The Long-Term Care Path from Medicare to Medicaid

Although Congress enacted Medicaid in the 1960s to provide health care coverage for the poor, Medicaid has become the primary pay source for nursing home and long-term care for the vulnerable elderly population.  The majority of nursing home residents, or 80%, are age 65 or older and 62% of residents are covered by Medicaid, which is available to beneficiaries with limited income and assets. 

Medicare – the national health insurance program for seniors and the disabled who work a sufficient number of quarters and pay Social Security and Medicare taxes – covers nearly 60 million people, mostly seniors, however Medicare provides very limited coverage of long-term nursing home care, just 100 days of rehabilitation in a facility after a 3-day hospital stay.  This and other Medicare coverage gaps, premiums, and copayments help explain why Medicare beneficiaries spend a larger share of income on health care costs than non-Medicare beneficiaries, according to the Kaiser Family Foundation.  Few can afford long-term care insurance or the annual cost of nursing home care, which was $82 thousand in 2016, more than three times the annual income of most seniors, according to KFF.

The lack of coverage of costly long-term care is like a hidden tax on the elderly.  Frail Medicare beneficiaries who require long-term personal assistance with bathing, dressing, and other activities of daily living often exhaust their savings paying for long-term care until they qualify financially for Medicaid.  The complex rules for qualifying for Medicaid challenge even the most savvy beneficiaries and their families.

The Stone Law Firm guides clients through the maze of Medicaid rules, with the goal of legally protecting assets while obtaining Medicaid benefits, similar to the way tax planners assist with legally minimizing taxes and preserving income.  An individual can have no more than $2,000 in countable assets to qualify, a limit that has not been updated for inflation in thirty years.  Married couples, however, benefit from “spousal impoverishment protections” which allow the “community spouse” of a nursing home resident to keep more and sometimes all of the couple’s assets.  The Stone Law Firm also prepares “Medicaid-friendly” estate planning documents, including wills, trusts, deeds, and power of attorney, designed to help protect clients’ assets from the steep “nursing home tax” on Medicare beneficiaries.