Using Medicaid to Pay for Assisted Living

We received a call recently from a family looking to help their mother move into assisted living.

Photo by Abbeyfield Kent

Their mother was increasingly unable to care for herself in the large house where she lived alone. Her income was well below the 300% of federal poverty level set by the Social Security Administration and, unfortunately, she had little savings. They wanted to know how they could use Medicaid to pay for the cost of assisted living care. This family’s inquiry was very common, so we wanted to share the answer, in a general way, as a blog post.

Medicaid’s Long Term Benefits

The states and the Center for Medicaid Services (CMS) have been responding to popular demand for this form of long term care and, over the last decade, we have seen a significant improvement in the program rules and waivers with regards to their assisted living benefits.

The long term care benefits from Medicaid generally consist of nursing home care, not assisted living. (For more about how Medicaid is structured see this simple explanation.) While nursing homes provide a more comprehensive and sophisticated level of care, many people who are well enough prefer the independence and higher activity levels of assisted living communities. When someone who is Medicaid qualified, medically and financially, and yet prefers to live in assisted living instead of a nursing home, they can turn to the states’ Medicaid Waivers.

State Programs Vary

While there’s a federal administration for Medicaid oversight and regulations, the states are left to implement their own versions of the low income health insurance program. In our research, we found that 44 states now offer some help for individuals to pay at least some of their assisted living costs via Medicaid programs and waivers.

Often these state Medicaid programs use different names and ways to refer to their assisted living benefits. Sometimes these programs will be called care homes, supported living communities or adult foster care, among other names.

And it is not just the names that differ—the benefits do as well. Sometimes, the state programs will reimburse only for the actual care and skilled nursing services provided by the communities. Often, the cost of the room and food is excluded from being paid by the states, but at least a few states have waivers that include the full cost of the assisted living as long as it is at one of their approved facilities.

In order to learn more about the particular benefits available in your state’s Medicaid program and its associated waivers, we refer you to our partner’s website for a “State-by-State Guide to Medicaid’s Assisted Living Benefits.”

Affordable Alternatives

While Medicaid is one of the most well known and largest programs for long term care benefits in the US, it is still not designed to address the growing demand for receiving care in assisted living. It might not be the best source of funding for your family. Because Medicaid is often restricted to only paying for the care services, the rates paid out might not be sufficient to cover all of an elder’s expenses.

It might be best to start with an assisted living community search to find the most affordable community for your family. Assisted living rates will vary widely, even within the same city. A free search service could help families locate communities that fit their budget.

How to Negotiate With Assisted Living Communities for Better Rates

Photo by Abbeyfield Kent

If I were to tell you how I negotiated on the price for the purchase of a used car, you would not be surprise. In fact, you might think me a fool if I did not at least try to negotiate the price. Yet, the same thinking does not arise when we purchase long term care for an elderly loved one. A wide range of rates that residents pay for the same level of care in the very same assisted living communities strongly suggest that the prices are more flexible and negotiable than they at first seem. Indeed, negotiating may help families save as much as $300 - $500 per month ($3600 - $6000 per year). In this post, we discuss how to tactfully and skillfully negotiate for a better rate with the assisted living community of your choice to make sure that the long term care your loved one needs is affordable.

Negotiate Without Compromising Relationships

Many people are embarrassed or uncomfortable negotiating for long term care. This might arise because it is the first time that many are in fact considering purchasing this type of service and are feeling unsure of the proper etiquette. However, negotiating is not uncommon.

Because a provider will never accept a price that is not in their interest, one should not be concerned about damaging relationships. By following these insider tips, you will be sure to get what your love one needs while also being fair and direct with the community sales representative.

Know What You Want

Besides the rate that your loved one can afford, there are many other aspects of assisted living that might be important and have an impact on their quality of life. Many of these features have different cost implications for the community, so might allow you more points on which to discuss the final rate.

Besides the obvious variations in the apartment size and location, many senior living facilities allow residents to share an apartment with one or two other residents. While not for everyone, some residents might appreciate the increased social interaction that a roommate brings. Assisted living communities often have multiple levels of care and each service level carries its own cost. The important point is to have a clear idea which items are negotiable and which are not.

Find Several Alternatives

Negotiation experts will tell you that the strongest way to negotiate is to enter a negotiation knowing what your alternative is. If all of your negotiating fails and you cannot reach an agreement, what would be the next best thing for you? This is called the Best Alternative to Negotiated Settlement and it is a powerful tool. While you might not want to exercise your alternative, you will be in a stronger and more comfortable position just knowing that you have an alternative.

Tour multiple communities in your area. Ask for referrals and recommendations. All American communities have an Area Agency on Aging (AAA) and the volunteers and paid staff that work at the AAAs are very knowledgeable about local services and housing for seniors. Alternatively, you might ask at local community centers, community organizations, or your local church.

To add to your list of assisted living communities in your area, you can always use a free senior living search service. If you live close to a state border, be sure to include some communities on the other side of the border. Differing regulations or demographics might make them cheaper.

Consider the Community’s Needs

Remember that they community wants to maintain a full and happy community of residents. What are some of the ways that you can assist them in their goals? Can you write a review of their services online (For example, SeniorAdvisor.com is online community where many families share their experiences of assisted living communities).

The timing of your entrance might be important. Assisted living communities and their sales and marketing staff may have certain times of the month, quarter, or year when they are looking to for move-ins more urgently in order to meet their goals. This could be an important point to strengthen your position.

Rural communities that are further from population centers may be more in need of new residents. Moreover, assisted living communities that are outside of urban areas will likely have lower overhead costs that they are able to pass along to residents through lower rates. Similarly, smaller communities without large marketing budgets and staff might be more hard pressed to bring in new residents and may provide a more intimate and personal level of care.

Like hotels, assisted living residences will need to keep occupancy above a certain thresholds and new residences need to fill up. If they have many empty units, they will be more likely to negotiate on price. For example, some will offer move-in incentives such as credits that can be used to reduce future rent payments or will drop their standard move-in fee.

While assisted living companies typically do not state their occupancy rates with clients, referral services do have access to this information. By working with the referral service, you can arrange to view many residences in a short time.

Summary

Remember when viewing assisted living residences, keep in mind what your loved one needs. Consider what alternatives you have and actively develop a list of different residences that would fit your requirements. Finally, there is always much to be gained by considering what the other side needs in a negotiation. If you are clear about what you want and are able to pay while being open to other ways that you might be able to cut costs, then you will be more successful in your search for affordable long term care.

Help Qualifying for Medicaid Long Term Care

Diversity of Medicaid Planning Assistance Options Can Confound Applicants

For those seeking long term care assistance from Medicaid, determining eligibility is challenging and the application process is daunting. Couple this with the fact the person completing the application paperwork is very often doing so on behalf of a loved one for whom they are concurrently providing care. This combination of challenges can make the process of obtaining Medicaid assistance almost insurmountable.

Fortunately, Medicaid planning assistance is available. Unfortunately, there is such a diversity of individuals and professionals who refer to themselves as Medicaid Planners that one more challenge exists for caregivers: determine which form of Medicaid planning assistance is right for your situation. Some planners provide services free of charge and others are fee-based. Some are public employees; others are employed by for-profit organizations. Some will refuse to provide assistance if the applicant's income or assets are too high and others will refuse if they're too low. To say it is confounding is an understatement.

It is not an exaggeration to say one needs assistance to determine the type of Medicaid planning assistance one needs. Here we provide that assistance—to direct persons seeking Medicaid planning assistance to the appropriate resource for their needs.

Getting Started

Photo by Nathan Pfau

Our organization has identified seven different categories of professionals who provide assistance helping families with the Medicaid application process. Start by considering which one of these groups best describes your financial situation:

 

Group 1

1. Applicant's monthly income is less than $2,000 or $3,000 if married.
2. Applicant's total financial assets, not including their home, are valued at less than $2,000

Group 2

1. Applicant's monthly income is between $2,000 - $3,500. If married, joint income is greater than $3,000 but less than approximately $4,500.
2. Applicant's total financial assets, not including their home, are valued between $2,000 and $50,000. If married, combined assets are valued at less than approximately $115,000.

Group 3

1. Applicant's monthly income is greater than $3,500 or, if married, joint income is greater than $4,500.
2. Applicant's total financial assets, not including their home, are valued at more than $50,000 or if married, combined assets are valued at less than $115,000.

Group 1

Applicants in Group 1, very likely, already meet their state's financial eligibility requirements for Medicaid long term care services. This means they will require no assistance qualifying or simply administrative assistance managing the Medicaid application paperwork. There are multiple sources from which they might gain help at no cost.

• Area Agencies on Aging - there are a network of over 500 local area agencies on aging throughout the country. These agencies employ Case Managers / Benefits Counselors who help applicants to understand the Medicaid application process, gather the necessary documents and fill out the paperwork. Typically, each agency has responsibility for multiple counties.
• County Medicaid Offices - Each county has an office responsible for managing Medicaid. Administrators may be available to help with the Medicaid application or they may refer you to the local area agency on aging.
• SHIPs Counselors - These are volunteers who provide free counseling, usually over the phone, on Medicare and Medicaid benefits. They are perhaps better used to answer specific questions one might encounter while filling out the application, rather than guiding you through a Medicaid application process step by step.

 

Group 2

Applicants in Group 2 may already meet their state's Medicaid eligibility requirements, or they may qualify through a Medicaid Spend Down program or their assets and incomes may require some minor financial re-structuring in order to meet Medicaid limits. Because their status is uncertain, they may compromise their opportunity to qualify for Medicaid by seeking assistance from a state employed individual. Therefore, the prudent approach is to seek outside (non-public) assistance, even though they may have to spend money out of pocket to do so. It is worth mentioning that for most individuals the money they spend out-of-pocket on professional assistance is money they would have otherwise have been required to spend on care through a Spend Down program. There are multiple avenues of assistance available; each with pros & cons.

• Geriatric Care Managers - Care managers are professionals hired to manage all aspects of caring for an aging loved one (except providing hands-on care). As such, most are familiar with Medicaid and the planning and application process. Care managers typically bill by the hour and could provide as much or as little assistance as is required for any applicant. Using a Care Manager for Medicaid application assistance is best suited for those families who also require care management assistance.
• Eldercare Financial Planners - Financial planners specializing in eldercare can also be proficient in Medicaid planning. These professionals are best suited for those with broader financial planning goals which include but are not limited to qualifying for Medicaid.
• Fee-Based Medicaid Planners - These are dedicated professionals who specialize in helping families gain approval for Medicaid long term care and nothing else. They bill a flat fee for their services and can be very efficient in their processes. These are best suited for families whose sole goal is to gain Medicaid approval.

Group 3

Applicants in Group 3 have both incomes and financial assets that are higher than Medicaid's limits. These individuals may not be able to afford their cost of care, especially on a long term basis, but they still do not qualify for Medicaid assistance. These candidates are typically hoping to prevent becoming impoverished in order to gain Medicaid benefits.

• Elder Law Attorneys - Using a lawyer for Medicaid planning is probably the most expensive option but the expense is justified when a variety of complicated scenarios exists. For example, when the applicants are significantly over the limit and they have considerable assets they wish to protect or when a special needs trust is being set up for a family member. Another example is with married couples where only one spouse requires Medicaid and the other wishes to continue living independently.
• Eldercare Financial Planners - Financial planners specializing in eldercare are also a good option especially when the financial planning needs extend beyond simply planning for Medicaid as is likely the case for families in Group 3 with higher net worths.
• Commission-Based Medicaid Planners - Planners who work on commission are mentioned with a word of caution. These individuals make commissions from the sale of Medicaid compliant annuities and trusts and will usually only work with those with higher countable assets. They do not charge their clients. As such, their primary motivation is to sell financial products not to gain their client's access to Medicaid services. Their interests are not aligned with those of their clients. That said, they can still provide a valuable service but potential candidates must proactively look after their own interests.

Do you or your organization provide Medicaid planning services? Do you agree with our assessment? Have we missed any types of assistance providers? We welcome your comments.

What can I do if I have too much income or resources to qualify for Medicaid?

Financial products to help qualify for Medicaid

Medicaid, the Federal program for the care of the disabled and elderly poor, has strict eligibility requirements: the individual applying for Medicaid must have very low income and little assets. The exact numbers and rules will vary in each state. (To learn more about using Medicaid to pay for eldercare in general, see our article on it.)

In some cases, though, an individual who exceeds the income and asset limits by a relatively small amount may be able to qualify by using financial products to ‘lower’ their income by putting the excess money in an account that limits its use to only certain expenditures. This has created a market for products and services to help people who need assistance to become eligible.

 

Too Many Resources or Savings

If you are over the asset limits for Medicaid, you can’t just give away the excess as Medicaid examines past financial transactions for up to 60 months preceding application.  

 

Photo by

John Patrick Robichaud

To help meet the assets limits, Irrevocable Funeral Trusts are an option for some individuals who have less than $15,000 over the eligibility limits. It is important to note that these trusts must be irrevocable. 

Some might wonder why use an Irrevocable Funeral Trust to pay for a funeral. Beyond helping to qualify the individual in need of care for Medicaid, these products also have some other benefits. Instead of pre-paying a funeral home, there is no need to select and plan in detail for a funeral in advance. Also, an irrevocable funeral trust can include the travel expenses for family members who come to the funeral. However, despite these advantages, an irrevocable funeral trust is not for everyone. Learn more about irrevocable funeral trusts in our full article on them. 

Medicaid Qualifying Annuities are specially designed annuities that help couples where one spouse requires care and the other does not. In these cases, Medicaid rules would otherwise force the well spouse to spend  most of their joint assets on the long term care of the other spouse, leaving him or her with limited resources on which to live. In order to avoid this situation, Medicaid state rules allow the couple to create an annuity from the couple’s assets and name the well spouse as a beneficiary. Find out more about how a Medicaid planner can help create a qualifying annuity.

 

Too Much Income

Similarly, an individual can be disqualified for Medicaid due to an income that is too high. However, here again, some products have come in existence to help address the situation for certain individuals and couples. 

Qualifying Income Trusts, Qualified Income Trusts, or Miller Trusts help individuals overcome the income cap. In some of states, known as ‘Income cap states,’ there is a cap, or maximum on the amount of monthly income someone can have. While this amount will vary in each state, in 2014, $2,163 per month is the highest state income cap and, in some states, it is less. Income over the Medicaid limits is secured in a trust to ensure it’s used on the care and medical needs of the individual. 

‘Medically needy states,’ without an income cap, look at the income of the individual and require that it be spent down by needed medical and long term care expenses before qualifying the individual. Find out which Medicaid financial criteria apply in your state.

Additionally, nonprofit organizations operate Pooled Income Trusts. These jointly managed trusts have lower administrative costs by pooling together many qualifying individual trusts within the state. These are often used in the case of disabled persons, but elderly can also qualify if all transfers take place before the age of 65. Special Needs Trusts have a similar application, but are not pooled and managed by a nonprofit.

 

Get Help

For both income and asset qualifying products, Federal rules are complex and state rules also matter and vary widely. For example, sometimes one might encounter products known as a ‘Medicaid Qualifying Trusts,’ which are, in fact, no longer compliant for Medicaid. 

Find out more on our site and seek the services of a professional Medicaid planner and/or elder law attorney when you are ready.

Getting Paid for Caring for an Elderly Loved One with Medicaid

Update Sept. 2015 - Our organization has released a Paid Caregiver Program Locator which allows families to search for programs that can be used to pay them as caregivers.  Start here. 


There are a variety of ways to help bridge the financial gap when caring for an elderly loved one. One of the most attractive approaches is to be paid as a family caregiver. For many families, this option offers two distinct advantages: receiving a new source of income while also ensuring the quality of care that your loved one receives.

In this post, we explain how Medicaid can provide this type of funding. If you are interested in the other, non-Medicaid based programs to get paid for care giving, please see this blog post (“Five Ways to Pay Family Members as Caregivers”).

Photo by the Abbeyfield Kent Society.

Overview

Medicaid, a federal program that is administered by the states, operates a series of programs referred to generally as ‘Cash & Counseling.’ The National Resource Center for Participant-Directed Services oversees the states’ Cash and Counseling programs. Other names include as Consumer Direction, Participant Direction and Self Directed Care. Most states have these programs under their own Medicaid waiver programs. They exist with a variety of names, such as Colorado HCBS Waiver for the Elderly, Blind, and Disabled and the New Jersey Personal Preference Program. See the full list here.

Program Description

At their most basic level, these programs provide cash to the participant and allow them the choice as to how best to spend it on their care. Participants can select their own home care agency, which may be someone from their own family. This means that the adult children and, in some cases, the spouse of the recipient could be hired as a caregiver.

When an individual is already enrolled in Medicaid or eligible, the agency will begin with a visit to the home of the senior to understand their needs. They will also contact the recipient’s caregivers and doctors. Once the agency has made a decision how much care is needed, a specific funding benefit is made based on the need and the regional cost of care. The benefit amount can change as the recipient’s needs change.

Most programs consider the situation where the care recipient needs a ‘surrogate’ to help them make care provider decisions. In these situations to avoid conflicts of interest, the care decision maker should be different from the individual who is employed as a caregiver.

Because the caregiver will actually become an employee of the senior, in some states, a third party organization might be required in order to make sure that payroll taxes are filed if those payments are above a minimum level where taxes are due.

Eligibility

• The care recipient must be enrolled in a Medicaid consumer directed waiver. Sometimes Medicaid waivers are oversubscribed and individuals will be placed on a waiting list.  

• In most states, individuals must be 65 and/or disabled. Participants with Alzheimer’s, who require nursing, or who require assistance with the activities of daily living are medically eligible.  
• Participants must be a resident in one of the states where these programs are available. See our list of the state programs for detailed information on your state program.

Understandably, getting paid to provide the care that many family members are already providing is an attractive option for families. However, the programs can be complicated. For people who are considering applying to Medicaid for the first time, a Medicaid planning professional can help. 

Learn More

Individuals wishing to learn more about how these programs can be accessed for your situation should visit our website for the full article on the Cash and Counseling programs and to find out more the program in their state.

New Products Help with Eldercare Financial Planning

As the ‘Age Wave’ Approaches, Private Business Steps in with Eldercare Financial Products

With Baby Boomers nearing retirement age and with many of their parents already needing aging care, private businesses are creating a series of new financial products to help families pay for care and aging related products. Over the past ten years, the market has seen the emergence of a variety of products serving the aging market that can be grouped into three categories. First, there are products that help families to convert assets to pay for care. Second are the loans specifically designed to meet the needs of families facing a paying-for-care challenge and the third is the financial products that help families to meet Medicaid's ever-changing, eligibility requirements.

Asset Conversions

Many families have significant financial resources tied up as assets that, in this non-liquid state, cannot be used to pay for care. Usually, the asset is their home. Reverse mortgages have been available since the 1960s. However, it was not until the late 80s when the government stepped in with regulation and consumer protections, that reverse mortgages gained in popularity. Today, there are what can best be described as private reverse mortgages that allow homeowners to receive a portion of their homes' value in cash without the same upfront costs as a reverse mortgage.

EquityKey and Rex Agreements are two examples that allow homeowners to receive cash immediately by selling a percentage of their home's future appreciation.  This clever idea enables participants to both receive cash, while continuing to hold 100% of their home's existing value. These products are best suited for persons who wish to age in their homes and might need to make home modifications to do so. Learn more from the EquityKey article and the Rex Agreements article on our website.

NestCare is another option, while still in development, this product is a more consumer friendly version of a reverse mortgage except the home is actually being sold in one month, one percent increments.  Even after 100 months, or over 8 years—a complete sale—the homeowner maintains the right to live in their home indefinitely.

Like homes, life insurance is another "asset" that can now be used for pay for care while the policyholder is still alive.  Life settlements involve selling the death benefit of a life insurance policy for a portion of the benefit amount.  This concept, which is also referred to as viatical settlements, began in the 1980s. However, the newer financial products associated with life settlements are designed specifically to pay for care and do so in a manner that allows the policyholder to become eligible for Medicaid should the funds from their life insurance settlement become exhausted. These Medicaid life settlements are being pioneered by an organization called LifeCare Funding. The concept is looked on so favorably that the state of Texas passed a law that requires Medicaid applicants with life insurance to be informed of the option. Several other states are expected to follow suit with their own versions of the law. Learn more about converting a life insurance policy to help pay for long term care on our website.

Eldercare Loans

Loans intended specifically for eldercare became a reality several years ago.  However, the best model for them is still being fashioned given the challenges associated with lending money to someone in failing health. The current version of eldercare loans are made on a short term basis when the borrower is expecting an alternative source of funding to become available.  It is quite common for the need for eldercare to come unexpectedly and families may wish to borrow money for assisted living, for example, while waiting for a home to sell.  Another very common scenario is when one is waiting for veterans' pension benefits.  Elderly veterans and their spouses can receive several thousand dollars per month for care but the application process can take 6 - 18 months.  Once approved, the benefits are retroactive to the date of application, resulting in a lump sum payment. Eldercare loans are given knowing a lump sum payment is forthcoming and the loan can be repaid from that lump sum. Lear more about eldercare loans on our website.

Annuities and Trusts

The third category of financial product specifically intended to help families afford eldercare involves annuities and trusts that enable families to qualify for Medicaid or veteran's pensions.  Both Medicaid and veterans' pensions provide significant financial assistance for care but both programs have strict financial eligibility requirements that take into consideration both the applicant's (and their spouse's) monthly income and their financial assets.  Pooled income trusts, a financial product sometimes managed by non-profit organizations, provide a way to lower one's monthly income in order to meet Medicaid or the VA monthly income requirements. Irrevocable funeral trusts enable a way to pre-pay for one's funeral expenses while at the same time lowering one's overall assets to meet Medicaid and VA asset limits. Medicaid and VA planning annuities achieve this same purpose; they convert assets that would otherwise disqualify the applicant into income that can be used for ongoing care. Often a Medicaid planner can best advise families on how to best make use of these products. Learn more about how a Medicaid Planning works in this article on our site.

Given the already high and ever increasing cost of eldercare and the massive number of Americans expected to require care over the next 20 years, we expect to see the amount of private financial products addressing this market to continue to grow.

Comments

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The Language of Long Term Care

As we have worked to help find families find the financial means to pay for care, we’ve come to realize that when an individual first develops a need for long term care, they or their caregivers are rarely knowledgeable about the subject. There are many confusing phrases, definitions and acronyms that those of us that focus on the subject full-time mistakenly assume that everyone understands.

In fact, most families are blissfully unaware and thoroughly confused by long term care terminology. In our ongoing effort to demystify the subject, we have begun creating short articles that explain some of the basic language and answer frequently asked questions.

For example, we have written about what are the Activities of Daily Living and why are they important? What is the difference between Medicare and Medicaid? And we have discussed the concept of consumer direction and how it is playing a larger role especially for individuals using Medicaid.

We hope our readers will contribute their questions and ideas about what they find confusing in the long term care space.