How do I get out of Medicaid
The most widely used and misunderstood aspects of the US Medicaid program are long-term care (LTC). Medicaid is not synonymous with long-term care insurance, but many who want to rely on it are unaware of it. As a result, they find themselves without the care they really need or want. Before you "plan" to have Medicaid cover your LTC needs, it is important to understand its coverage and how it differs from LTC insurance. (One program is for the poor and the other is for the elderly. Learn what's in What is the Difference Between Medicare and Medicaid?)
Medicaid is a multi-part program that offers a variety of medical and care services to those who cannot afford them. It developed during the so-called fight against poverty in the 1960s as a program for the really poor - the needy population who survived on less than 125% of the official poverty line. (For more information on poverty guidelines, see the U.S. Department of Health website.)
Medicaid LTC is of great benefit to those people who haven't necessarily had the chance to accumulate much and now need LTC services beyond what their families (or wills) can provide. (See Taking the Surprise Out of Long-Term Care.)
However, some people make a conscious choice not to purchase long-term care insurance and "plan" to use Medicaid instead. There's a whole legal specialty that focuses on helping older Americans bank themselves in order to qualify for Medicaid benefits. Unfortunately, many of these people find out too late that Medicaid is not offering what they want - the same choices, benefits, or coverage options that are provided by LTC Insurance.
Unlike Medicare, which is largely a federal program, Medicaid is primarily federal, which results in varying degrees and types of LTC coverage.
Medicaid LTC Benefits and Requirements
As a general rule, Medicaid patients are required to provide care in a nursing home in all states. Custody is when you cannot perform some or all of the activities of daily living (ADL) without help:
- Toilets / continence
Medicaid generally requires that you not be able to perform at least two of these six ADLs independently - much like the LTC insurance policies. (See Long Term Care Insurance: Who Needs It?) If you qualify for Medicaid by meeting the ADL requirement and your state's income and wealth requirements, you can likely use Medicaid to pay all of your care bills. a nursing home.
Comparison of Insurance and Medicaid
Aside from imposing income and wealth restrictions (because you buy them), LTC insurance offers options and flexibility not included in Medicaid benefits, but Medicaid has some advantages that most LTC insurance plans don't Tobe offered. The following table summarizes the main general differences between these two types of long-term care funding. (Note that all Medicaid programs and LTC insurance policies are different.)
|Coverage / benefit||Medicaid||LTC insurance|
|Nursing home stays||Usually||Usually|
|Insurance coverage from day one in a nursing home||Usually||Rarely: too expensive and not tax-qualified.|
|Coverage for as long as needed in a nursing home||Usually||Rarely: too expensive|
|Coverage in every nursing home||Rare: Many places don't accept Medicaid||Usually|
|Coverage in a home care situation||Not in most states||Available option|
|Cover for adult day care||Rare||Available option|
|Assisted living cover||Not in most states||Available option|
|Coverage for relief care||Rare||Available option|
|Access to all services in a nursing home||Rarely: often no access to private or marital rooms, shopping trips and personal care items (family has to pay for these things)||Usually - available to private or marital rooms, travel, personal hygiene and whatever the insurance benefit covers|
|Ability to stay in one place||No Guarantees: They can be moved if a facility stops accepting Medicaid patients or becomes too full||Yes, as long as the facility is open. Plus, you can change facilities as you wish|
Nursing home stays
Both LTC insurance and Medicaid offer nursing home coverage. Some LTC policies cover other types of care in addition to or in lieu of nursing home care.
In many states, nursing home stays (for unskilled custody care) are all Medicaid covers. This means that when you're covered by Medicaid, staying in your own home isn't always an option - although home care is less expensive and often what you really need and want. Compared to this inflexibility of Medicaid, LTC insurance can be a huge advantage. (Learn what to do now to maintain your options in the future, in Long Term Care: More Than Just a Nursing Home.)
Not all nursing homes accept Medicaid patients. If the facility does not have certain government or federal funding, it may not need to take Medicaid patients. Your facility may not be available to you.
Medicaid doesn't cover the fun things in life: trips to museums, shopping malls, or other non-medical forms of care. It can't be a private room, or you can have your spouse as a roommate. There may even be a special "Medicaid wing" or floor in the facility.
Medicaid pays for your stay in an institution for as long as you need the care. LTC insurance, on the other hand, will only do so if you choose the lifetime option and choose a benefit level high enough to cover lifetime costs. Medicaid also covers your costs from day one, while LTC insurance only does so at a very high cost and requires an elimination period (explained in Taking the Surprise Out of Long-Term Care). Plus, LTC plans are not tax-qualified, so your benefits are not eligible are likely to be taxable.
In addition to home care, home care is one of the two preferred ways to receive LTC. (The other is a care or training offer.) The majority of those in need of care are detained in nature and can be given in a home environment.
If, like most others, you and your spouse prefer to stay in your home for as long as possible, then LTC insurance is for you as this is the type of care you can choose from.
Also, if you own a home, think twice before using Medicaid to receive any form of LTC. If you have care and your spouse stays in your home, some states may force your heirs to reimburse the cost of your care from the sale of your home if the spouse - the one who stayed in the house - dies. That was a big shock for many heirs!
Assisted living and continuing care facilities
Sometimes before you need long-term care you need more support than you can get at home, or maybe you just want to live in a pension-oriented institution. Assisted Living Centers offer you an apartment and as much support as you need (at a price, of course). You can get household help, meal preparation and much more.
Ongoing care requires assisted living a step further with an on-site nursing home so the transition is easy.
Again, if assisted living or continuing care facilities are attractive to you, then you need LTC insurance. (Your illnesses shouldn't infect your savings. Read More
Day care for adults
Often times, rather than that person moving to a nursing home, the family of an elderly person chooses to provide much of the long-term care they need but may not be at home during the day due to work obligations, and the elderly may due to dementia or the inability to have ADLs to complete, don't stay home alone. Adult day care can solve this problem. This community-based care is often provided by churches and community centers. The premise is simple: drop the person off in the morning and pick them up in the late afternoon or early evening.
LTC policies offer the option to cover this coverage while Medicaid does not pay in most states.
Become a Medicaid User
The process of deliberately adjusting your financial situation in order to receive Medicaid seems simple: donate your fortune or put it in certain trusts and poufs! now you are poor so Medicaid will have to pay for your needs.
If you go down this route, make sure you know what you're missing out on. Here are the things to watch out for:
- Not all facilities accept Medicaid patients.
- You may not be able to take care of you at home.
- If you come out of the nursing home, your assets are likely not to be available to you.
- Do you want a roommate (not your spouse)?
- Is it important for you to go out into the community?
- Are you sure you want to give all of your assets to a trust or your heirs while you are still alive?
Think long and hard before betting on Medicaid for LTC. Both have their advantages (and disadvantages) so make sure all of your needs are covered before you jump in. As always, hasty decisions - especially when they involve something as important as your health - can come back to bite you. You may not get what you expected.
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