Long-Term Care: Medicaid Planning

John, 75, is a retired teacher earning $1,800 per month in Social Security benefits. He owns his primary residence in New Jersey, which is valued at $450,000, and he has about $10,000 in his savings account.

Unfortunately, John’s health is declining, and he requires long-term care due to mobility issues and other age-related health concerns. The cost of long-term care services has become a significant financial burden for him and he’s running through his savings fast.

John sought financial assistance through Medicaid to cover the costs of long-term care in a nursing home facility. However, he was notified that he does not qualify for Medicaid. The reason provided was that his total assets, including his home and bank account, exceed New Jersey’s $2,000 asset limit for an individual applying for long-term care Medicaid.

Even though his income is under New Jersey’s Medicaid eligibility threshold and his home’s value is under the state’s home equity limit, John was still denied much-needed Medicaid assistance.

While John’s situation is hypothetical, it is a very common predicament for seniors in need of financial assistance for long-term care. With some professional guidance and advance planning, the Medicaid application process could have had a different outcome.

What is Medicaid?

Medicaid is administered and regulated by both federal and state agencies and its rules vary from state to state. Different than Medicare, which does not pay for long-term care, Medicaid is a health care program that includes long-term care services for people 65 years and older and others who qualify. For elderly New Jersey residents, Medicaid may assist with long-term care expenses in either nursing homes or in-home.

To qualify for Medicaid, there are varying financial eligibility requirements, among other requirements. Importantly, the Medicaid application process has a five-year “look back” provision at financial records. There are very strict rules regarding what types of spending during that review period could disqualify an applicant for Medicaid.

Medicaid Planning

With the assistance of a knowledgeable and experienced estate planning attorney, John could have created a “spend down” plan to qualify for Medicaid. In addition, had he sought help with the application, an attorney could have assessed the situation, which would include a deep dive of his financial records. An attorney can assist in negotiating assisted living and in-home care contracts and help implement a spend-down plan quickly. John would have had the care he needed right away and be set up for Medicaid assistance shortly.

Timothy Rice Estate and Elder Law Firm helps families create estate plans that address the potential for future health care needs, including qualifying for Medicaid benefits. Contact us today.

Estate Planning, long-term care, Medicaid

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