Are you a senior citizen who is currently in the process of seeking assisted living options for yourself or your spouse? It can be difficult to get to a point physically or mentally where you need to rely upon your children or others to care for you daily. There are also social benefits to living in assisted living. Your current living arrangements may be somewhat isolated and assisted living may offer you greater opportunities to interact with others and build meaningful relationships in your golden years.
These benefits are considerable, but so can the costs of assisted living. With the monthly costs of assisted living adding up to thousands of dollars per month, finding any possible assistance to help pay for those costs is important to be able to budget for those costs. Medicaid can help to reduce some of the costs associated with assisted living. In today's blog post from the Law Office of Bryan Fagan, we are going to discuss how Medicaid may be able to benefit you in terms of helping to pay for your stay at an assisted living facility.
As far as government-assisted healthcare coverage programs, Medicaid leads the way. Medicaid is intended to act as a safety net for Americans who cannot afford the health care that they need on their own. Individual states, like Texas, work hand in hand with the federal government to help provide most of Medicaid's funding.
How to apply for Medicaid
There are several requirements that you would need to meet to qualify for Medicaid. First, the state of Texas has an income limit for a person to be eligible for Medicaid. The amount varies yearly so you will need to keep up with what it is for your particular year and then look at your income. Additionally, you may also be able to qualify for Medicaid if your medical-related expenses exceed your income. There are also limits on the assets that you can own in addition to your income. You should determine what sort of assets you own as far as the vehicle, bank accounts, or things of this nature. As a rule of thumb, if you own a home, it is unlikely that you can qualify for Medicaid.
There are additional requirements and criteria such as being a United States citizen, permanent resident as well as a resident of the state of Texas if you wish to apply for benefits in this state. There are also specific medical needs that qualify a person for benefits which you can verify on the Medicaid website. If you have recently moved to Texas from another state, it is important to understand that Texas has its guidelines for qualifying for Medicaid. As a result, just because you met your former state's requirements for Medicaid does not mean that you will meet the requirements of Texas.
What are the specific assisted living costs that Medicaid covers?
Medicaid covers most all health care costs for those who qualify. This includes some long-term care costs. Little care services as provided by assisted living communities and residential care homes are typically covered by Medicaid. Additionally, on-site therapy services and medication management including prescription drugs are covered by Medicaid. Different types of therapies such as physical, occupational, or speech are also covered by Medicaid. On the other hand, room and board are typically not covered by Medicaid.
How else can you pay for assisted living beyond Medicaid?
As opposed to Medicaid, Medicare typically does not cover any costs associated with assisted living facilities. Medicare, for those unaware, is a type of federal health insurance coverage for persons over the age of 65 and is useful for helping senior citizens cover various medical costs no matter where they live. Otherwise, you may be looking at a situation where retirement savings, money in the bank, or even long-term care insurance becomes necessary to help you pay for the costs of an assisted living facility. Bear in mind, that if you have access to these types of assets it is unlikely you would be able to qualify for Medicaid in the first place.
You should also investigate various support groups in your area that can help you with essential tasks like transportation to and from doctor's appointments, household budgeting, shopping or even helping with legal issues that come up. There are services available to you in Southeast Texas that can provide you with meal programs, senior centers, and support groups that little to no cost.
Even if you are unable to afford to live in an assisted living community then some alternatives may also be covered by Medicaid. For instance, adult daycare centers allow your child or another person to drop you off in the morning and pick you up in the afternoon. These daycare centers provide socialization and basic care during the day. If you prefer to live at home but have a need to socialize and be with others during the day then this may be an option that you should look into.
There are also in-home nursing in-therapy services that can be provided to you because you are Medicaid eligible. For instance, let's say that you were recently hospitalized for a broken leg. You needed surgery on the leg and spent a few days in the hospital after surgery. In that case, you may be able to get a referral from the hospital for in-home nursing and therapy to help you rehabilitate after leg surgery. In this scenario, you can ask Medicaid or talk to the provider about whether Medicaid can be used to supplement or completely pay for the cost of this service.
On a long-term basis, you may also become eligible for in-home personal care. This would be a circumstance where a certified nursing assistant or home health aide was assigned to your home to help you perform activities of daily living. Depending upon your needs these folks could help help you use the bathroom, shower, clean your home, and perform other essential duties. Or the services that they provide may be more limited to companionship and basic meal preparation. The services provided vary depending on your abilities and level of impairment.
What can you do if you are helping a family member search for assistance?
Let's put the shoe on the other foot. If you are an adult child of an elderly person and you are trying to help your mother or father determine what is best for them as far as ongoing care you should be commended. This is an extremely stressful process and not one that is entered into lightly. Rather, you need to be aware that there are challenges when helping loved ones locate and obtain services depending on their needs and income level. We have already covered the different options that may be available to your parent such as adult daycare services and in-home nursing and therapy. If you want help with cooking and cleaning services as well as other daily activities, these can also be provided by in-home care. You should talk to your parent, and determine their specific needs and that will help you make better decisions as far as where your parent may need the most help.
How can you use estate planning to prepare for Medicaid?
If you become interested in long-term care, then that is an extremely difficult decision at which to arrive. Long-term care not only involves a certain degree of lost autonomy on a personal level but there are also financial costs that are inherent with long-term care. The more planning you can implement and the more intentional you can be when it comes to helping your family get ready for these financial costs the better off everyone can be. As we are fond of telling clients and potential clients alike, you can wander into a legal situation, but it is difficult to wander out of one and still accomplish your goals. Therefore, having a plan is essential when it comes to being ready to prepare yourself for whatever eventualities come your way as it pertains to estate planning and its overlap with Medicaid.
When you talk about around-the-clock nursing home care, long-term care gets to be very expensive. Hopefully, you have some cash saved in the bank that will allow you to pay for nursing home care unfortunately, a common situation is that one spouse will crack and scramble that nest egg and then leave the other spouse with very little to live on after that nest egg is scrambled up and served.
When it comes to Medicaid, the rules are that a potential recipient can have no more than $2000 in countable assets. Additionally, your income must be limited to be eligible for Medicaid. You can spend down excess assets to qualify for Medicaid. However, this spending down of assets cannot involve transferring assets to other people. Please bear in mind that if you transfer assets within five years of applying for Medicaid then you can be subject to a penalty during which time you cannot become eligible for Medicaid and receive benefits. After you pass away Medicaid can also collect against your estate for benefits having been paid to you. For the most part, this means that your house may be subject to being gobbled up by the Medicaid program.
However, if you can execute some careful planning in advance then that will help to protect your estate for your spouse or your children after you pass away. If you are making a plan for long-term care at the moment you first need that care then it is almost too late. Ideally, you should have a plan in place for your long-term care before you ever need it. That way you can have time to distribute assets or protect them in a way that is most advantageous to your family. There are various tools in the toolbox of an estate planning attorney that can be utilized to benefit your family. The more intentional you can be the better prepared you can be when it comes to creating an estate plan that can be used to benefit you and your situation as well as benefit your family.
One of the most reliable tools in the estate planning attorney’s toolbox is a trust. Specifically, an irrevocable trust cannot be changed after it has been created. In your case, this type of trust will be drafted so that the income of that trust is payable to you for your life and that principle which is creating the interest cannot be applied to benefit you or your spouse. Once you pass away that principal sum is paid to your beneficiaries or heirs. What this trust accomplishes is that the funds are protected while you are alive, and the income can be used to pay for your living expenses.
When it comes to Medicaid, that principal amount and your trust is not counted as an asset as long as the trustee of the trust cannot pay it to you or your spouse. Once you determine that you must move to a nursing home then that trust income must go to the nursing home itself. Remember, Medicaid has a five-year look back. So, your trust must be funded for at least five years before applying for Medicaid benefits.
One of the most tried and true methods of estate planning when it comes to Medicaid eligibility is an annuity. An annuity is a contract with an insurance company where the holder of an insurance policy pays a specific sum of money to the insurance company and then the insurance company sends the policyholder an amount of money per month for the rest of your life. An annuity is not a transfer of property and would not cause you to run afoul of the Medicaid rules associated with a five-year look back for transfers of property. This is a useful tool for you and your situation given that if the income is in the name of a spouse who was not in the nursing home it does not count toward your assets. Therefore, an annuity is an especially useful tool for you if you are married.
If you eventually qualify and receive Medicaid there are things, you should know about how to protect your home after you pass away. The state of Texas must attempt to recoup from your estate whatever benefits were paid to you during your time under the Medicaid program. This is known as estate recovery. For most people in Texas who are Medicaid eligible, the only asset available to recoup under this recovery is the family home. While you can place your home into an irrevocable trust you cannot remove it once it is placed there. A life estate in the home where each person has an ownership interest in the property but for different periods is a second option. In this scenario, you may have a life estate in the property, and your spouse would have an ownership interest currently but cannot take possession until you pass away.
Final thoughts on estate planning during your golden years
One of the great misnomers about estate planning is that only a certain type of person has an estate plan. At the Law Office of Bryan Fagan, we hear all the time about how only wealthy, old, or young people typically have wills. This is not the case. People from every walk of life have wills. More than that, every person over the age of 18 should have a will. It doesn't matter how large or small your estate is or what your financial goals are. Even if you are not someone who values money or your property all that highly that does not mean that this estate of yours cannot be used to benefit others. Therefore, engaging in proper estate planning is not necessarily for you but is for the benefit of the people in your life who are most important to you.
If you do not know where to begin when it comes to planning your estate and you simply want some basic guidance on the next best step for you to take, we recommend that you reach out to speak to an experienced estate planning attorney. There's virtually no downside to engaging in this type of planning and at least speaking to an attorney. You may find that you can learn something meaningful about your circumstances that can greatly benefit you now and in the years to come.
Questions about the material contained in today's blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in today's blog post please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed estate planning attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of Texas estate planning as well as about how your family’s circumstances may be impacted by the filing of a probate case.