Strategies To Achieve Medicaid Eligibility for Nursing Home Care in the US

Updated January 26, 2024
12 min read
Strategies To Achieve Medicaid Eligibility for Nursing Home Care in the US

Long-term care, such as nursing homes or home care nursing, incurs significant expenses due to the requirement for specialized training, dedicated staff, and necessary medical resources. These high costs stem from the need for skilled staff who are trained in dealing with the complex healthcare needs of elderly or disabled patients. Additionally, the purchase and upkeep of medical equipment, essential for providing adequate care, also factor into the overall cost. These conditions create a challenging financial landscape for individuals seeking long-term healthcare solutions.

Long-Term Care Costs in the US

The median cost of a private room in a nursing home can tally about $108,000 annually, with slightly lower prices for semi-private rooms. To put things into perspective, this is more than double the average annual income of retirees in the US. Moreover, these costs can compound rapidly if the individual requires specialized care or additional medical services. Lastly, geographical location also plays a significant role in these costs, with nursing home care being substantially more expensive in some states than others.

Importance of Medicaid in Long-Term Care

Faced with these steep costs, many Americans turn to Medicaid — a federal and state program that assists people with limited income and resources in their medical costs, providing an essential financial lifeline.

The importance of Medicaid in long-term care cannot be overstated; for many individuals and families, it provides the only means of affording continuous, specialized care. In addition to covering a large portion of nursing home costs, Medicaid also covers other types of long-term care, such as in-home care, effectively giving eligible individuals a more comprehensive range of care options.

Therefore, gaining Medicaid eligibility is crucial to long-term care planning for many Americans.

The Role of Nursing Facilities in Healthcare Support

Knowing that Medicaid only pays for care received in licensed state nursing facilities, it's essential to understand the varied roles these facilities offer:

  • Standard nursing facilities: These facilities provide primary medical care and assistance with daily living activities. Examples of services include meal services, general health monitoring, assistance with dressing and bathing, and essential rehabilitative services.

  • Skilled nursing facilities (SNFs): They offer higher medical care. In addition to the services provided by standard nursing facilities, SNFs give a multitude of specialized services such as:

      • Continuous nursing care,
      • Physical therapy,
      • Occupational therapy,
      • Speech therapy,
      • Post-surgical care, and
      • Services for individuals with severe chronic conditions or complex health needs.

Including these considerations in your long-term planning strategy can help you make informed decisions tailored to specific care needs. Moreover, in discussing these factors, the use of a legally designated power of attorney for healthcare decisions is highly recommended to ensure seamless decision-making, especially when the primary person becomes incapacitated. 

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Asset Management Strategies for Medicaid Eligibility

There are several ways to arrange income and assets to qualify for Medicaid. Here's a list of some commonly used strategies:

  • Divesting of assets: This involves transferring, giving away, or selling assets for less than their fair market value. Considering the 'look-back' period for asset transfers is essential when using this strategy.

  • Creating a trust: Irrevocable trusts might be used to meet Medicaid's asset limit. This involves legally transferring your assets into a trust you no longer own or control.

  • Depleting your assets: While not ideal, this strategy involves using your resources until they are below your state's limit set by Medicaid.

  • Applying for a Medicaid waiver: Medicaid waivers allow individuals with a high level of need to receive care outside of nursing homes. These often have different financial eligibility criteria.

  • Purchasing a long-term care insurance policy: A long-term care insurance policy can cover the cost of nursing home care, thereby preserving your assets while providing for your care needs.

Remember, seeking professional advice when considering these strategies is essential, given their potential ramifications on your financial health and estate planning.

Understanding the Role of Medicaid Trusts

By transferring assets into a Medicaid trust, individuals essentially remove those assets from their direct ownership, which can help meet Medicaid's eligibility requirements regarding assets.

However, creating a trust is a complex legal process that requires precision, strategic planning, and a deep understanding of Medicaid's rules and regulations. Therefore, professional guidance from lawyers in related fields such as elder law or tax and probate can be immensely beneficial.

Their expertise could ensure proper asset management and adherence to all legal requirements, maximizing potential benefits and minimizing legal complications or possible penalties.

Distinguishing Between Medicaid and Medicare

While both programs provide health coverage, they have different features, eligibility requirements, and benefits. Here's a list to help distinguish between the two:

  1. Program scope: Medicare is a federal insurance program, while Medicaid is a joint federal and state program.

  2. Age requirement: Medicare is mainly for those aged 65 or older, whereas Medicaid is for people of all ages who meet certain income and asset criteria.

  3. Disability: Both Medicare and Medicaid cover people with disabilities. However, Medicare extends coverage to people with End-Stage Renal Disease regardless of age.

  4. Income and asset test: Medicaid has strict income and asset limits for eligibility. Medicare does not have such tests and is available for all U.S. citizens, legal permanent residents of 65 years or older, and certain younger people with disabilities or End-Stage Renal Disease.

  5. Coverage of services: Medicare typically covers hospital stays, doctor visits, prescription drugs, and some nursing home care. Medicaid, however, can protect a broader range of services, including long-term care, such as nursing home care and in-home care, depending on individual circumstances and state guidelines.

  6. Premiums and out-of-pocket costs: Medicare recipients often pay premiums, deductibles, and coinsurance. Depending on their state's policies, Medicaid recipients may have minimal or no cost-sharing.

Understanding these differences can help individuals and families make informed decisions about the most suitable health coverage for their situation.

Conclusion

Preparing for the golden years may seem daunting, but thorough planning can lead to a comfortable, worry-free future. By focusing on factors such as long-term care costs, Medicaid eligibility, appropriate nursing facilities, and asset management, one can create a robust plan that caters to their health and lifestyle needs. Legal elements like a power of attorney can further streamline the process, ensuring a smoother journey toward a fulfilling retirement.

Article by
Brad Biren
Elder Law & Tax Attorney

Brad Biren is a proud autistic professional, writer, and advocate for neurodiverse people within the business community. He is a tax & elder law attorney with a passion for estate planning and crisis Medicaid planning. His favorite part of his job is Special Needs Planning — a financial and legal roadmap to help families of diversely-abled people cultivate greater opportunities for their loved ones. Biren also assists startups and nonprofits with optimization challenges through his innovative and novel use of synergies between tax, law, finance, science, and technology.

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