When many people hear the word Medicaid, their first reaction is, “I’ll never.” “I have worked my whole life, and I’ve got too much pride to take some hand-out from the government.” This sentiment is commendable, and it’s the attitude bread into each of us as Americans, and moreover, as Texans. That independent spirit is what built our country, and what gives Texas its unique culture and community. Yet, Medicaid still remains the largest single payer of Long-Term Care (LTC) services in Texas and America as a whole. This is due largely to the high cost of services and the bleak reality that you, your spouse, your mom, your dad or someone else you know will eventually live the final days, weeks or even years of their life in a nursing home. Considering these eventualities, it may be time to take a fresh look at your attitude toward the Medicaid system.
According to a study by the U.S. Department of Health& Human Services’ Agency for Healthcare Research and Quality, roughly 43% of all people who reach age 65 will need long term care services in their lifetime. This means that almost every couple in the state will face the dilemma of paying for nursing home care for one or both spouses. Of those who go into a nursing facility, it’s projected that 21% will remain there for at least five (5) years. Overall, the average length of stay in a nursing facility is around three (3) years. Given the fact that the average American can only pay privately an average of 26 weeks, how the person is going to pay for their remaining stay becomes not just a problem, but a matter of life and death.
The cost of this care is exorbitant. For example, in the Greenville, Texas area the daily rate of a private room is around $165.00 per day. These rates increase as you move closer to the Dallas/DFW metro-plex. The total annual cost can be over $70,000 per year and even more if paying for an in-home service. Many people work diligently and save their whole life only to see their savings wiped out in a few short months due to the cost of care and still-present expenses at home. To compound the problem, Americans are living longer, and the Elder population is increasing. In 2010 America had 40 million citizens over age 65. That number is projected to increase to at least 55 million by 2020. The demand for nursing services will necessarily increase with this additional growth, and that increase can only raise the cost of nursing facility services.
To the surprise of many, neither Medicare, nor traditional health insurance will pay the cost of nursing facility care. This leaves Medicaid as the only alternative for most. In addition, even people who attempt to self-pay, eventually wind up on the Medicaid system once their money runs out. Because of these realities, Medicaid has become the primary payer for Long-Term Care services for a majority of the population. Therefore, it makes sense to recognize the importance of this system early, and plan ahead for the use of Medicaid and other state benefits before depleting your entire nest-egg. Pre-planning can save you thousands of dollars as well as your home and other assets. Qualifying for Medicaid is often complicated, and therefore, you should seek out the advice of an experienced attorney to help you develop a plan that fits your individual situation.
Still, planning for long-term care with Medicaid doesn’t have to be a nightmare. In fact, planning to pay for your LTC expenses with Medicaid does have some advantages to other methods of payment. As mentioned already, the average nursing home resident can only pay privately for 26 weeks. Pre-planning may be able to allow you to preserve those assets for future generations, rather than paying those funds to a nursing facility or on insurance premiums. Second, and most important, planning with Medicaid will allow you to protect the spouse at home from “Spousal Impoverishment.” Medicaid rules allow the spouse at home to keep, in some cases, all of the couples’ assets, and where the assets are low in value the spouse at home can keep all of the couple’s joint income as well.
You often hear horror stories about Medicaid taking a person’s home after they pass away. While it is true that Medicaid Recovery Program does have the power to lay claims against your probate estate, with proper planning your home can likely be shielded from any seizure and instead, passed to your heirs or other recipients as you choose, outside of the probate process.
In conclusion, aging is inevitable. We can hold back the hands of time no more than we can hold back the tide with a push-broom. The real fact is we all will need some type of assistance when we get older. That assistance is going to cost money, and likely more than we can anticipate. Medicaid offers a reasonable alternative to consuming all your resources on the expense of nursing care. Rather than viewing this program as a stigmatizing form of welfare, perhaps it’s time to view planning for the use of the benefit as another strategy of the prudent investor. Still, before you make any decisions, you should seek the counsel of a knowledgeable and experienced Elder Law attorney. Only then will you truly understand your options and what’s best for your particular situation.