Archive for July, 2014

How to Have Medicaid Pay for Your Long Term Care

July 30, 2014

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

What is the Policy Elimination Period?

July 24, 2014

A long term care insurance policy Elimination Period can be thought of as the deductible. While this “deductible” can range from zero days to a year or even longer, the overwhelming majority (87.8%*) of policies are issued with 90 or 100 day Elimination Periods. Only one small insurance company offers a 100 day Elimination Period, so almost all of the 87.8% are for 90 days.

How is this like a deductible? The Elimination Period tells you how many days of receiving qualified care* are needed before policy benefits begin to accrue**. The good news is that with mainstream policies the Elimination Period must be satisfied only once per lifetime, and the days can add up cumulatively.

**Qualified Care: For Elimination Period days to count, the insured person must meet the standard policy benefit trigger requirements.
***Accrue: Policy benefits are first “accrued” (built up in your claim account) then paid by the insurance company. Benefits are not paid in advance.

Let’s say someone with a 90 day Elimination Period is in a bad automobile accident. She needs and receives paid, qualifying care for 70 days then recovers. She has just satisfied 70 of her lifetime 90 days. Two years later, she contracts a serious disease and again needs care. At this point, after 20 more days of care, she has satisfied her 90 day Elimination Period and begins accruing policy benefits. She recovers from this illness some time later. Ten years after recovering from her illness, she is diagnosed with Alzheimer’s. This time our unlucky lady begins accruing benefits as soon as she again starts receiving qualified care.

Is a 90 day (or any other number) Elimination Period with one policy always the same as 90 days with another? Not necessarily. There are a number of variations. The two most common differences are a service day Elimination Period and a calendar day Elimination Period.

Service Day: A service day definition means that only days of paid, qualifying care are counted. So if you are only receiving paid care three days per week (Spouse or friends are helping during the other days), it would take almost seven months to satisfy a 90 day Elimination Period.

Calendar Day: Continues to count days after you have started with paid, qualified care…even if you only pay for the first day. Of course you must continue to have the loss of function that is part of “qualified care”.

Calendar day example: You need assistance with bathing and dressing. You pay a home care agency to provide care, but only on the first day. Then your spouse is able to help you for the next 89 days. Assuming a 90 calendar day Elimination Period, you will begin accruing benefits on the 91st day…even though you have only paid for one day of qualified care.

Zero day Elimination Period for home care: This is an optional policy benefit that I often recommend in combination with a 90 day general Elimination Period. With this option, the Elimination Period is waived for care received at home (and usually also adult day care). Since most long term care events begin at home, this can be a good way to reduce future Elimination Period out-of-pocket costs. I like it because the premium is lower than if we had included a shorter Elimination Period for everything.

There are other Elimination Period variations, and I am sure more will be offered as time goes by.

Do you have questions about your own policy? Do you want to become better informed about your choices as you think about applying for a new one? Call me at 303-699-4172. I will be glad to help.

*Source: Broker World magazine, July 2014 edition. “2014 Long Term Care Insurance Survey”

Disclaimer: Actual policy language, rather than the contents of this eNewsletter always takes precedence. Long term care insurance policies vary widely from company to company & often within the same company. Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice. Consult your tax advisor or attorney for these matters.

© Raymond Smith, The Long Term Care Specialist, 2014