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Medicaid is a healthcare program that is predominantly funded by the United States federal government; however, the individual states have the option to supplement funding for the program. Although it is primarily funded by the federal government, Medicaid is administered by the individual states, meaning the eligibility guidelines and benefits offered will differ somewhat from one state to another. Medicaid for seniors will also cover LTC expenses as well as community based programs that are aimed at allowing seniors to remain in their homes longer instead of going into a LTC facility.
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People often get Medicaid and Medicare confused, or use the two words interchangeably, though they are not the same program. Both Medicaid and Medicare are healthcare programs funded by the federal government; however, the similarities stop there. Medicare is an “entitlement” program, meaning that as long as you paid into the Medicare system during your working years, you will automatically be entitled to participate in the program when you reach retirement age, without regard to your income or assets. Medicaid, on the other hand, is a “needs based” program, meaning you must demonstrate a need for the benefits.
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The need to qualify for Medicaid will most likely arise as a result of the need for LTC. When you enter your retirement years you will stand about a 50 percent chance of needing LTC at some point before the end of your life. With each passing year, that chance increases. The cost of that care may prompt you to turn to Medicaid. As of 2016, the average cost of a year in LTC across the United States was $80,000. In the State of North Dakota, the average cost for a year in LTC during the same time frame was $130,000. Most basic health insurance plans will not cover LTC expenses nor will Medicare. Unless you can afford to pay out of pocket, Medicaid may be the only option which is why about half of all seniors in LTC rely on Medicaid.
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To qualify for Medicaid in North Dakota you must be a resident of the state and a U.S. citizen, or fit one of the other legal categories. In addition, your income and “countable resources” must be below the program limits. The income requirement will depend on where you live and your family size and will be tied to the Federal Poverty Level. Your “countable resources,” or non-exempt assets, cannot be valued at more than $2,000. It is this limit that causes most seniors who did not plan ahead to face challenges qualifying for Medicaid benefits.
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If your countable resources exceed the limit when you apply for Medicaid, the program will impose a waiting period during which time you will be expected to “spend-down” your assets. Basically, this means you will be expected to sell your non-exempt assets and rely on the profits to cover your LTC costs. When your assets drop below the $2,000 limit, Medicaid will start helping with your LTC expenses.
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To prevent the transfer of assets just to qualify for Medicaid, the five-year “look-back” rule is used. When you apply for Medicaid, your finances will be reviewed going back five years. Any asset transfers for less than fair market value will likely be discounted and the value of the asset imputed back into your estate.
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Given the Medicaid spend-down requirements, you may be concerned that a community spouse will be left with no resources if you need to qualify for Medicaid. Fortunately, that is not the case thanks to the Medicaid spousal impoverishment rules. The spousal impoverishment rules allow a community spouse to keep some income and assets when the other spouse goes into long-term care.
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Medicaid planning uses legal strategies and tools to protect your assets while ensuring that you will qualify for Medicaid benefits if you need them in the future. Incorporating Medicaid planning into your estate plan as early on as possible is the best way to make sure your assets are safe and you get the assistance you need with LTC expenses in the future.
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