When to Begin Applying for Medicaid

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No one enjoys thinking about the prospect of one day requiring long-term care, but the reality is that as the average lifespan stretches and Americans are living longer, the need for long-term care is increasingly becoming an issue for the aging. Adult children wishing to assist their aging parents often wonder where to go for this advice. Even gathering the information ahead of an emergency situation can be a bewildering process.

About 70 percent of Americans 65 and older will require long-term care of some kind, according to a study by the U.S. Department of Health and Human Services. Long-term care is not one size fits all. Depending on the level of care and, in some cases, the preferences of the individual, there are many types of care to explore including: skilled nursing, assisted living or in-home care.

Just to give you an idea of the typical cost of these categories of care, here are some 2015 national averages to consider:

  • Nursing home (semi-private room): $80,300 per year
  • Nursing home (private room): $91,250 per year
  • Assisted living (one bedroom): $43,200 per year
  • Home health aide: $20 per hour

(Bear in mind that in large cities, such as New York or Boston, the cost of nursing home care will usually be closer to $100,000 annually.)

As demonstrated by these numbers, an individual's entire life savings can easily be wiped out in a relatively short time. Unfortunately, the options for defraying the cost of long-term care are few:

Insurance and Medicare: Insurance companies cover standard health care and do not cover the need for long-term care. One cannot rely on Medicare to step in and foot the bill of long term care, either. Medicare, in most instances, will only cover the first 100 days of an individual's rehab stay at a nursing home. Even then, only the first 20 days will be fully covered, followed by 80 days of partial payments along with a co-pay.

Long-term care insurance and Medicaid: Generally speaking, those not eligible for Medicaid are encouraged to consider long-term care insurance at the age of 50, according to Jeffrey Condit, Senior Vice President and AARP Relationship Leader for Genworth Financial. There are several reasons for this, the most obvious being the low cost of premiums when an individual is middle aged and enjoying good health.

The average cost of long-term care insurance for a healthy 55 year old is about $2,550 per year, but it can range from approximately $1,325 per year to $4,935 per year, according to the American Association for Long-Term Care Insurance. It goes without saying that this cost will increase exponentially as the insured individual ages, and also does not include any other insurance premiums that a person must pay for regular health care. This leaves long-term care out of reach for many middle income Americans. Contrary to popular misconception, Medicaid is not designated only for the poor. Through Medicaid, many middle income Americans can gain access to long-term care choices that would otherwise be unaffordable to them.

With the proper knowledge and planning, many individuals can be eligible, and it can be a good idea to reach out to a competent consultant for guidance.

When is it a good time to begin thinking about applying for Medicaid?

Ideally, one should begin thinking about the application process five years in advance of anticipated long-term care. This will allow for asset preservation prior to the five-year ‘look back'. This is the term Medicaid uses to describe the 60 month period where they will look to uncover any transfers of assets for less than fair market value, and will impose a penalty period of ineligibility based on those gifted monies.

It is important to note that individuals with certain illnesses may need to plan earlier than others in case they need long-term care. Some of the illnesses that may result in an extended nursing home stay include dementia, diabetes, renal failure, some types of Parkinson's and some forms of cancer.

Once the prospect of nursing home care is imminent, for a single person it is generally best to begin thinking about the Medicaid application when ones assets are down to $100,000. A married couple should begin the process no later than when their assets are down to $240,000.

This amount gives the Medicaid applicant sufficient time to gather necessary documents and to spend down some assets on allowable expenses such as a pre-paid funerals and other expenditures. This will also allow for a smooth application process and greater peace of mind for the family. It is a subject many families find difficult to discuss, but knowing that plans have been made and they are compliant with personal wishes brings comfort.

Being properly informed and educated on Medicaid eligibility guidelines is really all it takes to ensure that the cost of your care is addressed and does not fall on your loved ones. Waiting until it is needed or procrastinating on this decision can complicate the issue even further. Using planning guides and discussing with family and close friends can assist in the decision-making process.

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7 Comments

Crumbs--You are not whining! In fact, if you feel as I do, I need a place to vent. I try not to, but I would love to talk (type) to someone and just let it all out! I can’t do this with my daughters or my friends. In truth, they love me, they say they understand…but they do NOT. Only those of us who are in these types of situations can truly understand. I took care of my parents (both passed) and I realize that only those of us who are taking care of spouses can truly understand this concept as well. I know the feeling of being the person who works all day, comes home to fix dinner, clean up, be the chambermaid only to go to bed exhausted, waking up the next day and starting all over again. Then, the maintenance of the home, vehicle, groceries, outdoor cleanup. It’s really too much isn’t it? I hear this all the time and my eyes roll (secretly), but you really must take some time for yourself. Even if it is only for a few hours (4 hours is the best!). Your husband will not like you leaving for any length of time, but it is a must. Through friends, you can find someone to come in to stay with him or maybe one of your friends will take a 2 hr stint. Combine a couple stints and you’ll have your 4 hr. respite. As far as assisted living…I found that there are many restrictions. I don’t know about Texas, but it’s best that you find out now. In Ohio, most of the ALF require that your private pay for two years before they will take Medicaid vouchers. A note to you from my recent experience, if you have private homes that are state certified for nursing home and assisted living care, look into these. The home that my husband resides is absolutely wonderful. Only 7 residents and the most compassionate dignified care that a person could receive. Certainly not what you find in an ALF or NH. Sorry, but these people are just overworked and underpaid. They are only human after all. Lastly, please seek financial assistance through Medicaid and/or Veterans Affairs if you haven’t done so. Don’t wait until you are financially exhausted. When/if you qualify, it takes months (and months) for you to receive the money to help.
I'm beginning to think the question is not how to get Medicaid because if one qualifies, you're okay. The question now should be the different levels of what I understand Medicaid will pay for.

Apparently, there are three levels...i.e., Skilled Nursing Facility (where patients are allowed some freedom to go wherever they wish if they're in their wheelchairs (apparently, these places are not allowing elders to walk unattended for fear of lawsuits, so our elders are now consigned to their wheelchairs because of fall risks) Not all people in Skilled Nursing Facilities are unable to walk. Dementia has taken hold and they are unable to function properly at home without some sort of supervision that more and more people are unable to give at home.

I've been told Medicaid does not pay for Assisted Living, which is one step up from Skilled Nursing Facility. Then, you've got Memory Care. All three are dealing with the number one problem facing this country, our people are living past the age of 90 at a time when dementia almost always takes over. To be consigned to a wheelchair when you should actually be in memory care where they are allowed some mobility is, to me, a cruel way to treat someone who qualifies for Medicaid but can't afford that one step up.

It's cruel. It's not humane.

And I do not know of anyone who can afford these fees and I'm upper middle class. If my mother had the money (if I had the money!) I'd definitely assume the responsibility, but I don't, neither does she. Fifty five hundred dollars a month is a lot to pay to be able to have the ability to walk on your own or even with a walker.
Hi Litldogtoo (love the name!) -- Whether Medicaid pays for Assisted Living may depend on your state. In my state (Washington) Medicaid will pay for AL, but only for certain facilities, and that list changes regularly. I've found the best way to get a current list is not to contact the state directly, but to work with the elder assistance agency in your area. They will know the buildings that are taking Medicaid and also will be able to give you more information about the buildings themselves (which ones have good/bad food, overly restrictive rules, etc -- for instance I was able to find out from the local area on aging counselor that one building I had been considering for my parents had a bad reputation for kicking people out without ceremony as soon as they showed signs of dementia or became too demanding in terms of their needs for the staff to handle).

To qualify for Medicaid support of an ALF (in Washington anyway), the financial requirements go beyond having assets and income below a certain threshold; Medicaid also determines what percentage of their Social Security income is "available" to put towards paying for their ALF rent/care fees. (At this point I don't know what factors they consider.) Also, a resident must meet certain requirements in terms of their needs for assistance with activities of daily living. Unfortunately, they also (I've heard - haven't been able to confirm it yet) only provide Medicaid to current residents who have lived in their building on private pay or long term care insurance for one or two years -- which, because it's so expensive, leaves out the very vulnerable people that Medicaid was designed to keep out of impoverishment and homelessness. The alternatives are not very appealing.

The lesson: if you are 50 or older, buy long term care insurance while you are healthy. It's well worth the cost. And sock away some money, because based on our experience, even the most Cadillac of LTC plans will likely have long and expensive exclusion periods (in our case, the first 100 days) and donut hole periods (in our case, the first 6 months after 3 full years of coverage, plus another 100 days).

Another alternative is public housing for seniors, or even private senior buildings with relatively decent management. For someone with dementia, of course, there would need to be paid in-home care assistance on top of the cost of rent.