If you or a loved one unexpectely needs nursing home or another form of long-term care right now, and you haven't done any pre-planning, you're probably wondering how you're going to pay for it. And not only how will you pay for it, but will doing so deplete a good portion, or worse-case scenario, all of your life savings, leaving you little to nothing to pass onto your desired beneficiaries? Unless you're worth several million dollars, these are very real concerns! So, what do you do? 

The answer is Medicaid. Primarily known as a public health insurance program for low-income individuals, families and children, Medicaid also pays for long-term care costs for individuals that qualify — and you may be surprised to know that you don't need to be "poor" to qualify. In fact, there are numerous legal ways to protect various assets, even if you haven't done any pre-planning prior to a healthcare crisis. However, qualifying for Medicaid can be a complicated process, especially if one elects to file the application on their own, without any professional assistance. 

The Medicaid rules for long-term care are complicated; however, these rules are meant to prevent the spouse who is healthy (known as the community spouse) from becoming impoverished because his or her spouse needs care in a nursing facility or at home. The Pennsylvania Department of Aging Waiver Program pays for in-home care for someone that would otherwise need nursing home care.

When a spouse requires long-term care, a resource assessment needs to be completed. This assessment determines what portion of a couple’s countable resources can be protected for the spouse who is living at home in the community (the spouse who is healthy). Of the amount of countable assets1 reported, the spouse living in the community can keep one-half up to a current maximum of $126,420.00. The other one-half of the resources must be spent down before the spouse who is residing in the nursing home will qualify for Medicaid benefits. 

One way to spend the excess resources is to pay for care every month at a rate of $14,676.04 (on average) until these resources are gone; then, the spouse who is residing in the nursing home will qualify for Medicaid benefits. However, there are other options:

• If the income of the spouse who is living in the community is insufficient to meet his or her monthly housing expenses, that spouse is able to protect additional resources through the use of a special kind of annuity. Through the use of this annuity option, the spouse who is living in the community may be able to protect a large portion, even all, of the excess resources. If done properly, the spouse residing in the nursing home may qualify for Medicaid immediately. These excess resources can be used for anything that would benefit either the spouse living in the community or the spouse residing in the nursing home. These resources can be spent on things such as home improvements, furniture, appliances, computer equipment, irrevocable burial accounts, and a new car, to name just a few. When these excess resources are “spent down,” the spouse who is residing in the nursing home will qualify for Medicaid benefits.
• It is still possible to give assets away. If assets are given away during the five year “look-back” period, a period of Medicaid ineligibility is created. This period of ineligibility is one month for every $14,676.04 given away.
• There are additional ways to preserve excess resources from the cost of long-term care. For example, if there is a child who has a disability or a child who has provided care, there are special Medicaid rules that allow assets to be protected from long-term care costs. 

The Medicaid rules are very complicated; therefore, it is important to get good advice when faced with the decision of how to protect assets from the rising costs of long-term care. Contact Steinbacher, Goodall & Yurchak at 1-800-351-8334 to schedule your consultation. You may also schedule a consultation online. 

¹Countable assets are things that are considered available to pay for long-term care. They include such things as bank accounts, stocks, bonds, certain annuities, investment accounts, certain non-resident property, and the cash value of life insurance, to name just a few. There are certain assets that are not available to pay for long-term care. These include the home of the applicant or spouse, term life insurance, a small amount of whole life insurance, personal property, the retirement plan (IRA or 401k) of the community spouse, irrevocable burial accounts, and cemetery spaces.