The oldest Baby Boomers are now turning 70. Suddenly, the possibility of needing long term care looms, despite the medical advances of joint replacement, heart surgeries, and pharmaceuticals. Boomers now must face the increasing possibility of needing care with activities of daily living - things like dressing, bathing, and toileting.
Medicare does not cover these basic services - beyond a limited number of days of "skilled" nursing care required, for example, after a surgery. The Veteran's Administration does cover some care, primarily restricted to VA nursing homes. Long term care insurance is the obvious solution - yet fewer than 10 percent of the senior population has such a policy.
So many seniors who need daily custodial care are forced to turn to state Medicaid programs. And in these days of dwindling state budgets, that's not likely to be an appealing solution -- despite some Federal matching funds recently added to some state budgets under the Affordable Care Act.
Here's what you should know if you're counting on Medicaid as a last resort for custodial care:
1. Medicaid care takes away choice. More than half of all Medicaid custodial care is given in an institutional setting. That takes away the chance to remain at home and have limited care for several hours a day. It also takes away your choice of nursing homes. Given increasing demand and low Medicaid reimbursement rates, most facilities have a limited number of Medicaid beds, instead opting to serve those who pay through private savings or Long Term Care Insurance.
2. Medical and financial qualification is necessary. Each state sets its own criteria to qualify for Medicaid custodial care. For example, the state of Illinois provides long term care services for 55,000 eligible residents in 738 nursing facilities. Those facilities take all but $30 a month from your Social Security or other income to pay for your nursing home care.
3. Exemptions for spouses remaining in community. Each state sets its own limitations for how much of your income will be retained by your spouse. For example, in Illinois in 2015, the non-Medicaid spouse could keep up to $2,980.50 of income per month from the Medicaid spouse. The Federal maximum for property retained by the community spouse is $119,220, in addition to the family home (up to a value of $552,000, or higher in some states), car, and household furnishings. But your state exemptions might be lower than the Federal limits, which are adjusted yearly.
4. Avoid Medicaid planning and transfers. It obviously is tempting to simply transfer assets to children, thus qualifying for your state's Medicaid long term care program. In fact, an entire industry has sprung up to plan for this eventuality. But states are getting tougher - creating a "look back" period, typically 5 years, to examine such asset transfers. And as state budgets are squeezed, some states are moving more aggressively to recover payment from sale of the home after the community spouse residing there dies.
5. Consider Long Term Care Insurance. Although it's estimated that 70 percent of seniors will need at least some assistance in performing basic activities of daily living during their lifetimes, the average stay in a long term care facility - the dreaded nursing home - is only 2.43 years.
So you may be better off purchasing a short-term Long Term Care Insurance policy - one that gives flexibility to access benefits for either home health care, assisted living, or a nursing home if needed. Once you become a resident in your nursing home of choice by paying for the initial months of care, you are likely to be allowed to stay as a Medicaid-paid resident.
If you have questions about these items, or want to know the Medicaid income and asset exemption levels for your state, go to www.ElderLawAnswers.com.
Growing older is better than the alternative. And realistically planning for the possibilities of needing care in your later years gives peace of mind for you - and your family. That's the Savage Truth.