Medicaid and Long-Term Care: What You Need to Know
Written by Jason C. Henbest, Esq. and Brittany Saxton
Aging is inevitable. In the past century, the average age for life expectancy in the United States has increased thirty years largely due to advancements in medicine and technology. Due to these incredible innovations, people are living longer and more fulfilling lives compared to the generations before us. With the increase in life expectancy, people should plan ahead for the future—particularly for the physical and mental limitations that come with age. But are people taking the action to plan this far ahead?
By and far, the answer to this question is no. Many people do not begin to think about what they may need in the future until the future becomes the present. And at that point, lack of preparation may lead to lack of resources to provide the essential long-term care that is needed. Because the definition of long-term care is so expansive, and because studies have shown that 1 in 4 people over the age of 65 in New Jersey will need long-term care, it is important to plan for a future where self-sufficiency—for whatever reason—may not be an option.
While preparing for the possibility of long-term care, there are several important points to consider. First, long-term care is extremely expensive. In New Jersey, long-term care may exceed $65,000.00 a year—almost three times the total price of the average American car. For many elderly individuals, paying the long-term care cost from personal assets is not a possibility. Thus, it is also important to consider that many long-term care facilities will need to be paid using a resident’s assets to move in and remain in the facility. Assets can include Social Security, pensions, real property, investments, etc. While long-term care insurance can certainly help offset the cost of services, it may not cover the entire expense. Therefore, a resident is permitted to “privately pay” for long-term care with their assets, until those assets have been depleted. Once a resident’s assets have been depleted, a resident can apply for Medicaid.
To be eligible for Medicaid, an individual’s total assets—including pensions, real property, bank accounts and investments—must be below $2,000.00. In their review of each application, Medicaid engages in a five year “look-back” period to assess whether the applicant has appropriately spent down assets, or if they have not, what penalty will result. Long-term facilities will commonly require that a resident “spend-down” their assets, for a period of one to two years, before the facility will consider offering a Medicaid bed to a resident.
It’s important for planners to know that facilities are not required to accept each Medicaid-approved resident. Wait lists for Medicaid beds are common. Therefore, it is important to talk to an experienced attorney who can help you plan for the likely event of long-term care. With all the moving parts in the long-term care planning process, don’t attempt to plan for such a massive life change alone.
Forked River Attorney | Elder Law | Medicaid | Spend-Down