Medicaid can help pay for the costs of long-term care in nursing homes. However, eligibility for benefits is based on the applicant's income and resources. This guide provides an overview and offers tips for the application process.
Paying for Long-Term Care
Medicare, the federal health insurance program for adults over the age of 65, offers very limited coverage for long-term care in nursing homes. A select few can afford to pay privately for a nursing home. However, with nursing home costs running several thousand dollars per month and projected to increase in the coming years, this is simply not an option for most families. Enter Medicaid, which is a joint federal and state program that pays the medical expenses of needy people. Medicaid can help seniors aged 65 and older get the long-term care they require.
There is a two-part test for determining Medicaid eligibility. First, your resources, less applicable exemptions, must be below the specified limit. For example, a single individual applying for Medicaid cannot have resources totaling more than $2,000.00. Some of the assets exempt from counting against this total might include your home, a car and burial funds. If the applicant meets the resource test, then the Oklahoma Health Care Authority, the agency responsible for Medicaid in the state, will look at your monthly income, which must not exceed the allowed amount. This amount changes yearly, and takes into account all sources of income, including Social Security.
Penalty for Transfer of Assets
You cannot give away your property and assets to become eligible for Medicaid. When you apply for Medicaid, the Oklahoma Health Care Authority will look at your financial history for the five years prior to your application. If during this time you or your spouse have transferred any of your property or assets without receiving compensation in return, you will be subject to a penalty period during which you cannot qualify for Medicaid. The penalty is calculated by dividing the dollar amount of the assets transferred by the average daily cost of nursing home care in Oklahoma. Depending on the value of the assets transferred, the penalty can range from a couple months to a year or more. Examples of transfers that can trigger the penalty are gifting property to your children or others, and placing your property and assets into a revocable living trust during estate planning.
Tips for the Medicaid Application Process
If you believe there is a possibility that you or your spouse might need Medicaid within the next 5 years, you should be extremely cautious about your finances. Avoid making any gifts of property or assets, and keep detailed records on all of your accounts and bills. In the event you do apply for Medicaid, you should be as honest and forthcoming as possible on the application. Finally, it may be worthwhile to at least consult an attorney to go over the application with you. Employees of the Oklahoma Health Care Authority will answer questions and provide some guidance. However, Medicaid is an extraordinarily complicated law, and an attorney knowledgable in this area can clarify things for you.
If I go into a nursing home and apply for Medicaid, will I have to "spend down" everything I own?
Not necessarily. Depending on your specific situation and circumstances, you may be able to protect some of your assets through what is called Medicaid planning. This is a specialized type of estate planning. Rather than lose everything you own, you might be able to protect your assets by putting them in a special type of trust or converting the assets you have into ones that are exempt under the Medicaid rules and do not count when determining your eligibility for Medicaid benefits. Medicaid planning is most effective when done in advance of the need for nursing home care.
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