Long-term care for the elderly is expensive, no matter whether it is funded through the accumulated lifetime savings of the estate or with long-term care insurance. For those who have already depleted their savings to pay for care needs from infirmity or disease, the premiums for such insurance can become prohibitive when they are on a fixed income.
And yet, often the fixed income these same people receive from a pension or social security is too high for the eligibility requirements of Medicaid. To keep from falling through the cracks, it is important to take a good look early on at options that include not only future cost-of-living resources, but also planning for potential infirmity. Getting advice on how to plan for a future that may include incapacity is an important part of estate planning.
Medicaid options in New York
Medicaid Managed Care, as it is known in New York, has several options for different types of long-term care, including differing levels of care, for eligible recipients:
- Institutional/Nursing Home Medicaid
- Medicaid Waivers/Home and Community Based Services
- Regular Medicaid/Aged Blind and Disabled
Eligibility is determined by income from any source (Social Security, pensions, alimony or dividends) as well as assets such as cash, savings and checking accounts, investments, stocks or bonds. Certain assets like IRA’s or 401K’s in payout status and other belongings are exempt from the determination of eligibility.
There are several spend-down options available, including a Community Spouse Resource Allowance that allows the non-applicant spouse to retain more of the couple’s assets. It is best to find out about strategies for applying, as there are new, more restrictive guidelines for Medicaid eligibility on the horizon for New York residents. One is a 30-month lookback for home care services.
Private long-term care insurance options
The cost of high-quality private insurance is prohibitive for many Americans, and the cash payout to some who do have such policies will potentially make them ineligible for Medicaid. It is estimated that only 10 to 20% of U.S. households that are 65 or older can afford such coverage. And, according to a report published by the Kaiser Family Foundation, only 20% of married couples aged 35 to 59 have an adequate retirement plan that incorporates long-term care insurance for both of them.
Fortunately for New York residents, a partnership program is in place to allow individuals to qualify for Medicaid once their long-term policy benefits are exhausted. The program requires policy holders to purchase a minimum daily benefit from certain designated policies to qualify, so it is important to do the research early on to weight the best options.