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CASE STUDY #1: Married couple. Husband in nursing home. Preserved $60,000 savings for wife. Care now provided by Medicaid.
CASE STUDY #2: Single person. Live-in home care needed. Assets over State limit. Able to quickly qualify for Medicaid.
CASE STUDY #3: Married couple. Home care help needed. Excessive prescription costs. Prescriptions and care now covered by Medicaid at no cost to family.
CASE STUDY #4 Married couple. Husband needs help beyond home care. Couple stay together in assisted living facility. Preserved $34,000 savings account.
CASE STUDY #5 Married couple. Home care needed. Preserved all their savings and income.
CASE STUDY #1
Mrs. M (age 81) had been taking care of her husband (age 84) in their home (the house that they had purchased 50 years ago) for a number of years, but his mental deterioration (senile dementia) had finally progressed to the point where he had to be placed in a nursing home (at just under $3,000 per month). Several months later Mrs. M contacted us. When asked what her plan was, she said she had planned to "pay the bill until I ran out of money, and then go to Medicaid."
After doing our own assessment, we referred her to Senior & Disability Services to have a Medicaid resource assessment completed. That assessment showed that the couple had combined countable assets (their home was exempt, at that point) of approximately $60,000. Each of them had a modest Social Security income, but no pension. Under the "split and spend down" rules of Medicaid, Mrs. M would have had to spend about half ($30,000) of their countable assets before they could qualify for assistance. The only thing Senior Services could tell her about the spend down was that she had to spend it on her or her husband - it couldn't be given away. Keep in mind that Mr. & Mrs. M, due to their inadequate Social Security incomes, had been dipping into their savings principal for years. Mrs. M was now faced with the loss of income (both while Mr. M was in the nursing home and upon his death), as well as the prospect of the loss of half their life savings. And, since no one could say how long she might live, and what problems, physical or financial, she might encounter, Mrs. M was faced with a real question: "Who's going to last longer, me or my money."
Fortunately, we were able to protect Mrs. M's savings, and still satisfy the Medicaid's spend down requirements. By creating, (using the $30,000 spend down), a special type of income stream for Mrs. M (she is currently receiving a monthly check of approximately $500 - for six years) she will recover that $30,000, with interest, over that six years. At the same time, Mr. M was immediately qualified for assistance. Mrs. M was able, in effect, to keep the savings (for her own support) that she and her husband had spent a lifetime accumulating for their old age, and still get the help they desperately needed. Had they not followed our recommendations, they would have qualified eventually, but only after half their savings was gone - forever!
Unfortunately, even though Congress inserted these rules into the Medicaid law to allow this protection for the community spouse (like Mrs. M), without the appropriate help, the overwhelming majority of Medicaid applicants would end up losing half, or more, of their life's savings. In most cases, this loss is absolutely unnecessary and completely avoidable.
Mrs. K, a 79-year-old widow, had suffered a stroke, which left her permanently confined to a wheelchair. She had spent about six weeks in a nursing home, but was in a condition where she could come home, if she could get 24-hour at-home care. Her daughter, who lived out-of-state, had been in contact with the local Senior Services office to check on her mother's eligibility for Medicaid assistance. She was told that her mother qualified under the income test (Mrs. K had $260 per month Social Security), but would be ineligible under the resource test (in addition to her modest home, she had approximately $28,000 in the bank). She would have to spend her resources down to less than $2,000 before qualifying. It was at this point that her daughter contacted us.
Of the $28,000, approximately $8,000 would be needed to pay the nursing home bill, make needed repairs to Mrs. K's home, and install special items (wheelchair ramp, bathroom fixtures, etc.) necessary for her to remain in her home. With the remaining money we recommended that she purchase an income annuity to raise her monthly income to approximately $480 per month. Under Medicaid rules, a single person receiving at-home care is allowed to keep $553.70 of their monthly income. Mrs. K would be able to keep all her income, as well as immediately qualify for assistance. The alternative would be for her to pay for her own care until her money was gone (at which point Medicaid would step in), and then try to live on $260 per month.
One interesting fact was that when the family informed the Medicaid case manager of their intention to proceed with our recommended action, he, at first, told the family that particular strategy was not allowed in their mother's situation. (He obviously was not familiar with the applicable rules, which is not surprising when you consider the many different programs, and the maze of rules, that case workers must contend with.) A short consultation with the caseworker solved the problem. Mrs. K is now receiving Medicaid assistance and her increased income.
Mr. and Mrs. R were both 78 years old. Mrs. R's health had been deteriorating for a number of years, afflicted by several different ailments. Thus far, Mr. R had been able to take care of his wife by himself, but it was becoming more difficult as her needs increased - particularly those functions that required physical strength and balance, such as assisting her in and out of the bathtub. Their daughter, who lived an hour and a half away, was driving over three times a week after work to help.
At this point, they figured they could manage the care, at least for the time being. The biggest problem, as they saw it, was financial. The cost of Mrs. R's prescriptions were running over $500 per month. Neither Medicare nor their insurance covered this cost. Their combined income totaled approximately $1,100 per month. (Her Social Security was $300 per month, his was $800.) They owned their own modest mobile home, but with space rent, utilities, insurance, her prescriptions, his prescriptions, food & clothing, etc., etc., their monthly Social Security checks didn't come close to paying their bills. Every month they had to dip further and further into their modest savings (about $29,000).
Mr. R had heard that there was financial assistance available to help with the prescriptions, but was told that they didn't qualify because their income was too high. The programs available to help with prescription costs or Medicare deductibles and co-pays have extremely low-income limits.
When we reviewed the situation, the solution seemed fairly obvious. Although Long Term Care Medicaid does not cover a patient whose only problem is the cost of prescriptions, it does cover prescriptions when the individual becomes qualified for assistance based on the need for care. In other words, if the patient has a need, and can qualify for long term care (i.e., home care), then Medicaid will also cover the cost of the patient's prescriptions. Mrs. R certainly needed and could benefit from home care. Her income was well below the standard (the spouse's income is not a factor). The only problem was their savings. A resource assessment conducted by Senior and Disability Services indicated a "spend down" requirement of approximately $11,000. The "spend down" was accomplished quickly by using $11,000 to create an income stream for Mr. R of $209 per month, for five years. In so doing, Mr. R will recover the "spend down," with interest, over a period of five years.
The bottom line was that: (1) Mrs. R began immediately receiving the care she needed, at no cost to the family; (2) both were able to retain all their Social Security income; (3) her prescriptions were paid by Medicaid, and (4) the "spend down" was accomplished in such a way as to allow them to retain the full value of their savings. Had they not followed our simple recommendations, they would have eventually qualified, but only after spending over $11,000 of their life's savings.
Mr. and Mrs. Jones, both in their upper 70's, had been married over 50 years. Mr. Jones had been afflicted with the symptoms of Alzheimer's for a number of years. She had always taken care of him in their apartment, but for the last year or so she had found it necessary to regularly bring in paid help to assist or provide respite care. They had been together for over 50 years, and, though she knew that his condition would only worsen over time, she had vowed not to put him into a nursing home until it was absolutely necessary. The major problem, as they saw it, was financial. Their combined monthly income was approximately $1,700. (Her Social Security and pension was $1,200, his Social Security was $500.) Between rent, utilities and insurance ($650), his prescriptions ($300), caregivers ($400), food ($???), etc., etc., there just wasn't enough income. Each month they had to dip further into their life's savings ($34,000) - and she knew it was only going to get worse.
Mrs. Jones had looked at several assisted living facilities, and was convinced that such an environment, where they could live together, would be the best situation for them. The problem was that the cost was really beyond their means. She had already been to Senior and Disability Services, where she learned that assisted living was an option under Medicaid, but was told she would have to "spend down" about $15,000 of their savings before they could get help.
The answer for Mr. and Mrs. Jones was to use the alternative spend down method allowed by Medicaid, and convert the $15,000 spend down requirement into an income stream (approximately $285 per month) for Mrs. Jones. He was immediately qualified for benefits and Mrs. Jones will recover the $15,000 over a period of five years. They immediately moved into an assisted living facility. Mr. Jones got to keep $104.00 of his Social Security (the rest going to his contribution to the cost of care). Medicaid then took care of his costs, including his prescriptions. Mrs. Jones was entitled to keep all of her income, including the $285 income stream (total of $1635.00), plus the family savings. She just paid for the cost of the second person in their apartment ($550 per month).
The Bottom Line: The total cost for room & board, care and prescriptions for Mr. Jones was $425. Adding room & board for Mrs. Jones brought the total to $975, which saved them over $1,000 per month. However, just as important, they were also able to preserve the value of their life's savings, and they will be able to stay together for the foreseeable future.
Mr. and Mrs. Smith owned their own home, where Mrs. Smith took care of her husband, whose health had been deteriorating for years. He needed assistance for many of the activities of daily living. It was becoming increasingly difficult for Mrs. Smith to physically handle the job of caring for her husband alone. As their incomes were not that great, she felt that she needed to do as much as she possibly could on her own, thereby avoiding the cost of paid care, even to the detriment of her own health. She knew, however, that at some point she would have to go to Medicaid for assistance. She had previously placed the title of their home, car and bank accounts into her name only, assuming that when she went to Medicaid they would not be counted, since he was the one applying. She was shocked to learn that Medicaid counted "combined countable resources," regardless of which spouse owned them. She also learned that creating a living trust, or putting her money into a joint account with her son, would not have helped either.
In determining Medicaid eligibility, the State would consider their home and car as exempt. However, their $50,000 of savings and investments would be considered a resource, and would most likely result in a "spend down" requirement of approximately $23,000. However, the actual spend down rules do not require that the resources be "spent," only that the couple reduce their "countable resources" by that amount. This can be accomplished, easily and quickly, by using the $23,000 to purchase a Medicaid-approved income stream for the spouse, thus allowing the spouse to recover the asset over a period of time, resulting in no financial loss to the couple. Since Mr. Smith would be receiving care at home, he gets to keep $553.70 of his $650 Social Security check, with the remainder ($96.30) diverted to Mrs. Smith (based on her income of $750). She would be entitled to keep her own Social Security, plus the income stream from the spend down.
The Bottom Line: Mr. Smith is able to receive all the care that he needs, including prescriptions, at no cost to the couple, while retaining all of their income. In addition, over a period of a few years (depends on a number of factors) Mrs. Smith will recover the full value of the "spend down," resulting in absolutely no loss of family savings.
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