MEDICAID – The New Long Term Care Program for the Middle Class

By necessity, Medicaid, which was intended to provide assistance to impoverished citizens, has become the default long-term care insurance for the middle class.

medicaidConsider this: The average cost of institutionalized nursing care in New Jersey is between $7,500.00 and $12,000.00 per month.  Contrary to popular belief, Medicare does not provide custodial long-term care coverage.  Instead, Medicare merely provides up to 100 days of care in a skilled nursing facility per each illness.  The vast majority of nursing home care, however, is “custodial” not requiring skilled nursing care.  Medicare therefore covers only a very small percentage of long-term care. Unfortunately, people of moderate means are unable to afford long-term care insurance policy which can, at least in part, cover nursing home costs.   Most people therefore end up paying for long-term care out their life savings.  It is therefore essential that middle class families with aging parents start planning for Medicaid eligibility should the need for long-term care arise.  This need is particularly acute for individuals with a family history of Alzheimer’s and dementia, since 70% of nursing home patients suffer from these illnesses.

Medicaid is a public assistance program jointly funded and administered by the Federal government and the individual states.  Presently, a Medicaid eligible applicant must have below $2,000.00 in countable assets and below $2,130.00 in monthly income.  Medicaid, however, affords married couples with the ability to retain additional assets for the community spouse.  The present “community spouse resource allowance” is $115,900.00.  The basic strategy for Medicaid eligibility planning is to spend down the patient’s financial resources within Medicaid’s asset and income limits. The Deficit Reduction Act of 2005, however, materially impacted Medicaid eligibility strategy by imposing a five (5) year look back period on all transfers where less than fair value is received. Medicaid will view “less than fair value transfers” as gifts, which must be returned to the patient before it will deem them eligible for long-term care benefits. Accordingly, the need for seniors to engage in long-term planning is essential to ensure eligibility for long-term care benefits without any unfortunate delays in receiving benefits.

Medicaid eligibility requirements are complicated and can present a mine field of costly errors for the inexperienced.  A misstep can lead to financially devastating penalties that can delay Medicaid eligibility for benefits for many months while nursing home expenses continue to mount at an average cost of $10,000.00 per month.  There are also many instances when an applicant has either overlooked a particular transfer or has made a gift to a charity or family member without considering its impact on eligibility.  It is therefore wise to proceed through the maze of eligibility requirements with experienced legal counsel.

At Sedita, Campisano & Campisano, we can guide you through the complexities of the State Medicaid eligibility requirements.  We can assist you and your loved ones in formulating effective strategies to pay for long-term care should the need arise.   It is never too late to engage in emergency Medicaid planning or too early to engage in long term care planning.

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