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Long Term Care

Medicare

Medicaid

Paying for Long-Term Care

 

Long-term care is expensive.  In Alabama, the cost of a single month in a nursing home (“skilled nursing facility”) is over $5,000 per month.

 

When it comes to paying for long-term care, people generally fall into one of three categories.  The first group consists of people who have the resources to pay for the entire cost of their long-term care, whether the money comes from private resources or a long-term care policy.

 

The second group of people consists of the poor.  When an individual has no resources, a means-tested government program like Medicaid will usually pick up the cost of their nursing home care.

 

But what about the rest of us?

 

A large number of elderly Americans fall somewhere in between: they have too many resources to obtain any government assistance, but too few resources to afford the cost of long-term care for very long. Most in this group are middle class people who spent a lifetime building a nest egg, only to see it spent down to pay for a few months’ of nursing home care.

 

Private Pay

 

For nursing home residents with sufficient resources, private payment is always an option. But what if the money runs out?

 

When a loved one requires nursing home care, don’t wait until the money is almost gone—talk with an attorney who practices in the area of elder law to determine what can be done to protect your loved one’s assets.

 

Medicare is a health insurance program for people over 65.  It does not cover the cost of a long-term nursing home stay.  Under the right circumstances, Medicare will cover the full cost of up to 20 days in a skilled nursing facility.  However, after day 20 Medicare will only cover a small portion of the cost for days 21-100.  Then, after day 100 Medicare will not cover any of the nursing home cost.  (Compare Medicare with Medicaid, below).

 

Long-Term Care Insurance

 

Only a small percentage of people purchase long-term care insurance policies.  We usually recommend to our clients that they at least consider purchasing a long-term care insurance policy if they are able to do so.

 

The benefits provided by a long-term care policy vary widely from company to company.  Review your policy every few years to be sure that you understand what benefits your policy does (or does not) provide.

Medicaid is a means-tested program which pays for certain medical expenses for the very poor.  Because the cost of nursing home care in Alabama is so expensive, many people who started out middle class find themselves to be very poor after a few months.

 

In Alabama, Medicaid will contribute to the cost of nursing home care only if the Medicaid applicant has income and resources (assets) under certain limits.

  • Income Limit

    A Medicaid applicant may not have more than $2,130 per month (as of 2013) in income in order to qualify for Medicaid long-term care benefits in Alabama.  Excess income is not usually the reason that a Medicaid applicant is denied, however. When excess income is the only bar to eligibility, an applicant may still qualify for Medicaid benefits by setting up a special kind of trust called a QIT (see “QIT” section, below).

     

    Qualifying Income Trust: "QIT"

    The term QIT is shorthand for a special kind of trust alternatively known as a “Medicaid Qualifying Income Trust” or a “Miller Trust.”  A QIT is used when a Medicaid applicant would be eligible but for the fact that they have too much monthly income.  Once a QIT is established, the applicant’s entire income is paid into the QIT account each month.  At the Medicaid applicant’s death, any money remaining in the QIT account is used to repay the Alabama Department of Medicaid for the money expended on that person’s cost of care.

  • Resource Limit

    The resource limit is much more problematic for a Medicaid applicant.  The Alabama Medicaid Agency will only contribute to the cost of an individual’s nursing home cost after the individual has spent-down their non-exempt assets below $2,000. This means that individual with $2,001 in his or her name as of the first day of the month will be ineligible for Medicaid long-term care benefits for that entire month.

  • Exempt Resources

    The resource limit is much more problematic for a Medicaid applicant.  The Alabama Medicaid Agency will only contribute to the cost of an individual’s nursing home cost after the individual has spent-down their non-exempt assets below $2,000. This means that individual with $2,001 in his or her name as of the first day of the month will be ineligible for Medicaid long-term care benefits for that entire month.

     

  • Married Couples: Spousal Impoverishment

    Different rules apply when the person entering the nursing home has a well spouse who is still living in the community.  If the nursing home spouse had to spend down all of the couple’s assets below $2,000 it would leave the well spouse destitute.  As a result, Congress passed a law providing that certain property is protected for a well spouse living in the community.

     

    Currently, the community spouse can protect the first $25,000 of non-exempt assets for their own use.  If the couple has more than $25,000 in non-exempt assets, the community spouse may keep 50% of that property, up to a total of $117,240 (as of 2014 – this number is adjusted annually for inflation).

     

    In addition, the well spouse in the community can keep enough of the nursing home spouse’s income as is necessary for them to meet the “minimum monthly maintenance needs allowance.” (MMMNA)  For 2014, that amount is $1,967 per month; this number is adjusted annually each July.

     

    For example, Mr. Smith receives $2,000 per month in Social Security income, while Mrs. Smith only receives $800 per month.  Mr. Smith enters the nursing home.  Mrs. Smith would be entitled to keep $1,167 per month of Mr. Smith’s income to get her income up to the MMMNA of $1,939 per month.  The remainder of Mr. Smith’s income would be contributed towards the cost of his care.

  • Applying for Medicaid in Alabama

    If you are assisting a loved one with applying for Medicaid nursing home benefits in Alabama, the attorney's at Red Oak Legal, PC are available to assist you.

     

    Medicaid eligibility is a complicated area of the law, and an attorney who practices elder law can help your loved one achieve eligibility for Medicaid nursing home benefits while helping to avoid the kinds of honest mistakes that can trigger a denial or a penalty.

     

    We suggest that you meet with an attorney prior to submitting a Medicaid application. However, we are available to assist clients in all stages of the process, including pre-application Medicaid Planning, preparing and submitting Medicaid applications, and appeals of decisions of the Alabama Medicaid Agency.

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Alabama Estate Planning Attorneys Steve Wiggins and Raley Wiggins with Red Oak Legal, P.C. assist clients in Tuscaloosa, Northport, Brookwood, Moundville, Holt, Eutaw, Greensboro, Marion, Centreville, Carrolton, Reform, Gordo, Livingston, Bessemer, Fayette, Jasper, Montgomery, Prattville, Wetumka, Auburn, Millbrook, Pike Road, Union Springs, Troy and the surrounding areas with Estate Planning, Elder Law, Business Succession, Asset Protection, Long-Term Care, Medicaid, VA Pension Planning, Litigation, and Probate and Estate Administration.

 

 

 

 

 

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