Basic Information about Medical Assistance – Long Term Care
By: Robert H. Chesley
This information is intended to provide basic information about Medical Assistance – Long Term Care. It is not intended to cover non-long term care Medical Assistance. That can be learned somewhere else.
As most people know, long term care is expensive. Long term care can be broken down into three different types, depending on where the care is provided.
Skilled Nursing Facilities
First, long term care can be provided in a skilled nursing facility. These are commonly referred to as “old folks’ homes,” “nursing homes,” etc. Although these used to be very common, nursing homes are becoming more and more uncommon. Nursing homes are closing. No new nursing homes are being built. There has been a moratorium on building nursing homes in Minnesota for more than 20 years. Why? The government does not want elderly and disabled people in nursing homes. Nursing homes are expensive and about 65% of the people in nursing homes receive government assistance to pay nursing home bills.
Assisted Living Facilities
Second, long term care can be provided in assisted living settings. Twenty years ago, these were very rare. Now, every community of any size has one of these. It’s not uncommon for a town of 50,000 people to have a dozen assisted living facilities. The care these provide varies from things called independent living, memory care, assisted living, care suites, etc. They provide a smorgasbord of care. The more one needs, the higher the cost. These can range for $2,000 per month up to $8,000 per month, depending on how fancy the place is and how much care is needed. One thing is true about all of these facilities: they do not provide skilled nursing care.
Third, long term care can be provided at a person’s home. This is probably where the most long term care is provided. It might be a spouse providing care to another spouse who has dementia. It might be an adult child who is living with and taking care of an aging parent. It might mean a senior living alone who has a public health nurse come once a week to set up medications.
As one might suspect, each arrangement carries with it a different price tag. In home care might cost nothing. As such, no government assistance may be needed. But, by the time someone needs assisted living, many people need financial assistance. Many people just cannot pay $3,000, $4,000 or $5,000 per month.
How can we pay for this? Here are some options:
Long Term Care Insurance
About 10% of the Minnesota population has long term care insurance. This percentage has not increased substantially in the last 20 years, despite the government wanting more people to purchase it. Most people who have this bought it through their employment when it was affordable on a group basis. Many of them are government employees or people who belong to a union.
If you are a veteran or married to a veteran, you may be able to get long term care benefits. These vary from being able to stay in a veteran’s administration nursing home or staying in a nursing home in your community and have the VA pay part of the cost of your care. You should talk to your Veterans Administration Advocate (there is one in each county) for help with this.
Medicare is not to be confused with Medicaid. Medicare, as a rule, does not pay for long term care. It will pay for up to 20 days in a skilled nursing facility following discharge from a hospital after an in-patient stay of 3 days or more. (Staying in a swing bed or on an outpatient basis does not count.) After the 20 days, Medicare will pay additional benefits as follows:
- It will pay a co-pay towards your daily cost of care.
- Payments will be made only as long as you receive rehabilitation with a goal of returning home.
- You continue to make progress towards going home.
- The maximum number of days this is good for is 80.
At most, Medicare will pay part of the nursing home bills for a maximum of 100 days. Few people ever receive nursing home benefits from Medicare for the maximum 100 days.
Another way to pay for long term care is to use your own funds. As indicated above, long term care can run anywhere from almost nothing to $8,000 per month. For example, $8,000 per month comes to $96,000 per year. While many people can pay this for a few months, most people cannot sustain a monthly payment in this amount for any length of time. Most people have income sources, like Social Security and private pensions. Some retired government workers have generous pensions that throw off a monthly payment. But again, most people cannot sustain a huge monthly payment to a long term care facility.
How much will in-home care cost on a 24/7 basis?
Some people think they will save money by having their loved one stay at home. That may be true if they are going to provide most of the care. However, if they are going to pay for someone else to provide the care, on a 24/7 basis, the cost will exceed $10,000 per month or $120,000 per year.
The most popular source of payment for long term care is Medical Assistance. In other parts of the country, this is referred to as Medicaid. Each state has its own version of this. For example, in California it is referred to as Medi-Cal.
Medical Assistance is a combination of federal and state programs to help low income people pay for medical care. Two thirds of nursing home patients receive Medical Assistance. Medical Assistance is referred to as an entitlement. That is, people have a right to receive Medical Assistance if they qualify under the program’s eligibility criteria.
What if you don’t need a skilled nursing facility but need an assisted living facility?
People can get Medical Assistance at an assisted living facility through a program called Elderly Waiver. Unlike Medical Assistance, Elderly Waiver is not an entitlement. The government makes available a certain number of slots, and if those slots are full, one has to wait for a slot to open. Also, facilities themselves sometimes have their own restrictions. They might limit the number of beds that can be filled by Elderly Waiver recipients or require that an Elderly Waiver recipient first pay with private-pay for a certain number of months, like 12 months or 24 months.
Medical Assistance Eligibility
To be eligible for Medical Assistance, a person must:
- Be a resident of the state in which they apply.
- Have medical expenses that exceed income.
- Have available assets of less than $3,000.
- If married, the spouse cannot have available assets that exceed the community spouse allowance, which can be as low as $33,851 or as high as $119,220 (2015 figures).
- Be 65 years of age or older or be disabled.
What is an available asset?
An available asset is any asset that one can convert to money fairly easily and that is not an excluded asset. Excluded assets include a home, one car, household goods and furnishings, clothing, a prepaid funeral, etc. Examples of available assets are: checking accounts, savings accounts, certificates of deposit, stocks, bonds, mutual funds, exchange traded funds, IRAs, 401(k), most annuities, and cash surrender value of life insurance policies.
What is a community spouse?
A community spouse is a person married to a person in a skilled nursing facility, assisted living or living at home who is receiving long term care benefits and who himself or herself is not living in a skilled nursing home, assisted living or receiving benefits at home.
Assets: How much can a community spouse keep?
When a spouse goes into a nursing home, if payment will be from private funds, the community spouse can keep all assets. However, if the couple applies for Medical Assistance, there are limits on what he/she can keep. As a general rule, the community spouse can only keep one half of the assets the couple had as of the asset assessment date. However, this formula is subject to maximums and minimums. For example, if the couple had over $240,000 in available assets as of the asset assessment date, the community spouse can only keep the maximum community spouse allowance of $119,220. On the other hand, if the community spouse only had $40,000 in available assets, the community spouse can keep $33,851, the minimum community spouse asset allowance.
Income: How is the income of the ill spouse and the community spouse treated?
Medical Assistance requires as much of the income of the institutionalized spouse as is necessary to pay medical expenses. It will allow the recipient to keep $97 a month as a personal needs allowance. This can go to purchase clothing, toiletries, haircuts, nail trimming, etc. Medical Assistance does not require the community spouse to contribute any of his/her income to pay medical expenses for their spouse. If the community spouse has low income (below $1,992 per month) or high shelter expenses, Medical Assistance will allocate some of the spouse’s income to the community spouse to prevent him/her from becoming impoverished.
When are the couple’s assets valued?
When a married person applies for Medical Assistance, they fill out a form called an asset assessment. They list all of their assets as of a certain date. Oftentimes, the date to value the couple’s assets is considerably different than the date they apply for Medical Assistance. The date in question is called the asset assessment date. This date is the first date that the ill spouse:
- Was institutionalized for 30 consecutive days in a hospital, skilled nursing facility, or combination of the two, or
- Had a MN Choices screen, had been found to need a nursing home level of care, and began receiving home or community based services within 60 days of the screening.
Example: John is now in a nursing home and his wife is applying for medical assistance. John had a new knee inserted 5 years ago and for this he was hospitalized for 5 days and he spent 26 days in a nursing home; the asset assessment date will be 5 years ago.
What is the 5 year look back period?
The Medical Assistance rule is that anyone applying for Medical Assistance has to disclose any gifts made within 5 years of the application. Does this mean there is a 5 year penalty? No. The penalty period for making gifts and the 5 year look back period are entirely separate periods. For example, if you made a gift of $10,000 two years ago, and now apply for Medical Assistance, here is what happens:
- You must disclose the gift on the Medical Assistance application.
- There will be a period of ineligibility because of the gift.
The period of ineligibility will be $10,000 divided by the SAPSNF rate (currently $6,141). The result (1.30 months) will be the period of ineligibility. However, that period will not start when you made the gift. It will not start until the county finds that you are otherwise eligible, including the requirement that your assets are below asset limits
Where can you find help?
You can find help at your local county office or contact an experienced lawyer for assistance. Say you are a single person and your available assets are already below $3,000; the only thing a lawyer could do is to fill out the forms for you. You may be able to do this yourself or with the help of a social worker. If, however, you are a single person with more than $3,000 in available assets or you are a married person with more than $40,000 in available assets, a lawyer may well be able to help you. The lawyer may be able to preserve some of your assets that you would not otherwise be able to keep.
Contact our office at 507-779-7529 or toll free, 877-599-5550, with your questions regarding Long Term Care and Medical Assistance.