When your aging parent is in need of assisted living or nursing home care, it can often create feelings of stress. Stress is a common response because you may worry about the financial impact involved with such a profound level of care. Fortunately, Medicaid can provide the coverage your parent needs, which will ease feelings of stress and worry. However, there are some tips and tidbits of information you should know to help your loved one get the coverage they need.
Understanding the Difference Between Medicaid and Medicare
Caregivers often express confusion regarding the differences between Medicaid and Medicare. If you have cared for your elderly parent up to this point only to realize that they need a greater level of attention or will require a higher standard of care at some point, it is important for you to know the difference between the two.
To begin with, Medicare is a federal insurance program that helps cover the cost of healthcare needs. The money used to cover the cost of health care needs comes from a trust that the insured person has paid into, usually throughout years of employment. Medicare primarily covers individuals who are over the age of 65 or those who are younger but otherwise deemed physically or mentally challenged or in need of dialysis treatment.
Medicaid, on the other hand, is both a federal and state insurance program. It adheres to federal guidelines but varies from state to state regarding coverage and limitations. Medicaid is available to anyone of any age as long as they meet certain low-income guidelines determined by their particular state. In many cases, a person with Medicaid coverage pays little to nothing toward their healthcare costs. At most, there may be a small copayment to cover.
Knowing How Medicaid Can Help
The reason it is so important to understand the difference between the two is because either form of coverage can help your parent pay for assisted living or nursing home care. Keep in mind that as it currently stands, assisted living can cost roughly $3,600 a month. If your parent is in need of nursing home care, that can cost an estimated $6,840 a month for a semi-private room and just under $7,700 a month for a private room.
Medicaid is often a valuable option because it means that there is no out-of-pocket expense for your parent. That is why Medicaid often takes effect once a person's Medicare funds run out. Unfortunately, Medicaid is not without its drawbacks. For instance, if your parent has any assets, the state has the right to step in and collect those assets to gain at least some of the money back that they had to put in for your parent's care.
The bad news is, if the state were to acquire your parent's assets, there might be nothing left for you or any other family members to acquire upon your parent's death. Luckily, you do not have to sacrifice your parent's ability to benefit from Medicaid at the cost of giving up all of their assets. There are ways in which you can help protect your parent's assets while still allowing them to qualify for Medicaid.
Protecting Assets From Medicaid Payback
In truth, it is better to prepare long before your parent ever reaches the point that they will need either assisted living or nursing home care. Keep in mind that any assets your parent owns will count toward the amount they have to spend on health care, which would fall under Medicare coverage. Your parent will either have to spend down some of their assets to qualify for Medicaid coverage or wait until assets deplete.
One way to protect assets is to have your parent gift them to you or place them in a trust that you control. As of 2014, a person can gift up to $14,000 tax-free, meaning your parent can gift you $14,000 each year to minimize assets. Also, homes and vehicles may be placed in a trust controlled by you. Essentially, that means your parent no longer owns the home they live in or the vehicles they drive, but they may still live in the home and drive the cars.
When discussing these options with your parent, make sure you let him or her know that they should choose someone trustworthy to take control of the trust. An untrustworthy person could very easily force your parent out of their home or vehicles merely because they now own the trust containing those assets.
By placing assets in a trust or gifting them, it minimizes the amount that your parent is worth and qualifies them for Medicaid sooner rather than later. Furthermore, placing assets in a trust or gifting money ensures that there is something left over upon your parent's death that the state cannot take. Keep in mind, however, that Medicaid programs will often do what is a called a "look back" over a period of five years.
Any assets transferred or gifted within five years of your parent applying for Medicaid may carry a Medicaid penalty. Therefore, you will want to make sure that any assets transferred out of your parent's name are done so no less than five years before applying for Medicaid. Of course, it is not always possible to plan ahead of time, particularly when your parent's health begins to decline suddenly and rapidly.
If that is the case, it is in your best interest to work with the assisted living or nursing home facility where your parent will reside so that you may determine the most affordable options available for your parent. You may also want to speak to a lawyer that is capable of handling situations similar to yours. By working with the facility and a lawyer, it will make applying for Medicaid and protecting at least a portion of your parent's assets far easier. For assistance applying for Medicaid, contact a company like Senior Solutions of Long Island, Inc.
Share28 July 2016
My husband and I recently moved his mother to an assisted living facility. My name is Audrey Martin, and I am going to share our experience with you. My mother-in-law is eighty-two years old. She has been living on her own for twelve years since her husband passed away. My husband, David, is her only child. That left us in charge of making this decision for her since she has declined to the point of not being able to make sound decisions on her own. I’m not going to tell you that it’s been easy, but I will say that it can be done. I hope that what I’m about to share proves to be helpful to you should the time come that you are the one moving a loved one to an assisted living facility. Thanks for stopping by!