The Long Island Medicaid attorneys at our firm advise clients that have questions about the program. There are definitely many facts to digest, and we consistently hear the same concerns. In this blog post, we will look at a number of the questions that we often hear, and we will provide answers so that you can go forward in a more informed manner.
Why is Medicaid relevant to me when I will qualify for Medicare as a senior citizen?
This is the first question that most people ask, and it is a very good one. Under currently existing laws, you will qualify for Medicare when you reach the age of 65 if you have worked and paid your taxes for at least 10 years. Even if you have not worked, if your spouse has paid into the program for a minimum of 10 years, you would qualify when you reach the age of eligibility.
Medicare will provide a solid health insurance underpinning, but you should be aware of the fact that there are significant out-of-pocket costs. Part A is the portion of the program that pays for hospitalization, and there is no monthly premium for this part of the coverage. However, there is a deductible per benefit period, and there are co-payments for long stays.
You have to pay a monthly premium for Part B, which is the component that pays for visits to doctors and outpatient treatments, and there is a deductible. Plus, the program will only pay 80 percent of the covered expenses; you pay the rest. Enrollees must cover premiums, deductibles, and co-payments for the prescription drug portion of the program as well.
In addition to these out-of-pocket expenses, there is an enormous gap in Medicare coverage. If you ever require long-term care, you have to pick up the tab on your own. Medicare will pay for convalescent care after an injury or illness, but it will not pay for the custodial care you would receive in a nursing home or long-term care community.
Is long-term care affordable?
The answer to this question will depend upon your definition of affordability. Genworth Financial does a great deal of ongoing research probing into the state of long-term care costs around the country. We practice law on Long Island, and as you might imagine, the prices here are higher than the national averages.
According to their most recent study, the median monthly charge for a private room in a nursing home on Long Island in 2017 was $14,220. You won’t save much if you sacrifice some privacy, because the median cost for a semi-private room was $13,535 each month. For a one bedroom unit in an assisted living facility, you are looking at a price tag of $4000 a month, and the median cost for an in-home health aide was $4385.
What’s the solution?
It is possible to purchase long-term care insurance. However, it is quite expensive, especially if you obtain the coverage when you are an older adult. The solution that most people embrace is Medicaid eligibility. This jointly administered federal/state government health insurance program will pay for long-term custodial care.
Medicaid is only available to financially needy people, right?
This is true. There is a $2000 limit on countable assets, but many people divest themselves of resources so that they can gain Medicaid eligibility. In essence, they give their loved ones their inheritances in advance. This process is called a Medicaid spend down.
It would be logical to resolve to give gifts to your loved ones as soon as you find out that you need long-term care. The program does not want people to be able to do this, so there is a five-year look back period. If you give away assets within five years of the application submission date, your eligibility will be delayed. The length of the penalty will depend upon the amount of the divestitures.
To provide an example, let’s say that the average cost for a year a nursing home in the state of New York is $120,000. You gave away $240,000 a year before you applied for Medicaid to pay for long-term care. This amount would pay for two years of nursing home care, so your eligibility would be delayed by two years.
Attend a Free Seminar!
Our Long Island Medicaid attorneys are holding a series of free seminars in the near future. You can learn a lot if you attend the session that fits into your schedule, and you can visit our seminar page to get all the details.
Mark S. Eghrari, Estate Planning Attorney
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