Navigating Medicaid and Medicare
Board: Macro Economics
Don’t let granny re-marry, and other tidbits about elder care, Medicaid and Medicare.
Recently I have been spending a lot of time on several elder care cases including insurance, wills, trusts, Medicaid and Medicare. There are many important factors, which I was not previously aware of. Here are a few disparate issues. The only commonality is that they all apply to elder care.
1. Superman lives. For seniors to qualify for Medicaid or “Long Term Care” insurance, they have to “pass” several “tests.” For Medicaid, a case worker will visit in person and ask:
a) Are you able to get in/out of bed by yourself?
b) Are you able to feed yourself?
c) Are you ever incontinent?
d) And others
What happens on the day of the interview is that the elder turns into Superman/Superwoman. All of a sudden in their mind, there are able to do all of these things like they were 18 years old again. I am currently dealing with one case, where a 90 year old “passed” this test and did NOT qualify for Medicaid. Only problem was the person absolutely, positively could NOT care for themselves. The solution is that you must have a family member present during the interview to help the elder properly answer the questions. I am NOT advocating lying on the tests, only trying to insure that the facts are brought out.
2) Who is in charge? Similar to the first point, it is very important elders have someone that fully understands their power of attorneys, medical directives and insurance benefits. Another case I am dealing with is an insurance issue. Long story short, the hospital and rehab center claimed the elder’s Medicare supplemental insurance did NOT cover X, Y and Z. It took an ASSERTIVE person to schedule an in person appointment and present PROOF of coverage. When I say assertive, I mean one step short of Sam Kinnison explaining that there was valid insurance coverage. Finally the hospital/rehab center was convinced. It made a difference of literally tens of thousand dollars to the elder family. The solution is to have this person identified and kept up to speed before they are needed. Perhaps it should be a child or younger family member that has a higher probability of being coherent when the elder needs help.
3) Don’t let granny/grandpa remarry! This lesson comes from Medicaid. We have all heard of elders that remarry in their 70’s or 80’s or 90’s after their first spouse deceased. In some cases, this creates an unintended consequence. Assume that Granny has substantial financial assets, say $500k. Assume she marries Grandpa who has zero financial assets. The family recognizes the financial discrepancy and has the couple sign a pre-nuptial agreement to the effect of “what is mine is mine, what is yours is yours.” The thought is that Grannies money will NOT be required to care for Grandpa if he goes into a nursing home. WRONG! Medicaid does NOT recognize pre-nuptial or post-nuptial agreements! Granny will be required to “spend down” her assets to care for Grandpa. Depending on which state, she will have to spend down about $375k before Medicaid starts paying for Grandpa. Medicaid rules are way more complicated than this, but the solution for this case is that if an elder has darn near any financial assets, he/she should NOT get married. (This is grossly over simplified, but at least you know enough to investigate the financial ramifications of marriage.)
4) Granny and Grandpa’s money is in IRA/401k/403B’s, they will qualify for Medicaid. WRONG. Medicaid treats all IRA/401K/403B assets as being immediately available. They count in the overall asset base. The elder likely will be forced to take out money, far beyond the Minimum Required Distribution amounts, likely creating an income tax liability. There are several planning techniques that are beyond the scope of this post to “work around” this limitation.
5) Medicaid rules are complicated. Elder care is very straightforward in the extreme cases. If you have zero assets, Medicaid will pay for your nursing home. About 60% of all nursing home patients in the US are solely dependent on Medicaid. At the other extreme, you can assume that Warren Buffet will NOT receive any Medicaid support for future nursing home needs. The problem is everyone in the middle. If you have $10k, $100k or $1 million, you should spend some time planning for elder care/nursing homes/rehab center expenses. Recall that Medicaid has a 5 year look back rule. If you “give away” assets, Medicaid will look back at the last 5 years to see their value. It will make you ineligible to receive any Medicaid support, until the 5 year period has passed. Once again, this is over simplified. BOTTOM LINE is that if you are in this middle group, you should get expert legal advice from an “elder law” attorney IN YOUR STATE. Note that the rules and precedents change from state to state, since Medicaid is a joint state/federal program.
Due to all of these issues, in one case, it appears that several hundred thousand dollars are going to end up being used in a totally unintended fashion. This is a result of poor elder law planning and will likely result in a dramatically lower quality of life for one elder.
BLACKBOX WARNING: Yoda is NOT an elder law attorney in your state or any state. NOTHING in this post is legal advice. There is NO substitute for getting competent elder law counsel in YOUR state.
BTW, more details later. There are a lot of other issues that were edited out for the sake of brevity.