Medicaid Maze: The Background

Lindsay M. Harris, JD
Medicaid Maze

How much do you know about Medicaid? If you are like most people, you probably don’t know a lot. Medicaid is a convoluted government program that requires expert assistance to help guide you and your loved ones through the often drawn-out and unnecessarily difficult process. In our Medicaid Maze series, we are going to take a closer look at Medicaid to assist you in developing a base knowledge of the many issues and strategies you or your loved ones may face when entering the nursing home.

WHAT’S CAUSING THE PROBLEM

Americans are living longer than they ever have causing a drastic change to our demographics and financial need.

  • In 2000, 35 million Americans were 65 or older.
  • By 2030, 70 million Americans will be 65 or older.  
  • At least 10% of Americans over 65 will have a chronic health condition.
  • At least 10% will be affected by Alzheimer’s disease.
    • 50% for Americans 85 and older.

If the standard retirement age remains 65 (and Americans live longer), then people will need income and assets to support them longer in life.

Now that Americans are living 20 to 30 years past retirement, it is imperative to maximize retirement income. The legal, financial, & tax planning related to retirement income is more essential today than it was for any previous generation in history. This area of planning requires knowledge about Medicaid, Veteran’s Benefits, Social Security, Pension Planning, and of course Tax Planning.

So, what 3 options do you have if you are looking at ways to pay for nursing home care?

  1. Private Pay
  2. Insurance
  3. Public Benefits (like Medicaid)

  1. Private Pay
    According to the Department of Social Services, the average cost of a nursing home in South Dakota is $223 a day or $81,400 a year in 2018. As most people stay in a nursing home for 2.5 years, they will need $203,400 to cover their expenses. This cost is per person, with a semi-private room, and with no additional health complications. Even if you do not go to a nursing home, in home care is almost if not more expensive depending on your needs. Nursing homes in more densely populated areas also tend to be higher priced. With the rising costs of nursing homes, few of us can afford to private pay, which leaves us asking for other options.
  2. Insurance
    Long-term care insurance is another option, but the “golden” policies of the past no longer exist, and many people are cancelling these policies due to rising premiums and reduced coverage. As a side note, we always recommend you meet with your estate planning attorney and financial advisor (your advisor team) prior to cancelling your long-term care policy. There may be other options available to you to retain full or partial value of these policies. Keep your advisor team informed before you take action. Some other options to look into include roll overs to life insurance policies with long-term care riders. Essentially, these life insurance policies allow you to borrow against the policy for long-term care costs. These are not an option for everyone but may produce a better result than your long-term care policy. Plus, they allow any unused amount to go to your heirs so you do not feel like you are just throwing money away every year.
  3. Public Benefits
    Many public benefits (such as: Medicaid – Title XIX, Medicare, Supplemental Security Income (SSI), Social Security Disability Income (SSDI), Housing, Veteran Benefits, and Other Benefits (i.e., Food, Travel, Railroad…)) are available depending on a number of factors. Although other programs exist, one of the most popular options is Medicaid.

Check out the rest of our Medicaid Maze Series to learn more about the basics of Medicaid, spenddown strategies, and planning techniques that may be available to you. If you would like to learn more about Medicaid or asset protection strategies, schedule a consult with us today by calling 605-777-1772. Getting the right information and help at the beginning of the process can save you thousands of dollars down the road.

*This blog is for general informational purposes and is not intended to give legal advice. Please consult with an attorney about your situation.

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