Medicaid and Long Term Care Planning

In advising clients on their estate planning needs, I have found many concerned by the possibility and others confronted by the reality of long-term care in a nursing home. In addressing these needs, it is important to consider and address issues related to long term-care.

First, it is important to note that long-term care is not limited to care in a nursing home. In recent years, assisted-living facilities, in-home nursing providers and independent living facilities have become alternative and often more desirable long-term care provides.

Long-term care involves providing assistance with ordinary tasks such as bathing and dressing. Although such custodial care can be delivered at home or in a residential facility, it is expensive and can be a significant drain on personal resources.

The question is, “How will long-term care be paid for?” Contrary to what many people think, Medicare, Medigap and traditional health care insurance do not cover most long-term care costs.

Medicaid, the federal-state health care program for the poor, pays more than 40% of all nursing-home bills today. Although Medicaid pays for long-term care in a nursing home, there are many limitations.

First, because Medicaid is a government welfare program, it is only available after an individual becomes impoverished and qualifies financially for aid. To qualify for Medicaid, an individual most meet the minimal income and asset limitations.

In addition to income and asset restrictions, there are restrictions and penalties related to transferring assets in order to qualify for Medicaid. In an effort to qualify for Medicaid, many individuals (or their children) transfer assets to other family members. If these transfers are made within five years of applying for Medicaid, there will be a penalty.

As a final concern, the use of Medicaid limits one’s freedom to decide how and where to receive care. Often, assisted-living facilities and in-home nursing care are not qualified to accept Medicaid payments. Care from these sources generally requires payment from one’s own funds or from long-term care insurance.

Although still a relatively new product, long-term care insurance is becoming a desirable means to plan for possible long-term care needs.

Jeffery J. McKenna is a local attorney licensed in three states and serving clients in Utah, Nevada, and Arizona. He is a partner at the law firm of Barney, McKenna and Olmstead, with offices in St. George and Mesquite. He is a founding member of the Southern Utah Estate Planning Council. If you have questions or topics that you would like addressed in these Wednesday articles please email him at jmckenna@www.barney-mckenna.com or call 628-1711.