Understanding the Limits of Medicare Coverage
Many people believe that Medicare will pay for nursing home costs. After all, the language states that Medicare will pay for “skilled care,” and nursing home facilities are referred to as independent, assisted, and skilled. But Medicare only provides health care benefits for acute medical care; rehabilitation services; and prescription drugs. “Acute care” is short-term treatment for a condition or illness from which recovery is expected.
In other words, Medicare only pays if you are expected to get better and go home! Many people are shocked to discover that the Medicare benefits they paid into for years will not pay for “skilled care” in a nursing home.
When Medicare was created, it was designed to cover acute care because strokes, heart attacks, and cancer were the biggest health issues in 1965. Now that a few generations have passed, our health problems are no longer confined to acute care issues. The fact is that our life spans often exceed the coverage of Medicare.
Medicare was not designed to pay for the kind of care you will need if you have the misfortune of having dementia or other long-term care needs. For most people, long-term care assistance begins in the home, progresses to the assisted living facility, and then eventually ends at a skilled nursing facility, a.k.a nursing home.
Medicare does not pay for these components as reflected by the fact that it does not even have reimbursement codes for them. Long-term care insurance could help, but the unfortunate reality is thay only 4% of seniors have a viable long-term care insurance policy. That means you are on your own to pay for the cost of care at home, in an assisted living facility, or in a nursing home. Due to this cost being so high, most people who require that type of care will need the assistance of the hybrid federal/state Nursing Home Medicaid program.
Unlike Medicare, which is available to qualified individuals with no means-testing, Medicaid requires that the person needing care and their spouse meet strict limitations of income and assets means-testing by the state of their residence. Nursing home Medicaid does not come to your rescue unless and until you are sufficiently broke.
The government uses a fancier term than “broke;” their words are “limited resources.” Unlike Medicare, one must meet the limited income and resources rules of each state to access the benefits of Medicaid. Those limitations are described as “means test testing.” In other words, if a person has sufficient means as defined by the government, then that person does not qualify for Medicaid.
The predominant use of nursing home Medicaid is to pay for facility based long-term care expenses once a person has run out of money and out of other options. Medicaid pays nursing home costs for certain qualified individuals. It covers very limited home and community-based health-care services, such as assistance with bathing, light housekeeping, cooking, and laundry, while a “qualified individual” remains at home.
The federal government provides a grant to each state to cover approximately 50% to 80% of the Medicaid program costs within the state, and the state pays the rest. Many people think about Medicaid with disdain, but it is not a moral failure to need assistance with long-term care when you have a long-term care illness with extraordinarily high costs.
For most aging US citizens nursing home Medicaid is an absolutely necessary benefit. These days, the monthly cost for a nursing home typically ranges between $5,000 and $15,000 per month! People who worked for decades often have only enough savings to pay for just a few months of full-time long-term care costs in a nursing home.
Medicaid is a joint program between the federal government and the individual states. Therefore, its implementation in each state is markedly different because the actual Medicaid rules are created by the state (and reviewed by the federal government to ensure that the states don’t violate the federal rules). Individual states do have substantial leeway to modify the application of Medicaid within their borders.
With proper planning, you can pay what the law requires to become eligible for nursing home Medicaid, but not one penny more.
Understanding the Very Narrow Gate to Long-term Care Veteran’s Benefits
The Veterans Administration may provide a special monthly pension for veterans who meet the strict financial-need and diagnosis requirements for this long-term disability benefit. This benefit is referred to as the Aid and Attendance, or Non-Service-Connected Pension. The veteran’s current disability does not need to have any connection to the veteran’s actual time in the armed forces. A non-service-connected disability can be Alzheimer’s, Parkinson’s, etc.
Aid and Attendance is a needs-based program with income and asset tests.
The Veteran:
- Must have served during a wartime era as specified by the VA.
- Must not have given away assets to qualify for the benefit (self-impoverishment).
- Must be permanently and totally disabled, or 65 years of age or older. The disability does not have to be related to military duty.
- Must meet income and net worth requirements (The net worth limit from December 1, 2021, to November 30, 2022, is $138,489).
A higher pension is awarded if the veteran is housebound, and an even higher pension is awarded if the veteran needs on-going daily aid and attendance. In 2022, the annual range for the Special Monthly Pension benefit is from $14,753 to $29,175. The factors which are used to determine an individual veteran’s Maximum Annual Pension Rate (MAPR) include:
- Number of dependents including a spouse and dependent children.
- Income and net worth, excluding a home and a car.
- Level of need for care.
Additonally, the Veteran’s Spouse/Dependent is eligible for a Death Pension. A higher pension is awarded if the spouse/dependent is housebound, and an even higher pension if the spouse/dependent is in need of daily aid and attendance.
You Need an Experienced Elder Law or Elder Care Attorney
In order to deal with the above matters, you need an attorney who has substantial experience in the issues of aging, dementia, long-term care, Medicare, Medicaid, and nursing home asset protection. There is a distinctive difference between an estate planner who is focused in wills and trusts and an elder law estate planner who is focused not only in wills and trusts, but also in the issues of health care during the aging trajectory.
You are looking for an attorney who is focused on giving advice not only about estate planning, but also about how to survive and thrive during the aging process. Such an attorney needs to understand a wide variety of issues that face clients as they become senior citizens. They need to understand how health care will be provided for their clients and how health care for seniors is paid for in the United States.
The attorney with the appropriate experience will be able to show clients that if done correctly, their elder-law-informed estate plan can have profoundly positive benefits for the client and family—even while the client is still alive. You are looking for someone who has substantial experience in helping people make life, death, and health care decisions.
A recommended first step in finding a qualified elder law attorney would be to go to the website www.naela.org. That is the website of the National Academy of Elder Law Attorneys—an organization of attorneys who are focused on the issue of elder law.
