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.

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.

2. 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.

3. 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.

Joellen Meckley, of Yardley Estate Planning, explains what an Elder Law Attorney is.