How soon before running out of money should my parent apply for Medicaid?
An underlying principle of elder law is that illness should not lead to the depletion of a family’s assets. When a parent requires supervision at home, even for a few hours a day, it is time to consider applying for Medicaid. Without a proper long-term plan, the daily and weekly payments to caregivers will remove necessary resources from a family’s budget. Greater care needs will require greater outlays of money to pay for that care. Nursing home care is even more expensive and delaying a Medicaid application may cost a family tens of thousands of dollars.
Medicaid home care used to offer the flexibility of asset transfers without a penalty, but the law in New York State has changed. Following the end of the Covid emergency, asset transfers to spouses, non-exempt persons or trusts for Medicaid home care will be penalized. This means that waiting to apply for Medicaid will actually cost families additional money.
The pace of need is different for individuals depending on the type of illness and its progression. Sudden illness or acute injuries leading to hospitalizations thrust families into emergency planning mode. Contemplating Medicaid should be one part of a long term care plan along with Medicare benefit review, preparing advance directives, and estate planning. In these situations, time is of the essence. Medicare has specific time limits with regards to rehabilitation stays following hospitalizations. Unless the ill individual has long term care insurance, the two available options are to privately pay or apply for Medicaid. Even if the ill individual still has substantial assets and no spouse at the point nursing home care is imminent, partial asset protection can still be achieved. With the use of promissory notes, ill individuals can make a gift transfer and loan combination to save resources and manage the Medicaid penalty period. Along with the creation of a promissory note which initiates a shortened penalty period, a Medicaid Nursing Home Application would be filed to pick up from the date the penalty period concludes.
Slower illnesses that develop over years may be managed more conservatively. Family or friend caregivers could be called upon early in the progression. Some municipalities offer limited home health aide benefits for its residents which are worth researching. Medicaid and Estate planning should still be prioritized so that the support system for that ill individual is prepared for the more difficult stages yet to come. Day to day care plans in this situation can be approached more methodically. Medicaid home care will ultimately have a 2 and ½ year lookback following the end of the Covid Emergency and Nursing Home Medicaid will continue to have the 5 year lookback. Less intensive care with lower out of pocket costs could be projected over years and balanced with the lookback timetables and targeted asset transfers.
In general, waiting to apply for Medicaid leads to higher out of pocket costs. The question that each family must answer is whether the need for control is more valuable than the continued loss of resources. Talk to the professionals at Sloan and Feller today for more information on applying for Medicaid.