When the health of a spouse, parent or loved one is declining, a crash course in public benefits can be helpful. If the individual requires daily assistance with personal care tasks, or can no longer live safely at home, families may engage in “crisis planning” to determine how to access government benefits quickly, while also preserving assets. Many caregivers begin by learning the difference between Medicare and Medicaid and which program covers long-term care.
Medicare is the national health insurance program for the elderly, however it does not cover long-term custodial care. When Medicare was enacted it consisted of two “parts”, a required contributory hospital insurance program (Part A) and a voluntary program that covers physician services (Part B). Today Medicare also includes a voluntary outpatient prescription drug benefit (Part D), administered exclusively by insurance companies. Long-term care, however, is not covered, except in limited circumstances.
Medicare covers home care only if the beneficiary is homebound and requires skilled nursing care. Medicare covers the first 100 days of rehabilitation in a skilled nursing facility after a three-day hospital stay, provided the patient is benefitting from therapy. Substantial co-payments are charged after 20 days, but a Medicare Supplement, or Medigap, policy will cover the co-payments. Medigap should not be confused with Medicare Advantage plans (Part C), in which insurance companies administer comprehensive Medicare benefits, offering beneficiaries an alternative to the traditional federal government program.
Medicare shifts long-term care costs to Medicaid, the state-federal health insurance program for the poor. More than 60 percent of nursing home residents are covered by Medicaid, according to “Medicaid: A Primer 2013” by the Kaiser Family Foundation. In a 2012 demonstration proposal, the Texas Health and Human Services Commission noted that 60 percent of state spending for beneficiaries who are dually eligible for Medicaid and Medicare is for institutional long term care.
How does a patient enter a nursing home and become eligible for Medicaid? A patient must need 24-hour nursing care to qualify, but cannot apply until 30 days after entering a Medicaid facility. In a common scenario an elderly individual is hospitalized after a stroke or injury, discharged to a nursing facility for rehabilitation under Medicare and, when the 100-days benefit ends, is not well enough to return home. If the patient is not financially eligible for Medicaid, he or she typically pays the nursing home out-of-pocket – about $5,000 per month or more – until sufficiently impoverished to qualify for Medicaid. Often the patient is not informed about legal options for both qualifying for benefits and preserving hard-earned savings from catastrophic long-term care costs.
The income limit for Medicaid eligibility is $2,742 per month in gross Social Security, pension, and other income in 2023. If income exceeds the limit, a Miller Trust can be created to obtain eligibility. A single individual can have only $2,000 in countable resources, such as checking, savings, and retirement accounts, to qualify. Certain resources are excluded, including a home and one car.
Federal “spousal impoverishment protections” apply to married couples, when one spouse is applying for Medicaid nursing home care, while the other spouse remains at home. The “community spouse” can keep one-half of the couple’s countable resources up to $148,620, with a floor of $29,724. If, however, the couple’s combined income is below $3,715.50, the community spouse may be allowed to keep an expanded “protected resource amount,” up to the total value of the couple’s countable resources.
An elder law attorney in Texas can provide advice on whether resources exceed the limit and strategies for preserving assets, such as purchasing excluded property, converting assets to income for the community spouse, creating a college education fund for a grandchild, utilizing a testamentary trust for a spouse, or gifting property to a special needs trust for the benefit of a recipient of Supplemental Security Income or Social Security Disability. With few exceptions, Medicaid penalizes an applicant who has gifted property during the five-year look-back period before applying. The penalty is a period of ineligibility for nursing home coverage that begins when the applicant has entered a facility and is otherwise eligible for benefits, and continues for a number of days calculated by dividing the value of the property transferred by $237.93/day.
Although a beneficiary’s home is not counted as a resource, it may be lost to the Medicaid Estate Recovery Program (MERP), which can file a claim against the probate estate of a deceased recipient to recover the cost of benefits provided. Strategies to avoid probate should be implemented before applying, such as drafting an enhanced life estate deed.
Texas Medicaid also offers home care services. Community Attendant Services (CAS) provides several hours of home care daily to individuals who need assistance with activities of daily living, such as bathing, feeding, and exercising. Medicaid nursing home beneficiaries may transfer to Community Based Alternatives (CBA), now called the Star Plus Waiver (HCBS-SPW), which is the in-home equivalent of the nursing facility program. CBA (Star Plus Waiver), however, is not an entitlement and has a waiting list for admission directly from the community. Medicaid does not cover assisted living, although a few assisted living facilities participate in CBA (Star Plus Waiver).
The Department of Veterans Affairs provides a non-service connected disability pension to assist with long-term care expenses. A veteran residing in an assisted living facility may be eligible for the Aid and Attendance Pension, which is about $2,229 – 2,643 per month. The veteran must have served at least one day during a wartime, be at least 65 years old, and qualify both medically and financially for the pension. A widow(er) of a qualified veteran is eligible for a pension of about $1,433 per month.
Other public benefits programs assist low-income Medicare beneficiaries and uninsured individuals with out-of-pocket expenses. Qualified Medicare Beneficiary (QMB) and Qualified Individual (QI) are Texas Medicaid programs that pay Part B co-insurance. Extra help with Part D co-insurance is available through the Social Security Administration. Uninsured individuals who enroll in a qualified health plan under the Affordable Care Act may be eligible for premium tax credits.