Medicaid May Not Be A Good Option For Your Long Term Care Planning
Yes, Medicaid will pay for your long term care costs - but only if you haven't the income or assets to pay
. But often, people who could pay for their long term care directly or through insurance make themselves eligible for Medicaid by transferring their assets to other family members. For such people, this divestiture of wealth is called 'Medicaid Planning'. Perhaps this is not the way to go for their personal benefit as well as that of the government's. Here's why...
Medicaid is a welfare program. But, unfortunately, the growing cost of long term care (LTC) is forcing not only more poor people onto Medicaid, but causing more 'Medicaid Planners' onto its rolls too. And just how will this affect Medicaid now and its future prospects?
Way back in 2005, John Hurson, President, Nat'l Conference of State Legislators stated, "Medicaid is bankrupting state and federal governments. . . .The one thing everyone agrees on is that the program cannot be sustained as it is currently structured." ...And that's the problem.
To remedy this, an effort has been made to reduce Medicaid Planners burden on Medicaid. This resulted in the passage of the Deficit Reduction Act of 2005 (DRA). The DRA made Medicaid eligibility more difficult for Medicaid Planners. Among some of DRA's rulings to frustrate Medicaid Planners are:
* Lengthened the 'look-back' period from 3 to 5 years for all asset transfers from the application date for Medicaid.
* The penalty period (waiting period before Medicaid pays for care) will now commence with the date of eligibility for Medicaid rather than the date of the transfer, and after personal assets have been spent down.
* There is now a $500,000 cap on the amount of home equity (house and contiguous property) that can be excluded from Medicaid asset calculation.
* Annuities, which might be used to "shelter" assets, must list the state as the remainder beneficiary.
* Life estates will be considered as an asset unless the purchaser remains in the home for at least a year after the date of purchase.
-And what about those Medicaid facilities you'd be subject to?
Stephen Moses of the Center for Long-term Care Financing stated, "Medicaid is a means-tested public assistance program. It is welfare . . . and has a dismal reputation for access, quality, discrimination and institutional bias. Medicaid recipients face long waiting lists even for inferior facilities. . . . No clear thinking person in possession of all the facts would coordinate benefits with a welfare program for going bankrupt."
Marilee Driscoll, author of The Complete Idiots Guide to Long-term Care Planning underscores Medicaid's reputation, "It's quite breathtaking the difference between the private pay rooms and Medicaid rooms [in nursing homes]."
So, the benefit of unnecessarily putting yourself in a position to rely on Medicaid may not be all that good. Perhaps Medicaid planners should look more carefully to paying for their own care with what they have.
-It'll get worse in the future too:
The DRA of 2005 won't be the final action to stop Medicaid's continued instability. Expect more restrictive action as well as additional tax-based incentives to encourage individuals to pay their way with long-term-care insurance.
So, if you can afford to pay for LTC insurance, perhaps that's the best and safest option for you or your loved one.
by: Shane Flait
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