Note: Special thanks to Daniel D. Munster, a Georgia top-rated elder law attorney, for a recent presentation in our offices on this subject, as well as much of the background information for this post. Please note that nothing herein is legal or investment advice.
There is tremendous confusion in the area of long-term care planning, whether that be questions about whether or not to buy long-term care insurance, how governmental programs fit in, or even how expensive care can be in even the most mundane of circumstances. In times like these, it’s important to employ a fee-only CERTIFIED FINANCIAL PLANNER™ professional, and if needed, a qualified and experienced elder law attorney. To give you a sense of the level of confusion that abounds, here are ten popular long-term care myths:
My Wife (or Husband) Can Care for Me Forever on Their Own
Too often a primary caregiver ends up in the hospital or even predeceases the unhealthy spouse because he or she (or the kids) failed to acknowledge the limits of her ability to provide care “around the clock.” Therefore, everyone involved needs to recognize that an illness impacts both spouses. In the end, keeping an unhealthy spouse at home can actually do more harm than good.
Medicare and Medicaid are the Same Thing
The Medicare and Medicaid programs are both government programs that have similarly sounding names. However, that is about the end of the resemblance. There are many differences between the two programs, but here are some of the key points: first, eligibility for Medicare is determined based primarily on age (and on whether you paid adequately into the system during your lifetime). There is no test for assets or income. On the other hand, eligibility for Medicaid is determined based on need, and includes limits on the assets and income of the applicant (and spouse if married). While Medicare is generally available only to those over 65 (except for those deemed disabled by SSA), Medicaid programs extend to people of all ages.
Thus, Medicare might be described as a Federal government health insurance plan for the elderly which is available across all socioeconomic levels to anyone who worked and paid into the Medicare system. Meanwhile, Medicaid is need-based program with many subclasses of assistance. Although all Medicaid subclasses are designed for those in financial need, Medicaid recognizes that “need” must be defined relative to the exorbitant cost of long-term care. Thus, the asset and income limits governing access to long-term care resources from Medicaid are substantially higher than all the other classes of assistance. Ultimately, since Medicare provides no help with long-term care and very few can afford to pay out of pocket, the majority of long-term care in America is paid for by Medicaid.
Long-Term Care Expenses are Covered Under My Medicare Plan
Medicare is health insurance, and therefore does not cover long-term convalescent care. At most, it will pay for 20 days in full following a hospitalization, and potentially an additional eighty days, but only after a daily co-payment is met by the participant. Under no scenario will Medicare provide assistance with long term care beyond 100 days.
Medicaid Will Cover Home Health Care and Assisted Living Care
Almost everyone would rather receive care at home than in a long-term care facility. However, although there are limited Medicaid programs designed to help with home health care or assisted living care, these programs are grossly underfunded and maintain long waiting lists. Moreover, under no circumstances will Medicaid pay for home care around the clock. For the most part, home health care and assisted living care must be paid for privately.
Isn’t Medicaid for the Poor? So My Level of Care Will Deteriorate on Medicaid, Right?
While it is certainly true that some nursing homes offer better care than others, virtually every nursing home in Georgia accepts Medicaid. The key is gaining admission to one of the better homes as a Medicare or private pay resident before Medicaid ever becomes necessary. If a resident converts to Medicaid following admission, the facility cannot involuntarily discharge the resident or reduce care provided. In fact, care providers do not have access to the records showing which residents are on Medicaid and which are not.
Before I Can Get Help From Medicaid, I Have to be Broke, Right?
Medicaid allows recipients to own assets of great value so long as those assets are considered exempt under the eligibility rules. In addition to exempt property, a married couple can own non-exempt property valued as high as $122,900 (2017). Non-exempt property for a single person is limited to $2,000.
I Must Sell My Home To Pay For Private Nursing Care
Your home is the most sacred asset in the Medicaid world, and there are many nursing home residents who qualify for Medicaid with a great deal of equity remaining in their homes. Careful thought and planning should be undertaken with a qualified elder law attorney (in conjunction with your CFP professional and Personal CFO) to maximize the value of this asset while still qualifying for Medicaid, if that is your goal.
My Net Worth is Too High to Ever Qualify for Medicaid
Medicaid separates assets into “exempt” and “non-exempt” categories, and will typically deny benefits to applicants with non-exempt assets over certain thresholds. However, even if your non-exempt assets are currently over the resource limit, it is often possible to achieve eligibility before exhaustion of savings with the help of a qualified attorney.
Although preemptive Medicaid estate planning can involve a five-year waiting period, the majority of Medicaid estate planning takes place in “crisis mode.” Though it might seem counterintuitive, there are often a variety of viable planning options for those who currently need care (or will in the near-term). Every case is different and must be analyzed by a qualified professional.
I Can Qualify for Medicaid Simply by Giving All My Property To My Children
This myth used to be true; however, there have been recent changes to the law affecting how Medicaid penalizes gifts. Because of this, gifting now plays a smaller role in Medicaid planning. While careful gifting can still be helpful if done based on sound legal counsel, most crisis-mode Medicaid estate planning focuses on steps other than gifting. For example, restructuring assets from “countable” to “exempt” is often a better option.
The Government Will Take Everything From Me If I Go On Medicaid
Georgia finally initiated, in May 2007, a program whereby certain sums paid by Medicaid on behalf of a recipient will be recovered from their estate after death. Although many of the program’s rules remain ambiguous, it appears that estates valued at less than $25,000 will avoid recovery. Moreover, recovery against a home can generally avoided altogether or at least postposed if the Medicaid recipient’s spouse still resides there. Although recovery may occur, the estate still enjoys significant benefit in that repayment takes place at the Medicaid rate instead of the private pay rate – usually about a 20% discount.