Financial Planning: Understanding Medicaid

"Money money money" by Andrew Horowitz

by Kim Keller

I never imagined my father would need to be in a nursing home. The idea was profoundly sad but Karen and I realized that our mother could no longer manage Dad’s care at home, not even with help.

But there was yet another looming disaster: how would our parents pay for this care? They had no long-term-care insurance plan. Their money would be gone soon, as a consequence of Dad’s medical bills. Where would that leave him? And where would that leave our mother who still had a lot of living left to do?

It quickly became evident that we needed to understand our options and develop some sort of financial plan, in case our parents ran out money.

That’s when the nursing home gave us a crash course in Medicaid, a government program that provides health benefits to people with low incomes and limited assets, and who also have some other type of qualifying factor, such as age or disability.

Medicaid can be used for long-term care in a nursing home, for in-home care, and for assisted-living facilities in some states. It will also handle many of the healthcare costs that Medicare does not.

Although our parents didn’t qualify for Medicaid, and Dad passed away shortly thereafter, we were grateful to acquire a better grasp of our options, which may include Medicaid at some future date.

Here’s some essential information about Medicaid eligibility requirements:

Where Is Eligibility Information Located?

Qualification information is posted online for each state, and you can also call Medicare’s toll free line, 800-633-4227, to ask for the Medicaid phone number in your specific state.

Basic Guideline for Eligibility

Medicaid eligibility varies by state, but people who qualify for Supplemental Security Income (SSI) will usually qualify for Medicaid. There is an income limit, known as the Federal Benefit Rate, which currently stands at $710 per month for individuals and $1,066 per month for couples. Of course, the eligibility requirement is not that straightforward, so take a look at “Understanding Supplemental Security Income” from the Social Security Administration’s website to get more information.

What Information Will Medicaid Review?

Medicaid will look at all of your parent’s income and assets. Usually Medicaid will want the following information: current bank statements for both checking and savings; mortgage or rental information; car ownership information; life insurance policies; income verification; medical bills; information about pensions, investments, loans, rentals, veteran’s benefits; proof of citizenship and age.

How Far Back Will Medicaid Go?

Medicaid may look at your parent’s records for the past five years. In particular, Medicaid is exploring any transfer(s) of your parent’s assets for less than fair-market value.

Exempt Assets

Medicaid considers certain assets “exempt resources.” For example, your parent can have a home with an equity value of less than $500,000 (up to $750,000 in some states), if your parent, your parent’s spouse, or a dependent child lives at that residence. Also exempt: an automobile, some personal belongings and furniture, term life insurance. and an irrevocable burial policy.

Reimbursement

Once your parent has passed away, the state will seek reimbursement for any benefits it has paid out. The state cannot go after your parent’s home, if your parent’s spouse or dependent child still lives in the house. A sibling would also have the right to continue living in the home if he or she has an equity interest and lived in the house at least a year before your parent went into the nursing home. It is vitally important to understand the state rules before your parent becomes dependent on Medicaid.

Application Processing

Medicaid is supposed to respond to all applications within 45 days. If your parent’s application is accepted, then coverage is retroactive for the three months prior to the filing of the application.

Although 7 out of 10 nursing home residents are on Medicaid, it’s important to note that not all facilities will accept Medicaid payments. Therefore, if you suspect that your parent may need to consider this option at some point, then be sure to find a Medicaid-certified nursing home. This terrific booklet called Your Guide to Choosing a Nursing Home (PDF) is a valuable resource for learning more about selecting a nursing home, as well as better understanding how Medicaid works.

 

Kim Keller is the Co-Founder of In Care of Dad. She lives and works in New York City.

The photo titled “Money Money Money” was taken by Andrew Horowitz.



Leave a Reply