A new insurance company survey of financial advisers reports that four-in-ten have clients who ask about giving away their assets so they can become eligible for Medicaid long-term care. Oddly, though not surprisingly, the same advisers report their clients say that a key goal of their long-term care planning is “maintaining control.”
The online survey, by Nationwide Financial, questioned a small, self-selected sample of advisers, so the results may not be representative. And remember, this survey did not report that 40 percent of clients want to spend-down, only that 40 percent of advisers had clients who asked about it.
Most research suggests that few ever follow through with this strategy. Still, if control and independence are really your goals, the last thing you want to do is rely on Medicaid for your long-term supports and services. Here are some reasons why:
Medicaid benefits vary widely from state to state. And while a handful of programs provide beneficiaries some flexibility, Medicaid is loaded with rules about what is, and what is not, covered. While home care is becoming more common, assistance is still often available only in nursing homes. And even where Medicaid home care is offered, the level of assistance is often low and many enrollees face long waiting lists before such care is available to them.
Medicaid pays only limited benefits for residents of assisted living facilities. It may pay for some assistance with daily activities, such as bathing or eating, but does not pay for room and board, which represents the bulk of costs. Medicaid normally won’t pay for independent senior living either.
While Medicaid does pay for nursing home care, getting into a high-quality facility is not easy. And once you get in, you may have very different accommodations than private pay residents.
Nursing homes normally are not required to accept Medicaid residents. Indeed, because facilities say they lose money on Medicaid stays —a new industry-funded study reports that nursing homes lose an average of about $22-per-Medicaid patient per day—the best nursing homes limit the number of Medicaid residents they will accept at any one time.
The trick is to get into a high-quality facility while you are still paying out of pocket. Once you are there, the facility is not allowed to evict you if you run out of money and go on to Medicaid. Nursing facilities, of course, know this. So they’ll often want to be sure you can pay for a year or more before accepting you. That may mean you have to enter a nursing facility long before you need to, just so you can get into your facility of choice.
Also, keep in mind that while a facility may not reduce its care if you shift from private pay to Medicaid, it can make some changes. For instance, in nearly all facilities Medicaid residents must share a room.
Finally, Medicaid makes it tough to artificially give away assets in order to benefit from the program. One rule penalizes you if you give away your money within five years of being admitted to a nursing home.
At first glance, giving away money to relatives may seem attractive. But Medicaid is a program aimed at the poor and it faces severe budget issues. Besides the ethical issues of gaming the system (which I think are significant), you might want to think twice about turning your care over to a government program that is chronically short of money.