Medicaid is a need-based, government run health insurance program. It is jointly administered by the federal government and each respective state government.
The way that the Medicaid program works for all people of all ages is a subject for a different post on a different blog. As elder law attorneys we focus on Medicaid in a particular context.
Medicaid is a need-based program as we mentioned in the first section. To qualify you must have very limited assets. The limit on countable assets in Indiana is $1,500.
At first, Medicaid is not going to be relevant to most senior citizens. If you have paid into the program throughout your life while you have been working, you will qualify for Medicare. This is a government run health insurance program as well. This is not a need-based program, so there are no asset limits.
The reason why a very significant percentage of elders ultimately enroll in the Medicaid program is because Medicare won’t pay for long-term care.
Before we get into the subject in more detail, you should understand the fact that most people are going to need living assistance eventually. The “this will never happen to me” approach is not a good one, unless you are someone who likes to defy the odds.
How Expensive Is It?
The average stay in a nursing home in Indiana could come with a price tag that approaches $200,000 using current costs as a barometer.
This is attention-getting enough, but long-term care costs have been rising by a few percentage points each year. If you need care in a number of years, the figure could be significantly higher.
If it becomes clear that you need long-term care on a given day, you can’t look toward Medicare for help because custodial care is simply not covered. If you make no advance plans for this contingency, what can you do? You would logically dip into your savings and/or sell your possessions to pay for long-term care.
Once you have practically nothing left, you could then qualify for Medicaid to pay for the care for the rest of your life.
The scenario depicted above is certainly not a pleasant one. You can steer clear of it by planning ahead with Medicaid eligibility in mind.
It would be possible to divest yourself of assets or “spend down” well in advance of applying for Medicaid. You would be reducing your countable assets by giving them to loved ones or otherwise using the money advantageously.
Advance planning is key because there is a five year look back period. If you give away assets within five years of applying for Medicaid you are penalized, and your benefit eligibility might be delayed.
If you would like to learn more about Medicaid planning, contact our firm to schedule a free consultation.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.