Even though he was in his late eighties himself, Jack was the primary caregiver for his wife who suffered from severe dementia. He took care of her as best as he could, for as long as he could. Then overnight she took a turn for the worse and there was no choice but to place her in a skilled facility. The couple had no long-term care insurance, and other than a Will, the couple hadn’t done much in the way of estate planning, much less long-term care planning.
Jack was referred to me for counsel. He was looking to preserve as much of his assets as he could since, despite his age, was in good health and wanted to be prepared to “be around for awhile.” This was not the ideal scenario for Jack and his wife, because here we were dealing with crisis planning where their options were far more limited than had they done advance planning.
Jack was frustrated and distraught when he learned that nearly half of his assets would have to be carved out and spent down before Medicaid could be applied toward his wife’s care. It was hard for Jack to imagine that all he had worked for and saved would be cut in half in the blink of an eye. He did not understand the difference between Medicare and Medicaid and how people generally paid for nursing home care. Without long-term care insurance, the only choice he had was to self-insure until the assets were exhausted, then apply for help from the government.
Here is what I had to explain to Jack and his family.
Many people confuse the term Medicare with Medicaid. Medicare is an entitlement program for general health insurance for seniors age 65 and older, as well as for certain disabled individuals. There is no asset or income level requirement to qualify for Medicare. Medicare is not long term care insurance although it does partially cover some skilled nursing admissions for a relatively short period of time after an admission to a hospital that lasts for at least 3 days. Medicaid, known in Pennsylvania as Medical Assistance (MA) is a jointly funded Federal/State funded insurance program for low-income and needy people and is part of the public welfare system. For the aged who medically qualify for skilled nursing care, MA is the most prevalent form of payment made when an individual no longer has sufficient assets to pay for care.
A resident of Pennsylvania who is 60 years of age or older and is both medically eligible and financially eligible for MA can apply for Home and Community Based Waiver Services. The aging waiver can provide home health services, adult day care, meal delivery, personal assistance, accessibility adaptations, equipment, technology and medical supplies along with other types of supports to help the individual age in place in his or her residence. It is important to note that MA is not available to pay for room and board in a personal care or assisted living setting.
Because Medicaid is a joint endeavor with the Federal government and the States, the requirements to qualify for Medicaid vary from state to state. In Pennsylvania, MA recipients must spend down their assets to no more than $2,400 if their income is equal to or greater than $2,205 per month. A Pennsylvania MA recipient whose income is less than $2,205 per month is permitted to keep up to $8,000 in assets. Certain assets are not included as countable resources such as one residence and one car.
The spouse of an MA recipient must be left with assets of at least $24,180, but cannot retain assets in excess of $120,900, in addition to assets of such spouse which are not countable as a resource under the law. The determination of exactly how much a spouse can keep is determined by dividing the couple’s countable resource assets by two. Fifty percent of the couple’s countable resource assets must fall between $24,180 and $120,900. If the value of fifty percent of the couple’s assets is more than $120,900, then not only does the MA applicant spouse need to spend down to $2,400, but the spouse remaining in the community must spend down to $120,900.
Individuals who do not have long-term care insurance but do have sufficient assets to live on and to cover payment for skilled nursing services for at least five years can take action to protect certain assets by proactively planning for long-term care with a qualified Elder Law attorney. Absent proactive planning, the family often ends up in crisis planning, like in Jack’s case.
Without long-term care planning, the probate estate of a Pennsylvania MA recipient is subject to Estate Recovery by the Department of Human Services (DHS). The executor of the estate of a decedent who is age 55 or older is obligated to notify DHS of the individual’s death if he or she was a recipient of MA. Many estate administration attorneys routinely recommend that an executor request a statement of claim for anyone dying at age 55 or older. An executor who fails to notify DHS where Estate Recovery is applicable can be held personally liable. Estate Recovery applies to MA payments provided on or after August 15, 1994. DHS will seek to recover the amount of MA paid for all nursing facility services, home and community-based services, and related hospital and prescription services paid on behalf of the decedent.
Just as estate planning is critical to ensure that your assets pass to your intended beneficiaries with as little death tax due as possible, long-term care planning is critical if your goal is to ensure that your beneficiaries receive some part of what you worked a lifetime to build. Being proactive in your long-term care planning will produce the best possible results if your goal is to protect your assets.
For more information about how we can assist you, please contact us.