Recently, I had clients who were very concerned about their parents. Mom had broken her hip and the rehab facility says that Mom has to go into a skilled nursing home even though she is fully recovered from her hip replacement surgery. The family has been told that Mom’s Alzheimer’s makes it unsafe for her to be at home with Dad. He really wants Mom to come home where they have lived for all of their married life. The family wanted to know if they had any options.
I explained that in certain cases, Medicaid will actually pay for up to 24 hours of in-home care in lieu of skilled nursing. We talked about two programs in particular – The Managed Long Term Care Program (MLTC) and the Nursing Home Transition and Diversion Program (NHTD). The applicant’s needs and medical condition determine which program is appropriate.
NHTD is generally available for applicants with cognitive impairment who are unable to be left alone safely – it can provide up to 24 hour in-home coverage. For other applicants who require skilled nursing care but are not a risk for wandering, the MLTC program is a good choice as it can provide assistance with the activities of daily living including hygiene, bathing, dressing, eating, and meal preparation. MLTC generally includes adult day care as part of its services. In-home supervisory care is rare under the MLTC program.
My clients were happy to hear this and for the first time since mom broke her hip, they had some hope.
I also explained that both programs are need-based, so their parent’s income and resources must be examined. With this news, they became chagrined. Dad is a retired university professor with a monthly income of $7,500 per month, consisting of Social Security of $2,200 per month, and his RMD from his TIAA-Creff account of $6,300 per month. Mom’s monthly income is $2,370 based on Social Security of $1,200 per month, a pension of $375 and $800 a month from her IRA. Their combined income is $8,575.00. They were sure this would disqualify Mom for Medicaid benefits.
Imagine their relief when I told them this would not be a problem.
Currently, under either program, Mom is allowed to keep $845 a month and she can either pay the excess income of $1,530 toward her home care bill or she can join the Western New York Pooled Trust and for a small fee each month, deposit the excess funds into the pooled trust, where it is available for her use to pay bills and purchase non-medical related goods and services. The caveat is that, on her death, any funds left in the pooled trust will remain in the trust, they cannot be distributed to her beneficiaries.
I also explained to them that all of Dad’s income is exempt so long as Mom is receiving care in the community under either of these programs. He would not have to contribute any of his income to pay for mom’s care at home.
Now, the three children were very excited.
I reminded them that there is also resource test. I explained that Mom was allowed to keep $14,850 and Dad could have $74,820 plus they could keep certain exempt resources. Before I could explain what exempt resources meant in this case, they became very upset.
They told me mom and dad had done well in planning for old age. They had a house worth $275,000, a car worth $25,000, checking and savings accounts with $100,000, an investment account worth $157,000, Dad’s TIAA-Creff account worth $1,300,000 and Mom’s retirement account worth $175,000. All totaled they were worth $2,032,000. If they private paid for care at $20 an hour, 24 hours a day, 365 days a year, the cost would be $175,200 a year. It would take twelve years to get down to Medicaid levels and by then Mom and Dad would be in their late 80’s and early 90’s and there would be no legacy left. Their life’s work to leave a legacy for their children would have gone for naught.
I explained that the house, the car and the IRA’s for Mom and Dad were exempt. Deducting those assets from their net worth, they were left with $357,00 in available resources. They could either spend down $267,330 to bring Mom and Dad to the resource levels of $14,850 and $74,820 and Mom would be eligible for home care in about 2 years or Mom and Dad could establish an irrevocable trust, transfer the excess resources of $267,330 into the trust and be eligible for in-home Medicaid in a few months.
They knew about the look back period, so they asked why Mom and Dad would not be penalized for the transfer. I explained that there is no look back for either of these Medicaid community-based programs.
My clients were stunned. They looked at me in disbelief, “Are you telling us that Mom can stay at home, she can enroll in a home care program with up to 24-hour care and basically preserve almost all of their assets and income?”
I assured them that was, in fact, the case, so long as Mom met the medical requirements for in-home care. They left my office greatly relieved.