. It’s an article about the expenses of long-term care and the importance of planning in advance for long-term care, and it only talked briefly about Medicaid, where it says, “(l)ow-income adults may qualify for Medicaid, but that requires a “lookback” which considers assets held in the last five years.” That makes it sound as though you must have low income to qualify for long-term care Medicaid. But, our parents did Level 4 Medicaid Asset Protection with your firm for our mom (and are about to hire you to do it for our dad, who is in assisted living but is soon going to need nursing home care) and Mom was not low income … our parents are middle class and our mom has about $3,500 a month of income. Our dad has even higher income of over $5,000 a month, so we are hoping that the law hasn’t changed and that you can still get our dad on Medicaid and protect some or all of his remaining assets. Our parents just wanted to protect the family’s assets from being all spent to pay for long-term care, since nursing home care is so expensive, and your firm successfully protected all of their assets and got our mom on Medicaid despite her monthly income. Also, a couple of months ago my sister and I tuned in to one of your monthly webinars in preparation for our upcoming meeting with you about our dad, and I am pretty sure I recall you explaining that long-term care Medicaid is not just for people with low income. I feel like I’m misunderstanding something. Are there different kinds of Medicaid? Is the article wrong? Did the laws recently change? Thanks, as always, for your help!
A. Thank you for your question, and we look forward to working with your family again to protect a large percentage of your father’s assets, just as we did when we got your mother on Medicaid and protected all of their assets in the process. The CNBC article you are referring to is ”Inflation drives long-term care costs even higher. Here’s how planning ahead can help families afford it.”
What is mentioned in the quote you cited about having to have low income to qualify for long-term care (LTC) Medicaid is a VERY common misconception, sadly even among highly educated journalists. To most who read it, it does sound as though you must have low income to qualify for LTC Medicaid, but this is simply not true. The low-income requirement is only for health insurance Medicaid, a completely different type of Medicaid.
It’s vital to understand that the type of Medicaid we help get for our clients is LTC Medicaid, often called “middle-class Medicaid.” This type of Medicaid does not require that the applicant have low income. This misconception is so common that even the article where I was interviewed got it wrong.
And no, the laws have not recently changed in this regard. There are frequent law changes and rule changes with regard to LTC Medicaid, but the income requirement has been the same for many decades.
The income requirement for LTC Medicaid is simply that the Medicaid applicant’s income (most of which must be paid to the nursing home as what is called “patient pay”) must be lower than the cost of the Medicaid applicant’s care. As an example, if a Medicaid applicant is in a nursing home that costs $12,000 per month, the Medicaid applicant could have income of say $8,000 per month from Social Security and pension and still get Medicaid because most of the Medicaid applicant’s income must be paid to the nursing home, with Medicaid paying the remainder of the monthly nursing home bill up to the Medicaid reimbursement amount for that nursing home. If the Medicaid applicant is married, often some of the Medicaid applicant’s income can be shifted to the healthy spouse. That’s how it works in about half of the states, including Virginia, Maryland, and DC.
The other half of the states are called “income cap” states, which also confuses people because this term makes it seem as though you must have income below the income cap to get LTC Medicaid, but again this is simply not true. If you live in an income cap state and apply for LTC Medicaid, your Elder Law attorney will simply need to set up a Miller Trust, also called a Qualified Income Trust, to receive the amount of the Medicaid applicant’s monthly income that is in excess of the state’s income cap. The Miller Trust will accumulate all of this “excess income” until the death of the Medicaid applicant, at which time the amount in the trust will be used to pay back Medicaid.
The Difference Between Long-Term Care Medicaid and Health Insurance Medicaid
Medicaid was created in 1965 as part of President Lyndon B. Johnson’s War on Poverty,\ and provides health and long-term care services for seniors in need, pregnant mothers, low-income individuals, and people with disabilities.
Health Insurance Medicaid is the nation’s public health insurance program for people with low income. Our firm does not deal with this type of Medicaid, and more information can be found here. These are a few bullet points for clarification purposes:
- The vast majority of Health Insurance Medicaid enrollees lack access to any other health insurance because of their low income;
- Despite their low income, Medicaid enrollees experience rates of access to care comparable to those among people with private health insurance coverage.
Long-Term Care Medicaid was designed for people who can qualify for it, which includes many middle-class and even upper-class seniors. When a loved one needs long-term care, Medicaid is the single largest payor of nursing home care costs because so many people can’t afford to cover the costs themselves. It is often imperative to the individual’s quality of life. These are some important things you should know about LTC Medicaid:
- Medicare does not pay for long-term care. Seniors can never use Medicare to help pay for long-term care, as Medicare simply doesn’t cover long-term care. Medicare will pay for short-term rehabilitation in a skilled nursing facility and for acute needs such as cancer care or heart surgery but not chronic care for stroke victims or for those with dementia or a long-term debilitating illness such as Parkinson’s.
- With DC Metro area nursing homes often costing $14,000 – $16,000 per month, even wealthy people and those who spend their lives saving can quickly lose everything.
- Many rely on long-term care Medicaid to cover the catastrophic costs of nursing homes so families similar to yours don’t have to completely deplete the assets it took a lifetime for them to earn.
- To qualify for Medicaid, applicants must have minimal assets — no more than $2,000 in cash and cash equivalents. For married couples, the spouse staying at home may potentially have assets worth an additional $137,400, the Maximum Community Spouse Resource Allowance for 2022.
- It is illegal to treat Medicaid patients differently than private-pay patients, and it is illegal to discriminate against Medicaid patients. Typically, the staff does not know which patient is a Medicaid recipient.
- Medicaid does have limits on how much a person or a married couple can have in the way of countable assets, but there are dozens of legal and ethical strategies to shelter assets so that they are not “countable” in connection with long-term care Medicaid eligibility.
- The laws (including regulations, rules, and policy) surrounding Medicaid are the most complex laws in our country. This is why it is crucial to work with an experienced Elder Law firm such as the Farr Law Firm to help your family legally and ethically protect assets and obtain Medicaid benefits, should the need for nursing home care arise.
- For a married couple, our firm can protect 90 percent to 100 percent of the couple’s assets and obtain Medicaid for the nursing home spouse. For an unmarried individual, our firm can protect 40 percent to 100 percent of the person’s assets and obtain Medicaid.
- 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 percent legal and ethical. Please read our web page on Why Medicaid Planning is ethical to learn more.
To reiterate, long-term care Medicaid planning is not something reserved for the wealthy. This type of planning is done by people of all financial means — smart people do not want to be “taken” by the unfair health insurance system that discriminates against people who have illnesses or diseases that require long-term care versus traditional health care.
According to Ron Lieber of The New York Times, “(w)e assume, incorrectly, that Medicaid is only for the younger poor or those with disabilities and that Medicare will pay for most nursing home care … When the first nursing home bills arrive, most people can’t pay … and certainly not for long, especially after 10 or 20 years of retirement spending. Ask around. Someone you know has quietly faced these facts and probably turned to Medicaid. Chances are, you, a family member or a close friend will someday, too.”
Planning for Long-Term Care
Do you have a loved one who may need long-term care in the not-so-distant future? When it comes to planning for long-term care, Medicaid Asset Protection Planning can be started while your loved one is still able to make legal and financial decisions or can be initiated by an adult child acting as agent under a properly-drafted Power of Attorney, even if your loved one is already in a nursing home or receiving some other type of long-term care. In fact, the majority of our Level 4 Lifecare Planning and Medicaid Asset Protection Planning clients come to us when nursing home care is already in place or is imminent. To plan for long-term care, please call us to make an appointment for an initial consultation:
Elder Care Rockville: 301-519-8041
Elder Care Fairfax: 703-691-1888
Elder Care Fredericksburg: 540-479-1435
Elder Care DC: 202-587-2797
About Evan H Farr, CELA, CAP
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