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.

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.

5 Ways to Pay Family Members as Caregivers

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.

Without question, the most common question our organization is asked is: "Can I get paid to provide care for my parents (or spouse)?"  On own website, we maintain a list of programs that offer that option to family caregivers, but as some new options have become available, we thought a blog post overview of all five different ways family members can be paid as caregivers of their elderly loved ones was in order. 

1) Medicaid Waivers

This is the most common and well known option.  Many states have Medicaid Waivers that allow participants to receive care at home instead of in a nursing home.  Some of these waivers allow for self-direction of care services.  This means the participant is free to select their care providers.  They can "hire" their adult children, other relatives or a few states, their spouses to provide them with personal care.  Relatives are paid the Medicaid hourly rate for home care.  Medicaid Waivers have enrollment caps, so only a limited number of individuals can participate through this option.

The exclusion of spouses in many states from being paid has led to an unintended consequence of some divorces.  While there are rules prohibiting spouses from being paid, there are no rules that prohibit former spouses.

See our website for a state by state guide of the Medicaid programs. 

2) Medicaid Personal Care Services (PCS)

Approximately 50 percent of states allow for personal care services in their Medicaid State Plans.  As with Medicaid Waivers, some of these programs allow for consumer direction of personal care providers enabling participants to hire friends and family members to provide them with personal care. 

These PCS programs differ from Medicaid Waivers in two key ways.  First, typically Medicaid Waivers have less restrictive financial eligibility requirements than PCS programs.  It is not uncommon for the monthly income limit for a Waiver to be approximately $2,130, while Medicaid PCS programs might be closer to $800 - $1,000 / month.  Second, because these programs are offered through the Medicaid State Plans, they are entitlements, unlike Medicaid Waivers which are not. 

3) State Based Non-Medicaid Programs

There are also non-Medicaid consumer directed care programs.  Unfortunately, a much fewer number of states offer these programs.  During our most recent survey, we found 12 states offer consumer direction in their non-Medicaid assistance programs for the elderly. 

4) Veterans Directed Home and Community Based Services

The 4th option is for veterans and their spouses only.  Similar to Medicaid Home and Community Based Services Waivers, there are Veterans Directed Home and Community Based Services.  Under these programs veterans, especially those living in rural areas, are given the flexibility to select what cares services they require and whom shall provide them.  Family members and friends can be hired to provide personal care.

5) Medicaid Life Settlements

Also referred to as Life Care Funding Plans, this is the newest way family members can receive payment for caregiving.  The approach is for holders of life insurance policies who require ongoing care and are considering Medicaid as a long term solution. 

Medicaid counts life insurance policies as assets and generally persons with these policies cannot qualify.  A Medicaid Life Settlement allows the individual to convert their life insurance policy into a dollar amount of care services.  That money is put into an account and used to pay for care for the policyholder.  It can be used for any type of care such as home care, assisted living or to make home modifications that help seniors maintain their independence (walk-in tubs, wheelchair ramps, stairglides etc.). 

It can also be used to pay family members for the care they provide.  For example, a spouse with Alzheimer's may require 24 hour supervision.  They might go to adult day care for 8 hours on weekdays and be looked after by their spouse for the remaining time.  The spouse could be paid the hourly Medicaid rate for the caregiving. 

The account that holds the money is a Medicaid qualified spend down, so when the funds are exhausted the individual is in a very strong position to qualify for Medicaid.

To learn more about each of this option and discover other sources of funding please explore our website.