Blog Series Part 2: Medicaid and Long Term Care 101

By | Elder Law, Estate Planning

In Part 1 of this series, we described the most common ways to pay for long term care in a nursing home, namely long term care insurance, personal income/savings, and Medicaid.  According to a policy brief published by the University of Pittsburgh in 2013*, the Pennsylvania Medicaid (or Medical Assistance) program currently carries the burden of 65% of the total cost of nursing home care provide in the state.  Each state administers its own Medicaid program and has its own unique eligibility rules in order to qualify.  The basic eligibility guidelines for Pennsylvania (in 2015) are described below:

  • A person must meet ALL financial and non-financial eligibility requirements in order to obtain Medicaid benefits for nursing home care.
  • The 4 basic Non-Financial Eligibility Requirements are: 1) A doctor must complete a form attesting to the fact that you have a medical need for long term care, 2) You must be a U.S. citizen or a qualified non-citizen, 3) You must be a resident of Pennsylvania, and 4) You must have a Social Security number.
  • Financial Eligibility is based on an analysis of two things: Income and Resources.  In a nutshell, if BOTH your income AND resources fall below a certain threshold, and you meet the all of the other applicable eligibility criteria, then Medicaid will cover the cost of nursing home care above and beyond what you can pay on your own.
  • How is income counted?
    • Most income is counted, including Social Security, pensions, investment income, IRA withdrawals, etc.
    • Income Limits: For a single person, if your monthly income is below 300% of the Federal Benefit Rate you are automatically income qualified.  Currently, that amount is $2,163/month.  If your monthly income is higher than that, you may still be considered Medicaid eligible if your medical expenses offset your income to bring it down to a limit of $2,550 (currently).  Many people with higher incomes are still able to qualify for Medicaid because the cost of care in a nursing home is considered a deductible medical expense, thus bringing them below the income eligibility threshold.  Different rules apply for married applicants, which will be discussed in a later blog post.
  • How are resources counted?
    • Examples of resources counted for eligibility purposes include bank accounts, stocks, IRA accounts, vacation property, and the cash value of life insurance. Examples of resources which are NOT counted include the value of your home if it is less than a certain amount and you intend to return home or your spouse lives there, one motor vehicle, all burial spaces/plots, and burial reserves subject to specified limits.
    • Resource Limits: If your income is $2,163/month or lower, you currently are allowed to retain up to $8,000 in resources.  If your income is higher than $2,163 (regardless of medical expenses), you are only permitted to retain $2,400 in resources.  Many people pay privately for long term care until their resources fall below the limits, and then apply for Medicaid.
    • The Look-Back Period – At the time you apply for Medicaid you must report any assets that you transferred, sold or gave away within the past 5 years/60 months. If the Department of Public Welfare determines that you gave that asset away for less than Fair Market Value, your application may still be approved, but a “penalty period” will be assessed before your benefits can begin.  This can be devastating to both the applicant and/or their family because often times the asset which was given away is now depleted or unavailable, leaving no cash to cover the private cost of nursing home care until the penalty period ends.

How the Medicaid application process works for married applicants will be discussed in subsequent posts in this series, as well as how to preserve assets without running afoul of the Look-Back Period.  If you would like more information in the meantime, contact Yardley Estate Planning, LLC where you can come in for an elder care consultation, explore your options and develop a prudent plan for paying for care.

This blog post was originally created by Joellen Meckley while she served in an “Of Counsel” position in our firm. While she no longer does that, we do maintain a  professional relationship and if you have any Elder Law needs, I’d recommend you reach out to her firm Meckley Law. If you need Estate Planning, please reach out to us.

Blog Series Part 1: Paying for Long Term Care in Pennsylvania

By | Elder Law, Estate Planning

Part 1 – Three Options for Paying for Nursing Home Care

The average annual cost of care in nursing home in Pennsylvania is currently a little over $100,000/year. It is no wonder that a common fear among older adults is that they will end up in a nursing home and leave their spouse in the community destitute or pass away without any inheritance to leave for their children. Knowledge is power in any situation, so the first thing one needs to understand in this situation are the basic options available to pay for nursing home care.

First, to dispel a misconception, Medicare Part A (not to be confused with Medicaid) does NOT pay for long term custodial care in a nursing facility. Medicare will partially cover the cost of up to 100 days of skilled nursing care and rehabilitation, if the recipient meets certain strict eligibility criteria. But note, Medicare never pays exclusively for what is called “custodial care,” like help with bathing, dressing, or caring for oneself.

So what are the basic options for paying for long term care in a nursing home? One option is Long Term Care Insurance, if you are fortunate enough to have a policy in place. However, many individuals did not have the foresight or could not afford to purchase a policy when they were younger and premiums were more reasonable, thus few people can rely on this payment option. Another option for covering the cost of long term care is the most obvious one – using a combination of income and a gradual liquidation of your assets to the cover the cost of care. While this is certainly a straightforward approach, at a cost of approximately $100,000 a year, most people will quickly deplete whatever assets they own. If the nursing home resident is married with a spouse living in the community, this option is particularly devastating due to the rules dictating what assets may be retained by the community spouse versus which must be used to pay for the institutionalized spouse’s care.

Last is the Medicaid program, also known as Medical Assistance in Pennsylvania. Medicaid is the fundamental financial safety net for most individuals facing long term care in a nursing home. While the availability of Medicaid is a godsend for many needing care, it also has very complex set of financial qualification rules and the potential pitfalls are numerous, especially for those with a community spouse or those who were lucky enough to have certain assets prior to entering the nursing home. Many try to take steps to try to protect those assets without consulting with an elder law attorney knowledgeable about Medicaid Planning, which if done incorrectly could result in a denial of benefits and stiff financial penalties.

Subsequent parts of this Blog Series will focus primarily on how the Medicaid application works, how to submit a successful application, and the potential planning options available to protect and preserve your assets for loved ones so it’s not all lost to the nursing home. If you would like more information in the meantime, contact Yardley Estate Planning, LLC where you can come in for an elder care consultation, explore your options and develop a prudent plan for paying for care.

This blog post was originally created by Joellen Meckley while she served in an “Of Counsel” position in our firm. While she no longer does that, we do maintain a  professional relationship and if you have any Elder Law needs, I’d recommend you reach out to her firm Meckley Law. If you need Estate Planning, please reach out to us.

Ask an Elder Law Attorney – What can I do if my elderly parent is losing the ability to make decisions and manage his or her affairs?

By | Elder Law, Estate Planning | 2 Comments

Ask an Elder Law Attorney – What can I do if my elderly parent is losing the ability to make decisions and manage his or her affairs?

By Joellen Meckley, Esq.

Here are three things you should keep in mind:

  1. The best time to plan is now. Oftentimes, mental decline in old age does not happen suddenly, it happens gradually. The signs can begin to show in subtle ways, such a noticing your mother isn’t paying her bills or has bounced a check or noticing that your father’s personal hygiene has begun to decline. Don’t ignore those signs, because the best time to plan is when your parent is still relatively healthy and competent. Planning can always be done, but the longer you wait, options become more limited.

 

  1. These conversations are often difficult. Older adults are no different from the rest of us – some are more resistant to change than others and it can be difficult to raise this subject. If you as a child are worried that your relationship with your parent may be damaged by raising these issues, a subtle approach may work best. Consider relating what a friend is going through with her own elderly parents and use that as a spring board to raise the issue of how you’re worried about what to do if it ever happens to them. Many elderly parents don’t want their children to feel burdened and will be more motivated to address certain issues if they see the potential negative impact their problems could have on their adult child. If there are siblings involved, try to reach a consensus beforehand. A united front can be more effective.

 

  1. A range of options are available based on existing mental capacity.   Depending on how receptive the parent is, the first step is generally to meet with an elder law attorney who can lay out the options. Hopefully the parent still has some capacity in decision-making and can dictate what he or she wants. They can then be walked through the process of appointing financial and health care powers of attorney, which saves the process of going through court to have a legal guardian appointed. An elder law attorney also can lay out common techniques that can be employed or pitfalls to be avoided when managing the affairs of an aging parent, as well as putting you in contact with a wide range of support resources in the community who are available to help in such a situation such as geriatric care managers, home health agencies, and daily money managers.

 

Throughout the process, don’t forget that remaining as independent and autonomous as possible may be critical to your elderly parent’s long term well-being and happiness. Obviously, safety and independence must be balanced and decline often continues. However, taking the time to recognize their dignity and promoting independence whenever possible can go a long way in sustaining their quality of life into the future.