Medicaid: Can your aging parent qualify?

Transcript of Interview: “Medicaid: Can your aging parent qualify?”

Mike Barnes:

You know, we’ve seen so many questions in our group about Medicare and especially Medicaid and whether you can qualify for it because do you make too much money?

Kim Barnes:

 It’s very confusing. So we decided to bring in an expert. We have Scott Stebler from Stebler & Shoelock. He’s an estate attorney. Thanks so much for being with us.

There is a lot of confusion, so let’s just start with what is Medicaid.

Scott Stebler:

Right, so Medicaid, when you hear the term Medicaid, it can mean a whole lot of different programs. It’s sort of an umbrella of programs. In the state of Texas, there are 40 different programs that are actually Medicaid programs in Texas. But for your group in particular, what you’re really interested in talking about is what we call long-term care Medicaid or nursing home Medicaid. And that’s a specific program that pays for long-term care, either in your home or more often in an actual nursing facility.

Mike Barnes:

Okay, and for those of you who are not in Texas, we are in Texas. That’s why we’re talking about Texas. This kind of applies to every state; it’s a little bit different.

Scott Stebler:

It does. There are some nuances and details that are different in different states. A lot of states are actually more generous with Medicaid benefits than the state of Texas, perhaps not surprisingly. So you just need to figure out what’s, you know, what it is in your state and go from there, from that situation.

Kim Barnes:

Okay, and then as you mentioned too, often when you think of Medicaid, you also think of, like, if you have a disabled child. There are so many things. So just remember that if you go to do a Google search for Medicaid, it’s going to bring up a lot of stuff. But we’re going to focus specifically for this interview on long-term care Medicaid.

Scott Stebler:

What we call long-term Medicaid can be both. It’s most often Medicaid that covers nursing home expenses. So for someone whose physical or mental condition has gotten to the point where they need actual skilled nursing, they can satisfy the requirements of actually, from a disability standpoint, having services provided in a skilled nursing facility. Long-term care Medicaid also includes what we call the Medicaid waiver programs, which in some cases will allow your family member to be served in their actual home and receive Medicaid benefits in their home. But more often than not, for your group, we’re talking about skilled nursing, nursing home Medicaid.

Kim Barnes:

So it’s not independent living. It would be assisted living or memory care, right?

Scott Stebler:

Common misconception: assisted living is generally not covered. That is one of the things that there are some differences among the states. But in Texas, it’s very rare to have assisted living covered by a Medicaid program. In Texas, generally, you have to reach the level where you actually need skilled nursing.

Mike Barnes:

Gotcha. Something to check on.

Kim Barnes:

And that is one huge differentiator between Medicare, which doesn’t often cover all of that. We don’t want to get super confusing. For Medicaid purposes, that’s what it covers.

Scott Stebler:

A common misconception is that Medicare will pay for nursing home expenses. Medicare only covers nursing home for a very short period of time, and it’s really a period of rehabilitation. Medicare will, for example, pay for nursing home expenses for up to 100 days after your parent or loved one has been hospitalized, but it’s only for a period of rehabilitation. It’s rare for Medicare to even go as far as 100 days because you have to be showing improvement and that sort of thing. So more often than not, if you had a family member that ended up in a hospital, they had a stroke, they had another physical problem, and now they’d been in a hospital, they’d been discharged to a nursing home, Medicare might cover it for a short period, but at some point, Medicare is going to be telling that family, “You now need to go private pay or you need to apply for Medicaid.”

Kim Barnes:

Gotcha. Okay, so that’s where Medicaid really makes such a huge difference. It’s for that longer-term care.

Scott Stebler:

Exactly.

Mike Barnes:

It can get really, really expensive.

Kim Barnes:

Right, okay, but so many people out there are thinking, “I make too much money for Medicaid. Isn’t that just for the poor and destitute?”

Scott Stebler:

Yeah, and that is a common idea. There are pretty strict asset and resource limitations for Medicaid, but there are a lot of rules and a lot of planning that can go into qualifying someone for Medicaid despite having certain assets. For example, you hear that the rules are that you can have no more than $2,000 in countable resources and the income limit for an individual can be no more than, right now, $2,382 per month. It’s going up next month to $2,532 a month. So a lot of people think, as Mike’s saying, “How would I ever qualify?” Well, your house doesn’t count as a resource; it’s not a countable resource. Also, if it’s a couple and only one person needs to go into a nursing home, there’s a way for you to protect certain assets for what is called the community spouse, the spouse that’s not having to go into a nursing home.

Mike Barnes:

Gotcha.

Scott Stebler:

You can keep up to $130,000 in assets for the spouse that doesn’t need to go into a nursing home and still qualify. This is getting way beyond the scope of this, but if there is a low-income family, there’s actually a way to expand the number of assets. If they have a lot of assets but they’re lower in income, there’s a way to expand the assets that can be protected and still qualify for Medicaid. So it gets very complicated. I think the key thing to understand on that is that if you have a family member who is looking at nursing home care, you should talk to an elder law attorney. A good place to find one is the National Academy of Elder Law Attorneys. NAELA.org is the website, and they have a search engine where you can find an elder law attorney in your state and in your community.

Kim Barnes:

So anywhere across the country?

Scott Stebler:

Right, it’s a national organization.

Mike Barnes:

You were mentioning that your house doesn’t count. That’s up to a certain amount, about $600,000, right? Are those requirements, the savings, you know, what’s allowed in your savings account versus what you can have as income, is that specific to Texas? Is it different in every state?

Scott Stebler:

There are some differences. What I just quoted you is sort of the bare minimum, and Texas tends to go with the bare minimum. But there are states that are a little bit more generous in terms of what you can retain. If it’s a couple and you have one spouse needing nursing home care and the other not, some states are a little more generous in what that community spouse can have and still qualify their spouse.

Kim Barnes:

Because I can see that being a really challenging situation where if you have one parent that does need to go into nursing home care or even assisted living and they’re spending or skilled nursing, and they’re using all of the money to be able to do that, and then you have a parent who’s actually pretty healthy who then potentially has no money left when they need help.

Scott Stebler:

Exactly, and that’s why those rules are there, to try to save something for the spouse that doesn’t need to be in a nursing home at that point and need nursing home care level care paid for by Medicaid. It allows you to save a protected resource amount for the spouse for their future. You get that a lot where people just think, especially our parents’ generation, they think, “Well, we just got to spend all of our money, and that’s just what we do.” But there are ways built into the rules to protect those assets.

Mike Barnes:

One additional thing I thought I would mention back to your question is in Texas and in a number of other states now, if the person you’re trying to qualify for Medicaid has an IRA that is already at a point where they need to be taking out required minimum distributions, the assets in the IRA itself don’t count as a resource. Only the required minimum distribution or the distributions that they are pulling out count as income to them.

Kim Barnes:

But I think that probably scares some people because they think, “Well, I already get Social Security and then I get a little bit from my 401k or IRA. I’m over the $2,500, so what do I do?”

Scott Stebler:

There’s a fix for that too. It’s not a fix for everybody, but there’s what’s called a qualified income trust. If you create this trust, it receives all the sources of income into it to keep the individual under the $2,382 a month income limit. That money still has to be turned around and used for the nursing home, but you can qualify them for Medicaid and get at least a portion of the Medicaid bill each month paid for by Medicaid. So there is a way to deal with an income problem or an income issue through a qualified income trust.

Mike Barnes:

Does it affect things if it’s a married couple still? Kim and I are still elderly, we’re still alive, if we’re like with your parents.

Kim Barnes:

Yeah, like my mom and dad right now, especially since my mom’s living in memory care and my dad’s in independent living. Separating them like that, and I mean, they’re still married, still together, but how does that affect things?

Scott Stebler:

Well, that’s, you know, when there is a couple, I think that there’s more of a planning opportunity than when there’s not, you know, when you just have an individual. It gets back to those rules I was mentioning about the community spouse. When you have a community spouse, there are certain protections in terms of income and in terms of resources that you need to look at. There’s an opportunity to protect more and keep more and still qualify somebody like your mom for Medicaid.

Kim Barnes:

Is it ever too late to apply for Medicaid?

Scott Stebler:

No, it’s never too late. A lot of people think that they need to be down to nothing before they apply. So a lot of people will spend down, and you hear that term, “I need to spend down.” Spending down is a planning approach in and of itself because there are certain ways to spend down. For example, a common way of spending down that benefits your entire family is for the individual who you are applying for Medicaid to spend down by paying off a mortgage, doing repairs on the house. The house is an exempt resource and a non-countable resource for purposes of Medicaid. So it’s a way of, if you want to pass something on to your kids and you’re applying for Medicaid, you can put more of your money into your house. There might be a need for additional planning with regards to the house in terms of estate planning.

Kim Barnes:

As long as it’s not worth too much.

Scott Stebler:

Right, as long as it’s not worth too much. The limit is right around $600,000, which in Austin, Texas, is a problem because most houses are over $600,000.

Mike Barnes:

So it’s almost just making sure that you ask the questions. If you have questions, if you think maybe, “Could we qualify? Could mom or dad qualify?” It’s asking the questions.

Scott Stebler:

That’s right, and like I mentioned, there are elder law attorneys. There are also a number of care managers throughout the country that are very good at Medicaid applications. Here in Austin, we have Accountable Aging, MirCare, folks like that who know all these rules pretty well too. But you want to talk to somebody if you think that there’s even a chance that your family member might qualify for Medicaid or if you just want to plan ahead a little bit. It’s a good idea to talk to somebody.

Kim Barnes:

Definitely ask those questions and don’t eliminate yourself. It could be somebody right now calling to see if they can qualify because you have to ask the questions to find out. Thanks so much for sharing this expertise. It definitely shows us that there is a lot to this. There’s lots of nuances, and you really do need help to figure this all out.

Scott Stebler:

I agree.

Mike Barnes:

All right, thanks so much, and thanks for watching. We hope that you will let us know if you have other topics you’d like us to cover.

*This transcript is auto-generated. Please excuse any typos or mistakes.