Medicaid Planning - An Important Part of Your Overall Financial Strategy
By Don Drake, Connelly Law Offices, Ltd.
Attorney RJ Connelly III, a professional fiduciary and Certified Elder Law Attorney (CELA), has explained that Medicaid is a government healthcare program that offers low-income children, seniors, and people with disabilities access to health insurance. The program also provides coverage for nursing home care to eligible recipients. Medicaid is known by different names in different states, such as 'Medi-Cal' in California, 'MassHealth' in Massachusetts, and 'TennCare' in Tennessee.
Medicaid has become the preferred choice for most Americans when it comes to nursing home insurance because of the lack of other public programs to assist with long-term care expenses. It is common for individuals to bear the burden of long-term care expenses until they meet the eligibility criteria for Medicaid.
"Despite the increased availability of Medicare-covered home care services, the reality remains that many older Americans fear needing nursing home care," said Attorney RJ Connelly III. "Not only because there is a significant loss of personal autonomy, but also the tremendous financial cost involved and loss of their assets they planned on leaving their loved ones. However, careful planning can ease some of these concerns."
One Family's Story
Fran and Jack had a plan in place for their long-anticipated retirement. They had saved their money, invested wisely, owned two homes, and looked forward to traveling around the country in an RV they had just purchased. Both were teachers in southern New England and had longed for time to travel together after spending decades in the classroom. "We weren't rich by any stretch of the imagination," said Fran. "But we did a respectable job of saving and felt we were sitting pretty well when it came to retirement." It was during their second road trip; the couple was on their way to the Carolinas when Jack began to feel "not right."
"We stayed at a rest area in Virginia and before retiring for the night, we had some wine and watched the news," said Fran. "Jack was saying that he felt a little weak, but we wrote this off to the long ride. During the night, he woke me up shouting that his arm was numb, and the feeling of weakness had spread to his entire body. My first thought was that he was having a heart attack. It was horrible."
The ambulance took over twenty minutes to arrive and transported Jack to the local hospital for treatment. "After a night of testing, the ER doctor came to me and told me that Jack had had a massive stroke. After weeks in the hospital, it was determined that he needed long-term care due to the damage that was done to his brain. It was devastating to hear. He was only 68 years old and everything we had planned for was never going to happen."
Sadly, things got even worse for the couple. "After I sat down with a social worker and set up interviews with nursing homes, I was shocked to see the costs of care. I was under the mistaken understanding that Medicare paid for nursing home care. I was shocked when I found out otherwise. As I said, we weren't rich, but the money we had saved to allow us to live a comfortable retirement was not even close to what the cost of long-term care would be. My concerns became two-fold, how could I afford to keep Jack in a nursing home, and what would happen once our savings were gone?"
This story happens daily in this country, emphasizing the importance of Medicaid planning, particularly because America is an aging country.
Looking at Trends
Here's today's reality: the number of older Americans is expected to nearly double by 2050. In fact, a staggering 25% of the population will be sixty-five or older. It is worth noting that from the year 2011 to 2030, an average of 10,000 people will reach retirement age daily. This demographic shift requires our attention and immediate action to ensure we are prepared to support and care for our aging population.
While the idea of retiring may seem appealing, it is important to acknowledge that as we get older, our bodies begin to deteriorate, and health issues become more prevalent. Despite living longer, our overall health may not necessarily improve.
According to research, it is anticipated that the number of Americans living with chronic conditions will increase by 37% by 2030, totaling almost forty-six million. Moreover, the number of individuals with Alzheimer's disease aged sixty-five and above is expected to rise 30% to 6.7 million by 2025 and triple by 2050.
"Although we are living longer, individuals are experiencing more medical needs and, as a result, spending more time in nursing homes," stated Attorney RJ Connelly III. "Without proper planning, assets can quickly disappear, leaving nothing for your children or grandchildren. Therefore, it is imperative to plan to avoid the possibility of financial hardship in your senior years."
The Costs of Senior Care
Based on the Genworth cost studies cited below, we provide the monthly expenses of senior care for Rhode Island, Massachusetts, and Connecticut residents for 2023. Please keep in mind that these are just annual averages. To see more about your state or more about the costs in southern New England, click here.
The annual cost of nursing care in Rhode Island in a private room this year is $120,450 and for semi-private rooms, $113,150. Annual assisted living costs are $81,915 and in-home homemaker services average $68,640.
The annual cost of nursing care in Massachusetts in a private room this year is $162,425 and for semi-private rooms, $151,475. Annual assisted living costs are $78,000 and in-home homemaker services average $70,928.
The annual cost of nursing care in Connecticut in a private room this year is $182,044 and for semi-private rooms, $165,163. Annual assisted living costs are $61,551 and in-home homemaker services average $62,920.
It is essential to understand what is covered by government programs and how to plan for them should they be needed. Let’s discuss some of this.
Understanding Medicare's Coverage -- or Lack of
As stated earlier, the need for medical care increases as we age, so it is essential to have the right coverage in place to ensure that care is accessible. Medicare and Medicare Advantage Plans are two healthcare coverage options available for seniors, but they don't include long-term care. This means that even with supplemental coverage, extended stays in nursing homes or long-term care facilities won't be covered.
In cases where nursing home care is covered, reimbursements may be limited, or the coverage may not pay for certain services. This can also place a significant burden on the individual's assets, which will affect their savings and assets. To avoid the high costs and financial burden of long-term care, planning ahead to seek protection through Medicaid planning makes sense.
Medicaid is a federal-state program that can help cover long-term care costs, including nursing home care, for those who qualify based on income and assets. And each state may have its own rules regarding qualifying for its portion of Medicaid reimbursement. So, to qualify for Medicaid, there are specific criteria that must be met both at the Federal and State levels. Therefore, it's essential to understand these rules to ensure you can receive the care you need without delays and before depleting your life savings.
Plan Before It Is Needed
When it comes to Medicaid, it is important to keep in mind that the program requires a "five-year look back" period, which means that individuals who have transferred assets within that period prior to applying for coverage may be disqualified. However, there are ways to protect your assets in the event of an emergency, but it is best to plan ahead.
Long-term care is very expensive and many of us will likely need to consider this option in the future in most cases anyway. Medicaid planning is a more affordable alternative solution to help cover the cost of long-term care. It is important to understand the details of Medicaid planning to ensure that you are taking advantage of all the benefits that are available to you.
Securing professional legal oversight when planning for Medicaid acceptance is beneficial for the following reasons:
To avoid being denied benefits, ensure all necessary documents are collected, reviewed, and completed accurately with the required information, signatures, and dates. Organizing and preparing materials can increase the chances of success and prevent delays.
To reduce stress levels and delays in approval, the process can proceed quickly and smoothly.
To protect the financial security of the spouse.
To keep limited financial assets from being misused and resulting in additional delays.
At Connelly Law, we understand the importance of Medicaid planning and can assist you in navigating the complex maze of rules and regulations. Our team of experienced Medicaid specialists can help you develop a plan that meets your unique needs and ensures you receive the benefits you are entitled to.
Whether you are planning for yourself or a loved one, our office is here to answer any questions you may have about the process. We can provide you with the guidance and support you need to make informed decisions about your future. Don't wait until it's too late. Call us today at 1-401-724-9400 to schedule a consultation and start planning for a more secure future.
Coming Up in Our Next Blog
Our upcoming blog post will provide you with comprehensive information on Medicaid Crisis planning, which is a critical step in safeguarding your family's financial well-being in the event of an unforeseen illness or injury that requires long-term care placement without proper Medicaid planning.
We'll help you understand the importance of Medicaid Crisis planning, the different options available to you, and the steps you can take to ensure that your family is protected from potential financial chaos. With our expert guidance, you'll have the confidence and peace of mind you need to face life's challenges head-on.
Please note that the information provided in this blog is not intended and should not be construed as legal, financial, or medical advice. The content, materials, and information presented in this blog are solely for general informational purposes and may not be the most up-to-date information available regarding legal, financial, or medical matters. This blog may also contain links to other third-party websites that are included for the convenience of the reader or user. Please note that Connelly Law Offices, Ltd. does not necessarily recommend or endorse the contents of such third-party sites. If you have any particular legal matters, financial concerns, or medical issues, we strongly advise that you consult your attorney, professional fiduciary advisor, or medical provider for advice.