How To Plan For a Medicaid Crisis

When I relate Medicaid to seniors, I’m talking about special assistance Medicaid or long-term care Medicaid. Paying for nursing homes, assisted living, or in-home care. Medicare will not pay for these types of long-term care.

Medicare would pay for 20 days, and that’s it.

And then who pays? You do.

If you’ve got a Medicare supplement through private insurance, the supplement would pick up and pay for 80 days. So that’s 100 days total that are covered.

After that, you would come in and pay out of pocket.

That’s a scary situation. Because if you have to stay there, then you have to start paying. And the cost can be quite a bit.


What Is A Medicaid Crisis?

According to a Department of Health and Human Services report, as of 2005, there’s a 70% chance that people over 65 will need some type of long-term care during their lifetime.

That’s the reality. That means that you’re going to tap your savings, your retirement savings, and have to start spending that down out of pocket.

People come to me all the time in emergency situations. They’re asking me what to do, because their wife or husband has to go to a nursing home or assisted living facility and they haven’t planned for it. They’re being asked to spend down most of their retirement savings to qualify for Medicaid.

That’s money they’re expected to live on for the next 20 or 30 years. Then they’ll put a lien on their house and take it to satisfy their medical bills after they pass.


Why Paying Out of Pocket a Big Deal?

Home healthcare agents are, on average, $21 an hour across the nation. Assisted living facilities are about $40,000 a year across the nation. And the national average for nursing home facilities is around $76,000 on average.

That’s a lot of money per year. And you could have other costs and incidental costs above that. So if you’re coming out of pocket $75-$100,000 a year to pay for care, that could quickly zap an estate and retirement savings.


When Will Medicaid Pay?

When will they come in and start helping you pay for nursing home or assisted living care?

After you’ve spent most of your money.

Let me tell you about those situations. For a nursing home or assisted living resident, you can keep $2,000 in assets. That’s your resource money. That’s it.

You could keep your home at that time, if you tell them you have an intent to remain in the home or go back to the home, but that doesn’t mean that it won’t be sold in probate to pay the Medicaid lien in the end.

That’s usually how it’s taken. That’s what we want to avoid. Because that gives the family options.

What if you’re married? If there’s a healthy spouse, and one spouse has to go to a nursing home or assisted living facility, the healthy spouse can keep – as of this year – $119,220. That’s it.

Now, some of you might say, well, that’s a lot of money. I mean, if I poured it out on the table, it might look like a lot of money.

But if you’ve got to live for a good, long time, that’s not going to get you very far and provide a lifestyle that you want.

A lot of people are concerned that this is way too low. That you ought to be able to keep more, because you worked for it. You paid into this system.

What about the rest of the money? If you have, let’s say $300,000, and you know that you can save, as the healthy spouse, about $120,000. But your wife or husband is going to a nursing home or assisted living facility.

How do you keep the rest? How do you keep the other $180,000 that you and your spouse worked so hard for?

Medicaid would say, just go spend it down on healthcare, funeral costs, burial plot, headstone. Spend it on your car.

You could spend it making your house more handicap accessible. You’re putting in a ramp, maybe bars in the bathroom, roll-in showers.

You can prepay utility bills. You can prepay hair appointments for a year. My mom did that for my grandmother.

If you have a special needs family member, we could give 100% of that to a trust for that family member, and save 100% of the cash assets. That’s another way to do it.

But I think there’s more attractive options than to give up control of that money.


Keep Control of Your Retirement Savings

What about keeping it to live on? And keeping it so that you can have that for retirement?

Well, we can use legal and financial tools, so that you keep the rest. In the married couple situation, with the healthy spouse, we can generally keep 100% of the cash assets.

The reason I say “around 100%”, is because with IRAs and 401ks, there could be some tax consequences. But those are generally offset, for the most part, by the healthcare expenses that year.

In a single person situation, where’s there’s no spouse, we can keep 50 to 60% of the cash assets and sometimes most or all just depending on the situation.

Medicaid will come in and pay for long-term care for you and your spouse. We work with families all the time to make that happen. We also want to look at saving real estate.

Pass it outside of the probate estate, directly to your loved ones, say your children. The last of your money passes, and you stay in control of it during your life.

That’s only in emergency situations, where you’re a nursing home now – or headed there quickly. And the family comes to me and says, “What are we going to do? We can’t afford this healthcare for very long? How can we position ourselves so our money goes the farthest and mom gets the best care?”

That’s the situation I’m talking about. If you just go to social services, they’re going to tell you to spend all your money. They are just going to tell you what the law is.

We work with those social workers all the time, and they’re experts. They help us do what we do.

But they’re not attorneys. They can’t give you legal advice.

You want to avoid getting in that situation where we just go to social service, and we’re told that we have to spend everything, and then it’s gone.

There are legal tools that can help you save you protect your savings, your home, and your assets.

If you’re in a Medicaid emergency crisis situation, where somebody is going to a nursing home or assisted living facility or has recently gone there and the money’s being spent down very rapidly, then see an elder law attorney immediately. They can explain your options and help you in your time of need.

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Greg McIntyre, JD, MBA

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Greg McIntyre, founder of McIntyre Elder Law, is more than just an attorney. As a Navy Veteran, father to six kids, and a loving husband, he values family deeply. This drives his commitment to helping clients safeguard their futures and pass down legacies.

Greg has a passion to help people. Beyond just legal advice, he loves having conversations and strives to build a long-term relationship with every clients that comes through his door.

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