How to Have Medicaid Pay for Your Long Term Care

There is Medicaid (for Government-provided medical care) and Medicaid Long Term Care. The eligibility requirements are different. This article addresses only Medicaid Long Term Care. The dollar amounts are for 2014. By the way, the Affordable Care Act (also known as Obamacare) has no impact on Medicaid Long Term Care or long term care insurance. Medicare is not a player as it does not cover long term care.

Because most people have not planned for long term care, Medicaid Long Term Care has become the default for:
1. Those who find themselves caught by the surprise of a sudden need for care…a crisis.
2. Those who are truly poor and thus have no other choice. This is who Medicaid Long Term Care was intended for. It should be available for people who have nowhere else to go.

Another category of people who receive Medicaid Long Term Care services are those whose affairs are consciously arranged so as to qualify. This means assets are given away, usually to adult children and always at least five years before care is needed.

This distasteful practice was once described to me as: “We artificially impoverished Dad.” That means Dad’s money and care choices were taken from him. Of course, artificially impoverishing Dad can preserve Junior’s inheritance.

My issue with Medicaid planning is the immorality of asking tax payers (you and I) to pick up the tab for those who can pay for their own care, but choose not to. On the other hand, attorneys who do Medicaid planning often argue that they are merely helping their clients get what the law allows.

Some basic Medicaid eligibility requirements:

1. Income limitation: The person applying for Medicaid Long Term Care cannot have too much income. In the 23 current “income cap” states (including Colorado), you cannot be receiving income of more than $2,163 per month. In the Metro-Denver, CO area if your income is between $2,164 and $7,864 per month (the top number is a little lower in other Colorado regions), the excess over $2,163 can be paid into a “Miller Trust”. In non-income cap states, you can spend down your income on care until you reach your state’s minimum. For a married couple, only the income of the person needing care is considered.

2. Resources, (or assets): In general, a single person (i.e. one who is not married at the time of Medicaid application) can have $2,000 in countable assets. A married couple in Colorado, with one person needing long term care can have up to $119,240 in combined countable assets. $119,240 is the maximum nationally. A number of states have a lower married couple limit. To calculate “countable” assets, start with everything the couple (or individual if single) owns, including retirement plans, then subtract items on the short list of “non-countable” assets. The major and more common non-countable assets are: the applicant’s principal residence (although it will be subject to estate recovery), one motor vehicle, personal possessions (i.e. household goods), and a pre-paid funeral plan (This is worth looking into regardless of Medicaid…ask me about Jamie Sarche.).

3. Functional limitations: You must be functionally (physically or mentally) impaired to a significant degree. How significant? That varies somewhat from state to state and among the many local agencies who actually perform the functionality assessment. Suffice it to say that you must require a great deal of assistance just to get through the day.

Assuming you meet the above basic Medicaid Long Term Care qualifications, how do you apply? It is not easy. Each state (and often each jurisdiction within a state) has its own procedures. Colorado’s 64 counties each have their own Medicaid entry point and the “rules” vary somewhat as they are applied locally. In Arapahoe County where I live, you apply at the county Department of Human Services. The application forms go on for many pages. The questions are detailed and intrusive. Make a mistake and your application may not be accepted. Gifting (transferring anything for less than fair market value) can also cost you money if done incorrectly.

After all is said and done, if you have decided that you are going to apply for Medicaid Long Term Care, the best advice I can give is to first consult with a good elder law attorney. Speak with a lawyer as soon as you think you may want to go the Medicaid route. Applying for Medicaid Long Term Care is not a do-it-yourself project…you are not likely to succeed without professional legal assistance. Even if your application is eventually approved, there is a good chance that the cost of an unexpected penalty period will far outweigh what you would have paid for an attorney. Contact me if you want the names of some Colorado attorneys who can help. I know a few.

Disclaimer: Medicaid Long Term Care eligibility is incredibly complicated. I am not an expert nor am I an attorney. You should seek competent legal counsel before acting on anything contained in this eNewsletter. Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice.
© Raymond Smith, The Long Term Care Specialist, 2014