Whenever I tell people that I’m an elder law attorney, I usually get asked one question – “How is it ethical for people to take advantage of loopholes in the rules and protect their assets while qualifying for Medicaid to pay for nursing home care costs?
Recently, I was asked this question in a rather unusual context. New York Times columnist Ron Leiber has been writing a series of columns this summer focusing on issues of Medicaid, the middle class, and long term care. He wanted to talk to me about how I justify helping families protect assets to qualify for a program that was intended to benefit the poor. Although the resulting column, which you can read here, gives a pretty good overview of the reasons people take steps to protect assets, there are a few more that didn’t make it into the column.
People are living longer and requiring longer nursing home stays. According to the Department of Health and Human Services, the median nursing home stay in 1985 was 237 days at an average cost of care of around $80 per day. In 2004, the median nursing home stay had increased to 835 days at an average cost of $210 per day. Currently, families in our area can expect to pay anywhere from $250 to $320 per day for long term care. When people who are in their 80’s today were retiring, they could not have anticipated the costs of care and length of stays we are seeing today. They could not have predicted and planned for costs in excess of $10,000 per month.
Many of my clients are couples, where one person may need nursing home level of care while the other needs to continue to support him or herself in the community. Medicaid’s rules allow a spouse to keep a maximum of $120,000 in assets and may leave a spouse at home with as little as $2000 a month of income. If a spouse has extraordinary living expenses, that might increase to $3,000 a month of income. So, if the well spouse needs assisted living costing $4,500 per month, plus insurance and prescriptions of another $500 per month, she can afford to pay for that care for about five years. And this assumes that there is $3,000 per month of income to transfer to her, enough assets to make her limit the maximum of $120,000 and that her costs don’t increase at a greater rate than her income.
Once a person is on Medicaid in the nursing home, they are allowed to keep a minimal amount of money each month to cover any needs not covered by Medicaid. In Indiana, this amount is $52 per month. Michigan gives a more generous allowance of $60 per month. This must cover haircuts, clothing, and anything else “extra” that a person needs. Medicaid has limits on how often it will pay for items like hearing aids, glasses, and dentures. If those items are lost or damaged before Medicaid will cover them, the patient will need to use his or her meager monthly allowance to pay for these items. Asset protection allows nursing home patients to have the funds available to pay for necessities and for niceties that contribute to the quality of life.
Finally, we are beginning to see a shortage of Medicaid beds in this area. While it hasn’t reached the level that other areas of the state or country have seen, wait lists for Medicaid beds in some facilities can be months long. If you are not eligible for Medicaid when a bed becomes available, you run the risk that a bed may not be there when you run out of funds. You may be forced to move to a different facility to find an available bed.
Medicaid asset protection is more than just preserving an inheritance for the next generation. It can be an essential part of preserving the dignity and quality of life for your loved ones.