Time Urgent Window for Seniors Due to Changes in Medicaid Law
By the time you read this, the President will have signed into
law significant restrictions to the Medicaid law. This article
describes the opportunity for seniors to take action and protect
themselves. These restrictions are intend ed to stop abuse of
the Medicaid system by middle income and even wealthy seniors
who think of Medicaid as the last resort for senior insurance.
Until now, the Medicaid law has been so liberal, anyone could
qualify for Medicaid support ed long-term care. For example, a
home has been a non-countable asset, so one could own a $10
million home (or an apartment building in which they reside) and
still qualify for Medicaid. No more such loopholes in this
senior insurance program.
Anyone with more than $500,000 in home equity cannot receive
long term care benefits from Medicaid. Additionally, one will be
penalized if they have given any type of gift within the last
five years (the look-back period was previously three years).
The gifts taken into account include college tuition for
grandchildren, emergency help for family, Christmas, birthday,
wedding and graduation presents, charitable and church
donations. In other words, Congress is attempting to insure that
the only people who use Medicaid for long term care will be
those that normally don't have enough money to give gifts
anyway. Use caution making gifts or donations as they will
penalize your ability to obtain Medicaid benefits for long term
care for the next 5 years. This senior insurance program will no
longer be available to many.
The new law starts the penalty period when the senior applies
for Medicaid, not when the gift is given. For example, if Mrs.
Jones gave a $40,000 donation four years ago (within the five
year look-back period) and if Medicaid needs to pay a local long
term care facility $4,000 a month, then Medicaid will not make
any payments for 10 months. In other words, Medicaid penalizes
assistance for the value of the gift. Even if Mrs. Jones is now
broke, Medicaid will not provide support until she has been in a
long term care facility for 10 months.
Also be aware that nearly every state is tightening their
implementation of the general Medicaid rules. Do not
automatically assume that an annuity is an exempt asset or that
the residence cannot be attach ed for recovery. These rules are
in flux and favor the state, so you must maintain contact with
your state agency that administers Medicaid or an Elder Law
attorney.
So what should the average senior do? Middle income and wealthy
seniors no longer have a substitute for long term care
insurance. They cannot rely on the government as their supplier
of senior insurance. Of the three choices that have been
available for dealing with long term care: a) self-insurance, b)
private long term care insurance, c) position assets to collect
Medicaid, the list is now down to two options: a) self-insure or
b) private long term care insurance. In other words, if you've
delay ed buying long term care insurance thinking that you had
the government as a safety net, that safety net is now gone.
Note that Medicaid was never a good option anyway. Someone with
private long term care insurance that can pay "full fare" for
long term care gets a nice sunny private room with big windows.
The senior on Medicaid gets shoved in an interior room with two
other people, no windows. As much as this is illegal or people
want to deny it happens, as stat ed by the National Senior
Citizens Law Center: "Many common nursing home practices are
illegal. For example, although the Federal Nursing Home Reform
Law requires that all residents receive high-quality care, many
nursing homes provide lesser care to residents whose care is
paid through Medicaid."
Why don't seniors just get private long term care insurance? The
most common reason is the expense. But it's a bad excuse because
an experienced financial advisor can show you how to keep the
cost down or make a one time payment rather than annual payments
(using an immediate annuity or a "combo policy," its possible to
make one single deposit and avoid annual payments). In some
states, insurance companies can provide a return-of-premium
option. With that option, if you never use the policy, your
heirs get all of your premiums return ed. But don't delay. One
negative comment in your medical records can preclude you from
ever getting insured so get the coverage now.