This Financial Literacy Month, we’ve been exploring the financial impact of long-term care and the importance of helping clients plan for a care need. Throughout this month, we’ve discussed the harsh realities of long-term care and how your clients can benefit from LTCI. Last week, we covered how you can use a Medicaid Compliant Annuity in crisis situations when it’s too late for Long-Term Care Insurance. Unfortunately, you may encounter clients who believe some of the myths surrounding the Medicaid program. Let’s bust those myths today.
Did you miss last week’s post? Check it out here:
Too Late for LTCI? Not Too Late to Protect Assets
Myth #1: You have to deplete all of your assets in order to qualify for Medicaid.
In reality, seniors can legally spend down their excess assets while also protecting them from paying the long-term care bill. They can do this by paying off debts, improving exempt assets, and purchasing products like Funeral Expense Trusts and Medicaid Compliant Annuities. If they are planning ahead for their future care, they can also protect assets with pre-planning products like Long-Term Care Insurance.
Myth #2: The community spouse has the same asset and income restrictions as the ill spouse.
For starters, the community spouse’s income isn’t even considered when determining eligibility, so they can essentially have an unlimited income while still qualifying the ill spouse for benefits. Plus, Medicaid has certain standards in place to prevent spousal impoverishment.
Medicaid Spousal Impoverishment Standards
First, the Community Spouse Resource Allowance (CSRA) is much larger than the institutionalized spouse’s allowance. Not to mention, the state Medicaid agency will no longer take the community spouse’s assets into account once eligibility is achieved, so they can retain additional assets once the ill spouse qualifies for benefits. Next, the Monthly Maintenance Needs Allowance (MMNA) ensures the community spouse has enough income to live comfortably in the community. If they don’t, they may be eligible to receive an income shift from the ill spouse.
Watch Now: Avoiding Spousal Impoverishment
Myth #3: Medicare will cover a long-term care stay.
Medicare only covers long-term care costs in specific situations—only after a qualifying hospital stay of at least three days and only for rehabilitative purposes. Plus, Medicare only provides full coverage for the first 20 days and partial coverage for days 21 through 100. Beyond that, Medicare provides no long-term care coverage. That’s where Medicaid comes in.
The Truth About Medicaid
Medicaid is actually the largest payer of long-term care in the U.S., covering almost 50% of care costs across the country. In order to qualify, applicants must:
- Meet certain income and asset restrictions
- Be a U.S. citizen or qualified non-citizen
- Be age 65 or older, blind, or disabled
- Reside in a Medicaid-approved facility
For qualifying individuals, Medicaid covers room and board, pharmacy, and incidentals in a Medicaid-approved facility, which is typically a nursing home. Most of the institutionalized person’s income goes toward their Medicaid co-pay, minus a monthly allowance, certain medical expenses, and any applicable income shift under the MMNA rules.
Watch Now: The Fundamentals of Medicaid Eligibility
If you’d like to learn more about Medicaid and how you can help senior clients who are facing a long-term care stay, contact our team at The Krause Agency.