You may wonder why you would ever want to qualify for Medicaid if you are going to be eligible for Medicare coverage when you reach the age of 65. After all, these are both health insurance programs. If you have Medicare coverage, you would not need Medicaid, and you would not qualify anyway because you will retire with resources.
While the above is true on one level, many senior citizens do attempt to qualify for Medicaid. This is because of the fact that Medicaid will pay for living assistance. Medicare will not pay for long-term care. The program will pay for up to 100 days of convalescent care after surgery, but it will not pay for custodial care.
It can be hard to imagine a time when you will become unable to take care of your own day-to-day needs, so you may not be too concerned about long-term care costs. In reality, seven out of every 10 seniors will need help with their activities of daily living eventually, so long-term care is something most of us will need.
Paying out-of-pocket is not easy, because long-term care is very expensive. The costs are significant everywhere, but in New York, long-term care costs are particularly high. Genworth Financial has conducted a survey, and it found that the median cost for a private room in a nursing home in the Empire State in 2014 was over $130,000. The average length of stay is over two years, and 10 percent of people in nursing homes ultimately receive care for at least five years.
Since Medicaid is a need-based program, there is a $2000 limit on countable assets. Given this limit, you may wonder how you can qualify for Medicaid.
People aim toward Medicaid eligibility through a process called a spend down. When you spend down your assets, you can literally spend the money, but you could also give gifts to your loved ones.
To spend down in the optimal fashion, you must be aware of the five-year look-back. Medicaid evaluators will examine your financial dealings going back five years from the time you submit your application. If they find that you have given away assets within this five-year window, you will be penalized.
The penalty would result in a period of time during which you would not be able to qualify for Medicaid coverage. The interim would be determined by calculating exactly how much long-term care you could have paid for with the money that you gave away.
To provide an example, if you gave away enough to pay for two years of nursing home care, your eligibility for Medicaid coverage would be delayed by two years.
Medicaid Planning Report
To learn more about Medicaid and long-term care, visit this page to download our in-depth report: Smithtown NY Medicaid Planning.