Medicaid turns 59 in July 2024! In the summer of 1965, President Johnson addressed a joint session of Congress asking that we honor a basic commitment to our seniors. He asked that the later years of their lives not be filled with “despondency and drift, or fear of financial hardship in the event of illness,” but rather with “security and dignity.” His words were followed that year by the signing of Medicaid (and Social Security and Medicare) into law on July 30, 1965.
Over the past 59 years, our nation has grown stronger as Medicaid has provided security to more than 84 million Americans (7.2 million seniors). Since its inception in 1965, Medicaid has emerged as the primary source of coverage and financing for long-term care services for the middle class, including the elderly and individuals with disabilities at all income levels.
After Nearly Six Decades, Journalists Still Mostly Get It Wrong
Despite Medicaid’s long-standing presence, a significant number of articles written by professional journalists about Medicaid and long-term care planning lack thorough research into its functioning. This leads to a plethora of incorrect information about Medicaid being disseminated. It is crucial to address these misconceptions and provide accurate information.
- Misinformed journalists almost always say that Medicaid has an income limit to cover nursing home care, which it does not. An example of this type of sloppy journalism comes from a very recent article in a series about long-term care published by the Associated Press in connection with CNHI News. The author states: “Medicaid will cover nursing home care for those whose income is under $2,829 a month according to the American Council on Aging.”
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- First off, the author says he gets his information from the “American Council on Aging” – citing this group as if it were an authoritative source of Medicaid information. The website does have a lot of helpful information, which helps get it highly ranked by search engines, but this “Council” is not authoritative; nor is it a not-for-profit government-related “Council” as its name would imply. Rather, it’s a very clever informational website whose true purpose is to solicit clients for a for-profit company which uses this very well-ranking and seemingly not-for-profit website to make them appear to be a nonprofit organization similar to the highly rated nonprofit National Council on Aging, which is a legitimate 501(c)(3) not-for-profit organization. Despite its potentially misleading name, the “American Council on Aging” is actually a for-profit venture run and “funded by Eldercare Resource Planning, LLC,” as disclosed at the bottom of their “About Us” page. Eldercare Resource Planning, LLC is a group of non-attorney Medicaid Planners who advertise as helping people file for Medicaid, and this company possibly practices law in violation of the unauthorized practice of law rules in many states (though their website says the company “does not offer legal representation, legal advice, legal opinions, recommendations, referrals, counseling, or any activity which would constitute the unauthorized practice of law”);
- Ignoring the non-legal source of the information, the bottom line is that the author of the Associated Press article referenced above gets the income rule very wrong! The true income rule for long-term care Medicaid in every state is that if your income is lower than the cost of the nursing home, long-term care Medicaid will pay the difference. Some states require that your excess income go into a special type of trust, called a Qualified Income Trust (aka a “Miller Trust,” with the funds in that trust eventually going to Medicaid upon the Medicaid recipient’s death), while other states simply require that you pay almost all of your income to the nursing home, with Medicaid paying the balance. For married couples, a significant amount of income, and sometimes all income, of the Medicaid spouse can be transferred to the healthy spouse by using an experienced elder law attorney.
- Many misinformed journalists also don’t fully explain how rehabilitation coverage and nursing homes work, failing to mention that you need a qualifying stay of at least three midnights as an inpatient in a hospital before Medicare will pay for rehab in the nursing home. An excellent example of this type of sloppy journalism comes from the same Associated Press article referenced above, where the author states that “Medicare covers the first 20 days in a nursing home and pays about $200 a day for the next 80 days. After that, in most states, Medicaid will cover nursing home care for those whose income is under $2,829 a month according to the American Council on Aging.”
- The important fact left out is that Medicare will only cover the first 20 days if you have first been admitted to a hospital for at least 3 midnights, and being in observation status does not count.
- When it comes to rehabilitation services, Medicare works by “benefit periods” rather than on an annual basis like most health insurance. A benefit period is 60 days. If a break in skilled care lasts for at least 60 days in a row, this ends the current benefit period and renews his skilled nursing and rehabilitative services benefits for another 100 days.
- It is important to understand that Medicare does not pay one penny for long-term care. Medicare only pays for medical care delivered by doctors and hospitals and, in many cases, short-term rehabilitation, which most often takes place in a nursing home.
- The Medicaid long-term care program is a federal-state program that covers long-term care expenses for individuals who need the nursing home “level of care,” whether that care takes place in a nursing home, at home through a state-based “waiver” program, or in an assisted living facility through a state-based “waiver” program. Medicaid covers more than 7 million elderly beneficiaries who use these long-term care services.
- Another piece of damaging misinformation in the article described above is where the author writes that: “In most states, there is no government financial help for custodial care.”
- Nothing could be further from the truth, which is that nursing homes, almost all of which take Medicaid, mostly cater to individuals who need “custodial care,” as custodial care is synonymous with long-term care, meaning hands-on assistance with activities of daily living (ADLs) and/or supervision and monitoring. ADLs include eating, bathing, dressing, transferring (moving between bed and chair, as an example), controlling bowel and bladder function, and properly using the toilet. Medicaid is specifically designed to cover long-term care aka custodial care.
- Lack of planning leaves many seniors unprepared for long-term care expenses, so Medicaid Asset Protection Planning with an experienced Elder Law attorney is essential to help pay for nursing home care.
- Another common misconception in popular media is that once an individual is in a nursing home, his or her assets must be “spent down” to pay for care until the state’s very low maximum asset level is met.
- It is simply untrue that once you’re in a nursing home, you must spend down your assets to pay for your care until the state’s maximum asset level is met. Although many people in nursing homes do this, you absolutely do not have to!
- While it is true that, in general, a Medicaid applicant can have no more than $2,000 in assets to qualify for long-term care Medicaid (though this asset limit is different in many states, including Maryland where the asset limit is $2,500 and DC where the asset limit is $4,000), there are many assets that don’t count toward this limit, and with good legal representation from an experienced Elder Law attorney, you do NOT have to “spend down” and go broke paying the nursing home in order to get Medicaid. On the contrary, by hiring an experienced Elder Care attorney, if you are a married couple, you can legally and ethically protect 100 percent of your assets and get Medicaid without “spending down” your assets at all. Likewise, by using an experienced Elder Law attorney, if you are a widowed or single person, you can legally and ethically protect 40 percent to 100 percent of your assets and still get Medicaid without having to “spend down” all of your assets.
- Lastly, many of these journalists fail to inform the public that there are specialized Elder Law attorneys/Elder Care attorneys who help people every day navigate the incredibly complex maze of long-term care planning and paying for long-term care without having to go broke.
- Certified Elder Law Attorneys, such as myself, are the recognized top experts in the field of Medicaid Asset Protection Planning. When it comes to Medicaid (the most complex area of law in the United States), a true legal expert is needed if you’re hoping to obtain the best legal advice and the most favorable financial results.
- At the Farr Law Firm, we do what’s called Life Care Planning and Medicaid Asset Protection. This process protects your assets from having to be “spent down’ in connection with entry into a nursing home, while also helping ensure that you or your loved one get the best possible care and maintain the highest possible quality of life, whether at home, in an assisted living facility, or in a nursing home.
- Many law firms that are run by a CELA, such as the Farr Law Firm, are highly specialized Medicaid planning attorneys, Estate Planning attorneys, Elder Law attorneys, special needs lawyers, and Elder Care attorneys. An experienced Elder Law attorney can prepare all of the legal documents needed in this area of law, including an irrevocable Medicaid asset protection trust that is often done as part of Estate Planning. For example, our firm prepares irrevocable Medicaid Asset Protection trusts every day for our clients – we call the 3 versions of our irrevocable Medicaid Asset Protection trusts the Living Trust Plus® Medicaid Asset Protection Trust, the Living Trust Plus® Veterans Asset Protection Trust, and the Living Trust Plus® Income Retention Trust. All of these are specialized Medicaid asset protection trusts (and one also assists people in obtaining the Veterans Aid and Attendance benefit) that also protect assets from lawsuits and other creditor risks – not just from nursing home expenses.
Start Planning for Long-term Care As Soon as Possible
When it comes to planning for long-term care, Medicaid Asset Protection Planning can be started while your loved one is still able to make legal and financial decisions or can be initiated by an adult child acting as agent under a well-drafted Power of Attorney, even if your loved one is already in a nursing home or receiving other long-term care. In fact, the majority of our Lifecare Planning and Medicaid Asset Protection Planning clients come to us when nursing home care is already in place or is imminent; fortunately, it is never too late to begin your Medicaid Planning.
To afford the catastrophic costs of long-term care without depleting all of your assets, you should begin long-term care planning as soon as possible. You should also do Incapacity Planning and Estate Planning if you haven’t done so already. Contact us whenever you’re ready to make an appointment:
Elder Care in Fairfax: 703-691-1888
Elder Law in Fredericksburg: 540-479-1435
Medicaid Estate Planning in Rockville: 301-519-8041
Medicaid Planning in DC: 202-587-2797
About Evan H Farr, CELA, CAP
