Medicaid May Be Last Resort for Many Maryland Boomers’ Long-Term Care
As 75 million baby boomers continue to age beyond the healthy years of early retirement, an estimated 70 percent of them will need long-term care services of some kind, whether in their home or in a facility.
The skyrocketing costs of long-term care can be devastating for middle-class people, especially if they haven’t planned for the expense. Employer-based health coverage will not pay for daily long-term care services, and the following options only offer partial or expensive coverage:
Out of Pocket: A semi-private room in a Maryland nursing facility costs about $9,231 per month, or $110,772 per year.
Medicare: Will only cover a short stay in a nursing home under very strict conditions.
VA pension: War-time veterans may qualify for coverage of some long-term care costs if they meet certain criteria.
Long-term care insurance: Fewer than 10 percent of Americans have purchased a policy. It can be expensive, with annual premiums ranging from $800-$30,000, depending on age, medical condition, history of the insured, and the level of benefits purchased.
Many individuals in Maryland who cannot afford to privately pay for long-term care must consider Medicaid as a last resort.
What is Medicaid?
Medicaid (known in Maryland as Medical Assistance) is the nation’s largest payer for long-term care services and support, both in the community and in nursing facilities.
Medicaid long-term care is a meanstested joint federal-state program that subsidizes the cost of nursing facility services for eligible individuals.
What are the Medicaid Requirements?
Applicants must meet strict financial, medical, and technical criteria. S/he must be a U.S. citizen and a Maryland resident, and must be either aged (65 or older), blind, or disabled. S/he must require daily skilled nursing or rehabilitation services or health related services above room and board for at least two activities of daily living.
Applicants must also meet strict income and asset requirements. In Maryland, an individual’s monthly countable income must be less than the monthly cost of nursing home care. Recipients of Medicaid long-term care benefits must pay all of their monthly income to the nursing facility less a few small deductions for a personal needs allowance, health insurance premiums, a spousal allowance, and some other limited expenses.
A non-married applicant cannot have more than $2,500 in countable resources. Medicaid considers certain resources to be “unavailable” or “excluded” when determining financial eligibility, meaning that they will not count towards the $2,500 resource limit. In general, these include the applicant’s home, vehicle and household goods, irrevocable pre-paid funeral agreements and burial plots, life insurance policies with limited cash value, and special needs trusts.
For married couples, Medicaid only considers the institutionalized spouse’s income. Additionally, married couples are eligible for a resource allowance wherein the community spouse is entitled to keep one-half of the couple’s combined countable resources up to a maximum of $126,420.
Those seeking Medicaid eligibility to offset the cost of nursing home care are wise to explore asset protection strategies that may be available to them. For example, married couples may spend down excess resources by purchasing a Medicaid-compliant annuity that converts the excess assets into income for the community spouse.
What about DC and Virginia?
Medicaid long-term care varies from state to state. Although many of the rules in Maryland are the same in the District of Columbia and Virginia, there are key differences. For example, a single applicant in Virginia can have only $2,000 in countable assets, but a single applicant in DC can have up to $4,000 in countable assets.
Regardless of where you live, the guidance of a qualified attorney with knowledge of the Medicaid rules is valuable to meet the objectives of individuals with immediate long-term care needs and those wishing to plan ahead.
Jenica Cassidy is an elder law attorney who helps seniors and their families with legal issues relating to aging. For more on Medicaid and long-term care, contact her at [email protected] or 301-347-1269.