Understanding Public Benefits When Caring for Elderly Parents
When a parent's health is declining, a crash course in public benefits can be helpful for attorneys. If the parent requires daily assistance with personal care tasks, families may engage in crisis planning to determine how to access government benefits quickly, while also preserving assets.
Many caregivers begin by learning the difference between Medicare and Medicaid, as well as which program covers long-term care.
Medicare is the national health insurance program for the elderly. However, it does not cover long-term custodial care. When Medicare was enacted, it consisted of two "parts" — a required contributory hospital insurance program (Part A) and a voluntary program that covers physician services (Part B).
Today, Medicare also includes a voluntary outpatient prescription drug benefit (Part D), administered exclusively by insurance companies. Long-term care, however, is not covered, except in limited circumstances.
Medicare covers home care only if the beneficiary is homebound and requires intermittent skilled nursing care. Medicare covers the first 100 days of rehabilitation in a skilled nursing facility after a three-day hospital stay, provided the patient is benefitting from therapy. Substantial co-payments kick in after 20 days, but a Medicare Supplement, or Medigap, policy will cover the co-payments.
Adult children of aging parents should not confuse Medigap with Medicare Advantage plans (Part C). In Medicare Advantage plans, insurance companies administer comprehensive Medicare benefits, offering beneficiaries an alternative to the traditional federal government program.
Medicare shifts long-term care costs to Medicaid, the state-federal health insurance program for the poor. More than 60 percent of nursing home residents are covered by Medicaid, according to "Medicaid: A Primer 2013" by the Kaiser Family Foundation. In a 2012 demonstration proposal, the Texas Health and Human Services Commission noted that 60 percent of state spending for beneficiaries who are dually eligible for Medicaid and Medicare is for institutional long-term care.
How does a patient enter a nursing home and become eligible for Medicaid? A patient must need 24-hour nursing care to qualify, but the patient cannot apply until 30 days after entering a Medicaid facility.
In a common scenario, an elderly individual is hospitalized after a stroke or injury, discharged to a nursing facility for rehabilitation under Medicare and, when the 100-days benefit ends, is not well enough to return home. If the patient is not financially eligible for Medicaid, he or she typically pays the nursing home out-of-pocket — about $4,500 per month or more — until sufficiently impoverished to qualify for Medicaid. Often, no one informs the patient about legal options that enable him or her to qualify for benefits while preserving hard-earned savings from catastrophic long-term care costs.
The income limit for Medicaid eligibility is $2,130 per month in Social Security, pension, and other income. If income exceeds the limit, the elderly person can create a Miller Trust, or Qualified Income Trust (QIT), to obtain eligibility. Each month, the person's income is deposited in the QIT and the trustee writes certain checks in accordance with Medicaid rules. In many cases, most income deposited in the QIT is paid to the nursing home as a monthly copayment. Any funds remaining in the trust account when the recipient dies are paid to the State of Texas.
Countable resources, such as savings, investments, retirement accounts and real property, cannot be protected in a QIT. A single individual can have only $2,000 in countable resources to qualify for Medicaid nursing home benefits; however, certain resources are excluded, including a home and one car.
For married couples in which one spouse applies for Medicaid nursing home care and the other spouse remains at home, federal spousal-impoverishment protections apply. The "community spouse" can keep one-half of the couple's countable resources up to $115,920, with a floor of $23,184. If, however, the couple's combined income is below $2,898, the community spouse may be allowed to keep an expanded "protected resource amount," up to the total value of the couple's countable resources.
An elder law attorney can provide advice on whether resources exceed the limit and advise on strategies for preserving assets, such as purchasing excluded property, converting assets to income for the community spouse, creating a college education fund for a grandchild, utilizing a testamentary trust for a spouse, or gifting property to a special needs trust for the benefit of a recipient of Supplemental Security Income or Social Security Disability.
With few exceptions, Medicaid penalizes an applicant who has gifted property during the five-year look-back period before applying. The penalty is a period of ineligibility for nursing-home coverage that begins when the applicant has entered a facility and is otherwise eligible for benefits. That period of ineligibility continues for a number of days, calculated by dividing the value of the property transferred by $156.34.
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