Yes. According to CMS, 44.30% of non-Alzheimer’s and non-dementia patients enter the nursing facility while 52.90% of Alzheimer’s and dementia patients enter the nursing facility. It is believed these percentages are even higher when considering the number of people receiving care at home. Non-Alzheimer’s and non-dementia patients stay an average of 3.25 years in the nursing facility. Alzheimer’s and dementia patients stay an average of 10.90 years in the nursing facility. In 2024, the monthly cost of nursing facilities in the Midwest average approximately $7,000 to $8,000 per month while unreimbursed prescription medications and medical expenses average $500 to $1,000 per month. As a result, long-term care costs (i.e., nursing facility costs, in-home care costs, unreimbursed medical expenses, unreimbursed prescription drug costs) can easily cost from $75,000 to $100,000 per year per person. These costs are even higher if someone is receiving care at home.
No. According to CMS, long-term care costs are paid 43.8% by Medicaid, 24.6% out-of-pocket, 13.7% by Medicare, 10.3% by long-term care insurance and 7.5% by other sources. Only one-fourth of long-term care costs are paid privately. Only 4.90% of those entering a nursing facility have any type of long-term care insurance.
No. Medicare will pay for up to 100 days of care in a skilled nursing facility if you are hospitalized for three days and then discharged to a skilled nursing facility for therapy. If you are not making any progress with your therapy, then Medicare will stop paying for the skilled nursing care regardless of how many days of coverage you have remaining. Additionally, when you use the 100 days of skilled nursing care, you will no longer be covered regardless of the progress being made in therapy. Essentially, Medicare is designed to pay for acute medical care while Medicaid is designed to pay for custodial care.
No. There are two types of long-term care insurance which are traditional long-term care insurance and asset-based long-term care insurance. With traditional long-term care insurance, you pay premiums for long-term care coverage. If you need care, then the policy pays benefits to cover your long-term care costs. When you die, nothing is paid to your heirs.
Asset-based long-term care insurance is in response to customer demand. Two aspects of traditional long-term care insurance most people do not like are: (a) if you put money in the insurance contract but later need the money, you cannot access the funds, and (b) when you die, any unused benefits are lost and do not pass to heirs. In response to these concerns, the insurance industry developed asset-based long-term care insurance. With this insurance, you decide how much coverage you want and then deposit enough funds with the insurance company in order to fund the coverage. With this type of policy: (a) you can always access the funds put into the policy although you will not be paid interest on those funds, and (b) any unused benefits will be paid to your heirs.
No. Welfare is generally considered to be you receiving something for which you did not pay. If you have worked during your lifetime, you have paid for Medicaid. On August 14, 1935, Franklin D. Roosevelt signed the Social Security Act creating Social Security while at the same time levying FICA and self-employment taxes to pay for it. On July 30, 1965, Lyndon B. Johnson signed into law legislation creating and adding Medicare and Medicaid under the Social Security Act. Social Security, Medicare and Medicaid are considered to be federal insurance programs for which working citizens pay through their FICA and self-employment taxes. Social Security is to insure a person’s income while Medicare is to protect the person from acute medical care expenses. Medicaid is to insure against custodial care expenses.
Medicaid planning is commonly referred to as nursing home planning although this may be misleading. As discussed earlier, you do not have to be in a nursing facility to receive Medicaid benefits. Medicaid planning uses the Medicaid rules and exceptions to your advantage in protecting assets and income while at the same time qualifying you for Medicaid benefits to pay for long-term care costs. Some courts have considered Medicaid planning to be the same as tax planning. One court went as far as to say, “Medicaid planning is a legal practice involving utilization of complex rules of Medicaid eligibility comparable to the way one uses the Internal Revenue Code to his or her advantage in preparing taxes.” Federal appellate courts have also recognized Medicaid planning as being both legal and acceptable.
Yes. Congress attempted to criminalize Medicaid planning in 1996. The United States Department of Justice later ruled the law to be unconstitutional and refused to enforce it. In 1998, a federal district court enjoined the Department from enforcing the new law. As a result, Medicaid planning is still legal and very viable for most clients.
People perform Medicaid planning for several reasons. First, Medicaid only pays for necessities. Planning can increase your quality of life if you need care by protecting assets and income to provide a financial reserve for your family. The family can use the financial reserve to supplement Medicaid benefits and provide you a better level of care. Second, if you are married, planning assists in protecting your spouse living at home from the financial hardships and insecurity created by you entering a nursing facility or needing care at home. Both assets and income can be set aside or protected to care for the well-being of your spouse.
Third, if you are in business with other family members such as children (i.e., small business, farming, etc.), planning helps protect the business assets and income from being lost to pay long-term care costs; and consequently, helps protect the children involved in the business from financial hardships. Fourth, you and your family have worked hard, paid into the system supporting Medicaid, and at the same time have been able to save a little for your family. Planning helps hard working, tax paying people such as yourself pass on the fruits of your labor to your children and grandchildren. Finally, most people want to die with dignity. Planning helps protect finances to assist your family in paying for special care for you and end of life expenses.
No. Medicaid allows states to provide waivers enabling you to qualify for Medicaid benefits while not residing in a nursing facility. In Oklahoma, the wavier program is known as the Advantage Waiver. These programs allow you to remain at home, receive in-home services and have your in-home services and other long-term care costs covered by Medicaid. These programs are based on the common sense approach of allowing you to use the same total dollar amount of Medicaid coverage to purchase in-home care instead of requiring you to be admitted to a nursing facility.
These programs will not provide around the clock care as in a nursing facility because the hourly cost of care at home is more expensive than the hourly cost of care in a nursing facility. If more care is needed than covered by Medicaid, you can purchase additional care with protected assets, supplement the covered care with other’s services, or do a combination of both. This program can be especially valuable in helping your spouse or other loved one, who is either living with or near you, to keep you at home longer. If your condition deteriorates to the point you need more constant care in a nursing facility, you do not have to requalify for benefits; but rather, just transfer your existing benefits to pay for the nursing facility. This is because in qualifying for a waiver program, you must still meet all the medical and financial eligibility requirements as if you were entering a nursing facility. In these cases, a UCAT (Uniform Comprehensive Assessment Test) is performed to determine if and to what extent you medically need care.
Yes, in most cases. You may have heard you must do Medicaid planning before you enter the nursing facility, which is not true. It is best to do Medicaid planning well before you enter a nursing facility or need care because you can save and protect the most amount of assets and income by doing so. However, you can still save substantial amounts of money even if you have already entered a nursing facility and currently pay for care. Medicaid planning after entering into a nursing facility will enable you to prospectively qualify for benefits upon completing the planning. In other words, once the planning is complete, Medicaid will start paying for your care even if you were initially self-paying for care.
No. You still retain all decisions regarding your care. The Medicaid agency will not determine: (a) if you should receive care, (b) whether you should receive care at home or in a nursing facility, or (c) if your care will be in a nursing facility, in which nursing facility you will reside. Most nursing facilities not only accept Medicaid benefits, but rely on those benefits as an important revenue source in sustaining their operations. Federal law prohibits nursing facilities from discriminating in any way toward Medicaid patients. There are a very small minority of facilities which do not accept Medicaid patients.
No. The only difference between you privately paying for your own care and Medicaid paying for your care is who is paying the bill. When you qualify for Medicaid, you still control your care. You, not the Medicaid agency, select your nursing facility, decide which medications you receive and handle all medical treatments. This makes common sense. If the Medicaid agency made these decisions, the potential liability would be enormous. Anytime you disagreed with a chosen treatment, the Medicaid agency would have liability exposure. Therefore, all of these decisions are made in exactly the same manner and methods as they are made for private-pay patients.
In order for a nursing facility to receive Medicaid money, it is prevented from discriminating against a Medicaid patient in any way. If a nursing facility is Medicaid approved and has an available bed, it must admit you. Most nursing facilities, especially in rural areas, are Medicaid approved. Most nursing facilities would not survive without Medicaid. Only those nursing facilities which are only private-pay (usually only located in large, metropolitan areas) can refuse to accept a Medicaid patient. Most people in nursing facilities are receiving Medicaid benefits; and yet, all patients receive the same level of care.
Additionally, not only will you be allowed to retain or obtain health insurance of your choice; but you will be encouraged to do so. As an incentive, Medicaid allows you to deduct your health insurance premiums from any payment you may be responsible to pay the nursing facility. This practice puts another source of payment of medical costs before Medicaid.
No. Nursing facilities commonly tell individuals entering the facility that they must live in a semi-private room. This is entirely false. The reason they are telling you this is due to the facility’s misunderstanding. If you are residing in a nursing facility, Medicaid pays the semi-private room rate. This is entirely different than requiring you to live in a semi-private room. Therefore, you can live in a private room, but if you do so, you or your family must pay the difference between the semi-private room rate which is paid by Medicaid and the private room rate. This difference is usually pretty nominal. Assets which are protected through Medicaid planning are commonly used to pay this difference in rates.
In many cases, nursing facilities will voluntarily file your Medicaid application for you if you authorize them to do so. This process is extremely dangerous. You should never allow a nursing facility to file a Medicaid application on your behalf. Nursing facility personnel are trained in providing care. They are not trained in Medicaid rules and regulations and have no legal experience in dealing with such provisions. They only know what they have observed in dealing with Medicaid which is very limited and may have no application to your situation. If a Medicaid application is filed incorrectly, it could prevent you from ever receiving benefits. Medicaid rules and regulations are some of the most complex requiring trained professionals to deal with them.
Unfortunately, no. Most state employees administering Medicaid are good people with good intentions. They work hard at their jobs which involve administering many different programs including the Medicaid program which is one of the most complex and confusing set of rules and regulations most professionals will ever face. Additionally, Medicaid rules and regulations are always changing, often without notice. State Medicaid employees do not receive adequate training. As a result, they frequently misquote rules and regulations, and give erroneous advice to clients and advisors. Relying on advice from a state Medicaid employee can result in some very unexpected and serious consequences for you.
Yes. When people consult with an attorney about estate planning, they want the attorney to protect them, their estates and their families from all risks and expenses. If you have five potential threats to your estate, you do not expect the attorney to protect you from two or three of those threats but leave the remaining ones unaddressed. You want to be protected from all threats.
People spend thousands of dollars to reduce or avoid the costs of probate, estate taxes and costs of estate administration. For most people, it doesn’t make much sense for them to spend thousands of dollars to avoid paying these expenses only to have their entire estates consumed by escalating long-term care costs. Medicaid planning does not replace your other estate planning but compliments it by protecting you and your family from these costs.
Although it is best to do Medicaid planning as early as possible, some people consider Medicaid planning when there is an illness or immediate need for long-term care. When considered earlier there is more flexibility in your planning. It will also result in you protecting more, if not all, of your assets. Waiting to do your planning until you need care usually results in you losing a portion of your assets.
Long-term care is the largest threat to individuals, their estates and their families today. It would be foolish not to address it. This does not mean everyone should do Medicaid planning. You should discuss the long-term care issue with your attorney addressing your options for protecting you from this threat (i.e., self-paying for care, long-term care insurance if available, Medicaid, etc.). You, with the attorney’s assistance, should make a conscious choice as to what alternative you want to use in paying for long-term care expenses. A decision to do nothing is a decision to self-pay for care.
Medicaid planning is a highly specialized and a very difficult area of the law. The Medicaid rules are a confusing combination of federal and state law. As such, most attorneys do not have any knowledge of the Medicaid rules and regulations, and do not care to learn them. Very few attorneys regularly practice Medicaid. Medicaid attorneys learn the rules and regulations both through training and more importantly through the experience of handling cases. The biggest challenge facing attorneys practicing in Medicaid is not competition from other attorneys because there are so few doing it; but rather, misinformation within the community about Medicaid.
Two factors discourage attorneys who are not well versed in Medicaid to discuss it with their clients. First, attorneys can be very prideful individuals. It requires the attorney to acknowledge his or her lack of qualification, training and understanding leaving the attorney concerned about the client’s perception of the attorney.
Second, it makes the attorney very vulnerable to losing you as a client. If you need help beyond the attorney’s capabilities, the attorney perceives he or she will not only lose your Medicaid matters to the Medicaid attorney but may also lose all other legal matters you may have. For the benefit of all involved (clients, non-Medicaid attorneys and Medicaid attorneys), Medicaid attorneys receiving a referral or inquiry from a non-Medicaid attorney should have a candid discussion about his or her role being limited to helping in the Medicaid case. The Medicaid attorney should set boundaries with both the client and non-Medicaid attorney to protect the non-Medicaid attorney’s practice. By doing this, the Medicaid attorney helps the client by helping the non-Medicaid attorney.
In most cases, no you do not. In 1993, Congress codified the Omnibus Budget Reconciliation Act of 1993 which contained very specific rules for disqualifying people who have trusts from Medicaid benefits. As a result, most trusts do not help you in qualifying for benefits. Under those rules, most revocable and irrevocable trusts are considered available resources to you just as if you owned the assets themselves with some very limited and specific exceptions. A trust can be structured so that its assets are protected, but most are not. As a result, generally you must spend the assets of the trust before you can become qualified for Medicaid benefits.
No. The word “spenddown” in Medicaid is a word or art. It means assets comprising the spenddown must be used for the benefit of you or your spouse, if you are married. Spending assets to pay for long-term care cost is one of many forms of spending down assets and is allowable, but not required. As long as the assets are used to benefit you or your spouse, it is an allowable spenddown. There are many ways to protect assets by using them to benefit you or your spouse without having to spend them on care.
You can give as many assets to any person as you want to give. However, the $18,000 rule is a tax rule which says you can give another person a total sum of $18,000 of assets each year without any of those gifts counting as taxable gifts. Although gifts exceeding $18,000 are considered taxable gifts, they may or may not be taxed depending upon the grantor’s unified credit. This rule is strictly a tax rule and does not having any bearing or relationship to Medicaid eligibility.
No. Most people have heard about the five-year (previously three-year) look-back rule. Under this rule, the Medicaid agency will review all transactions during the 60 months prior to the date the Medicaid application is filed. This rule does not mean you must do your planning 60 months before entering a nursing facility or 60 months before applying for Medicaid. In fact, many cases involve individuals who are entering a nursing facility within a few days or a few weeks of an initial consultation. Some Medicaid planning is often done within this 60-month period and very rarely depends upon assets being transferred 60 months prior to you entering a nursing facility.
You can still be eligible for benefits and qualify for benefits even if you: (a) have gifted property 60 months before entering a nursing facility, or 60 months before applying for Medicaid; (b) still own property and have failed to plan with it 60 months before entering a nursing facility, or 60 months before applying for Medicaid; or (c) have failed to do any Medicaid planning at least 60 months prior to entering a nursing facility, or 60 months prior to applying for Medicaid.
It is always best to do your Medicaid planning as early as possible. The earlier you perform your Medicaid planning the more assets you will protect and the easier your case will be when filing with the Medicaid agency. However, significant Medicaid planning can still be performed during this 60 months prior to filing a Medicaid application. Through proper planning, you can protect a substantial amount of assets even on the eve of entering a nursing facility or applying for benefits.
Yes. The actual Medicaid statute says a person applying for Medicaid cannot have more than $2,000 of countable resources. We, as human beings, tend to recognize and remember numbers but fail to hear qualifying terms surrounding those numbers. The term “countable” when referring to assets in Medicaid is another word of art. Countability of assets can depend upon not only the type of assets involved, but also its use. Some assets are just exempt while others may be non-exempt but do not meet the definition of countability. As such, individuals successfully qualifying for Medicaid benefits while owning assets have had net worths ranging from as little as $15,000 or $20,000 to as much as $4.5 or $5.0 million. Although these are the extremes, most people’s net worths range from as little as $100,000 or $200,000 to as much as $750,000 or $1 million.