When it comes to elder care, it it cheaper to keep a senior at home instead of in a nursing home. But what is a senior has too much income to qualify for Medicaid benefits to help keep them home? New Jersey seems to have come up with a workaround. What is it?
A legally authorized "trust account".
The Bergen Record recently published an article, titled "N.J. to allow Medicaid to cover in-home elder care," reminding citizens of the Garden State that any income above the Medicaid eligibility limit of $2,163 a month that a senior or disabled individual receives can be placed into an irrevocable trust account.
Once the funds are deposited into the trust account, withdrawals are permitted for qualified living expenses and some of their care. After that, Medicaid pays the rest, whether it care is provided in a nursing home or in the home of the senior.
Why has New Jersey taken this step?
The change is in response to advocates who believed the old Medicaid rules forced seniors who had income in excess of the eligility limits to move into nursing homes prematurely. Why? Because the state provided no assistance with home health aides, adult day care programs, or assisted living residences.
According to a state official quoted in the original article, "With these trusts, the individual who wants to live at home and age in place will have the capability of being able to live at home or remain in their communities while getting the long-term services and support they need."
And the cost of this Medicaid change?
New Jersey has earmarked three-quarters of the $125 million in its long-term-care budget for these new Medicaid enrollees.
So, what is the positive for taxpayers footing the bill?
Medicaid officials in New Jersey think the changes may bring about additional Medicaid enrollees, but will save money long-term by postponing the nursing home. Medicaid funds these stays for roughly $205 a day.
Still, some advocates and elder care attorneys worry that these trust arrangements could be too confusing and complex for the elderly and their caregivers. Consequently, this could create a potential "nightmare” for people trying to navigate this process on their own.
Qualifying for Medicaid is already a time-consuming and laborious task. Seniors have to organize their bank and financial records for the past five years to show that they did not give any money to adult children or others to avoid spending inheritances on long-term care.
Once the senior is Medicaid Qualified, his or her trustee is tasked with ensuring that all pension checks are deposited, the qualified living expenses are paid, and remaining funds are then paid to the care facility or back to Medicaid.
If each of these financial and administrative "cats" are not properly herded each month, then the senior may not remain Medicaid eligible.
If you have questions or want to discuss trusts and retirement planning, speak with an experienced estate planning. However, for issues related to Medicaid Qualification in your state, contact an experienced elder law attorney.
For a national directory of elder law attorneys check out the website of the National Academy of Elder Law Attorneys.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: The (Bergen) Record (November 30, 2014) "N.J. to allow Medicaid to cover in-home elder care"