IL Estate Planning Blog

Monday, March 23, 2015

Navigating Medicaid and long-term care by Terry Savage

 Navigating Medicaid and long-term care - Chicago Tribune March 8, 2015

Copyright Terry Savage Productions, Ltd.; Distributed by Tribune Content Agency

The oldest baby boomers are now turning 70. Suddenly, the possibility of needing long-term care looms, despite the medical advances in joint replacement, heart surgery and pharmaceuticals. Boomers now must face the increasing possibility of needing care with activities of daily living - things like dressing, bathing and toileting.
Medicare does not cover these basic services, beyond a limited number of days of "skilled" nursing care required, for example, after a surgery. The U.S. Department of Veterans Affairs does cover some care, primarily restricted to VA nursing homes. Long-term care insurance is the obvious solution - yet less than 10 percent of seniors have such a policy.
Consequently, many seniors who need daily custodial care are forced to turn to state Medicaid programs.  Here's what you should know if you're counting on Medicaid as a last resort for custodial care:
1. Medicaid care takes away choice.
The majority of custodial care provided by Medicaid is given in an institutional setting. That structural bias takes away the chance to remain at home and have limited care for several hours a day. It also takes away your choice of nursing homes. Given increasing demand and low Medicaid reimbursement rates, most facilities have a limited number of Medicaid beds, instead opting to serve those who pay through private savings or long-term care insurance.
2. Medical and financial qualification is necessary.
Each state sets its own criteria to qualify for Medicaid custodial care. For example, Illinois provides long term care services for 55,000 eligible residents in 738 nursing facilities. Those facilities take all but $30 a month from your Social Security or other income to pay for your nursing home care.
3. There are exemptions for spouses remaining "in community" outside the nursing home.
Each state sets its own limitations for how much of your income will be retained by your spouse. For example, in Illinois in 2015, the non-Medicaid spouse could keep up to $2,980.50 of income per month from the Medicaid spouse. The federal maximum for property retained by the community spouse is $119,220, in addition to the family home (up to a value of $552,000, or higher in some states), car and household furnishings. But your state exemptions might be lower than the federal limits, which are adjusted yearly.
4. Avoid Medicaid planning and transfers.
It obviously is tempting to transfer assets to children in order to qualify for your state's Medicaid long-term care program. In fact, an entire industry has sprung up to plan for this eventuality. But states are getting tougher - creating a "look back" period, typically five years, to examine such asset transfers. 
5. Consider long-term care insurance.
Although it's estimated that 70 percent of seniors will need at least some assistance with basic activities of daily living during their lifetimes, the average stay in a long-term care facility - the dreaded nursing home - is only 2.43 years.
So you may be better off purchasing a short-term long-term care insurance policy - one that allows the flexibility of choosing benefits for home health care, assisted living or a nursing home, as needed. 
Growing older is better than the alternative. And realistically planning for the possibilities of needing care in your later years gives peace of mind for you - and your family. That's the Savage Truth.


(Terry Savage is a Registered Investment Advisor, blogger and the author of four best-selling books, including "The Savage Truth on Money." Terry responds to question on her blog at

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