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Medicaid And Long Term Care


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Medicaid is the nation's largest payer of costs for taking long term care of a person when constant medical attention is not required. This kind of care, which can be given in different settings, is known as custodial care. In Medicaid terms, this kind of care is known as "institutionalization." Custodial care can be provided in, a Nursing home, an Assisted Living Facility or a Retirement Home, your home or an Adult Day Care Facility. Custodial care can be provided as: Daily Care, Respite Care, Hospice Care. (To learn more, see: Medicaid: Custodial Care). Since it is generally given in a nursing home, this discussion will refer to nursing homes as the place where the custodial care is given.

The requirements for qualification for custodial care are similar to those for basic Medicaid: you must be a member of an eligible group and have income and resources within certain guidelines. (To learn more about qualifying for non-custodial care, see Medicaid).

There are special rules for custodial care coverage that make it more accessible to people with higher incomes and more resources than for general Medicaid coverage.

There are also special rules for people who have a spouse who does not need custodial care and continues to live in the community (outside the nursing home.) The special rules recognize that when a person who needs custodial care is also married, living expenses aren't necessarily reduced because one spouse is confined in an institution. The other spouse still needs to maintain a home with the expenses involved in living separately.

In order to receive long term custodial care from Medicaid, the basic rule is that patients must pay all of their income to the nursing home or other service provider, minus certain permitted deductions. Permitted deductions include:

  • A personal needs allowance (in the ballpark of $60).
  • Uncovered medical costs including health insurance premiums.
  • In the case of a married applicant, an allowance for the spouse who continues to live at home if he or she needs income support.
  • An allowance for a dependent child living at home.

In some states, known as "income cap" states, eligibility for Medicaid benefits is barred if the nursing home resident's income exceeds a set amount of income per month, unless the excess above this amount is paid into a "(d)(4)(B)" or "Miller" trust. (To learn the income limits in your state, see: offsite link)

Keep in mind that if you depend on the government to pay long-term care costs, you lose the freedom to decide how and where you will receive care. For example, assisted-living facilities seldom accept Medicaid patients. Most nursing homes do accept Medicaid, but you may have to wait months or longer for a bed. You may also find that you will have to accept care in a geographic area other than the one in which you and your friends live.

This article focuses on the special rules that apply when Medicaid is going to be used to pay for Nursing Home and other Custodial Care charges. This article supplements Medicaid: Who Is Eligible For Medicaid? which explains the details of Medicaid eligibility. That article should be read prior to this one.

Planning can be used to hold on to some assets or transfer them to loved ones. Planning must generally be done in advance. To learn about various planning techniques, see: Medicaid: How To Plan For Medicaid Long Term.

Before you take any steps to qualify for Medicaid long term care, it is advisable to consult with a professional familiar with the rules in your state, generally an attorney who specializes in "elder care."


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