Five Myths About Medicaid’s Long-Term Care Coverage

March 12, 2013

While Medicare gets most of the news coverage, Medicaid still remains a bit of mystery to many people. The fact is that Medicaid is the largest source for funding nursing home care, but there are many myths about exactly who qualifies for it and what coverage it provides.  Here are five myths followed by the real story.

  1. Medicare will cover my nursing home expenses. Medicare’s coverage of nursing home care is quite limited. Medicare covers only up to 100 days of “skilled nursing care” per illness. To qualify, you must enter a Medicare-approved “skilled nursing facility” or nursing home within 30 days of a hospital stay that lasted at least three days. The care in the nursing home must be for the same condition as the hospital stay.
  2. You need to be broke to qualify for Medicaid. Medicaid helps needy individuals pay for long-term care, but you do not need to be completely destitute to qualify. While in general a Medicaid applicant can have no more than $2,000 in assets to in order to qualify, this figure is higher in some states and there are many assets that don’t count toward this limit. For example, the applicant’s home will not be considered a countable asset for eligibility purposes to the extent the equity in the home is less than $536,000, with the states having the option of raising this limit to $802,000 (in 2013). In all states, the house may be kept with no equity limit if the Medicaid applicant’s spouse or another dependent relative lives there. In addition the spouse of a nursing home resident may keep one half of the couple’s joint assets up to $115,920 (in 2013). For more information on Medicaid’s asset rules, click here
  3. To qualify for Medicaid, you should transfer your money to your children. Medicaid law imposes a penalty on people who transfer assets without receiving fair value in return. This penalty is a period of time during which the person transferring the assets will be ineligible for Medicaid, and the length of the penalty period is determined, in part, by the amount of money transferred. The state will look at all transfers made within five years before the application for Medicaid. That doesn’t mean that you can’t transfer assets at all — there are exceptions (for example, applicants can transfer money to their spouses without incurring a penalty). However, before transferring any assets, you should talk to an elder law attorney. For more information on Medicaid’s asset transfer rules, click here
  4. A prenuptial agreement will protect my assets from being counted if my spouse needs Medicaid. A prenuptial agreement only works to keep property separate in the event of death or divorce. It does not keep your property separate for purposes of Medicaid eligibility. 
  5. I can give away up to $14,000 a year under Medicaid rules. You can give away up to $14,000 a year without incurring a gift tax. Under Medicaid law, a gift of $14,000 or any other significant amount could trigger a penalty period if it was made within the five-year look-back period.

Before applying for Medicaid, it is crucially important to obtain legal advice.  To discuss Medicaid or other elder law issues with an attorney, please call the Elder Law Center at 630-844-0065 or contact us via email. The Elder Law Center is located in Aurora, IL, Kane County, in the Chicago Western Suburbs.

When Is a Hospital Stay Not a Hospital Stay? Bill Aims to Fix Costly Medicare Loophole

March 8, 2013

Sen. Charles E. Schumer (D-NY) is introducing a bill to change Medicare law so that elderly patients are not charged unfairly for receiving needed nursing home care after being hospitalized. 

In a press release, Sen. Schumer said the plight of Isadore “Ike” Cassuto, an 88-year-old retired tax attorney and former WWII pilot, is typical of the cases of thousands of elderly Americans who have been unreasonably denied Medicare coverage for required care.

After breaking his pelvis in November, Mr. Cassuto spent four days at an Albany, N.Y., hospital before being transferred to a nursing home for three weeks of rehabilitation.  Medicare covers such nursing home stays entirely for the first 20 days, but only if the patient was first admitted to a hospital as an inpatient for at least three days.  It turned out that, unbeknownst to him, Mr. Cassuto had spent his four days in the hospital merely under “observation” without actually being admitted.  This meant that he was entirely responsible for his subsequent $6,000 nursing home bill.

As ElderLawAnswers has reported, more and more Medicare recipients are getting hit with this sort of sticker shock.  In part due to pressure from Medicare to reduce costly inpatient stays, hospitals are increasingly not admitting patients but rather placing them on observation to determine whether they should be admitted – often for the duration of their hospital stay. The consequence is that if the patient moves to a nursing home after being “released,” the patient must pick up the tab for the nursing home stay — Medicare will pay none of it. The bills can run between $200 and $500 a day. 

Under Sen. Schumer’s Improving Access to Medicare Coverage Act, which is being co-sponsored by Sen. Sherrod Brown (D-Ohio), “observation” stays will be counted toward the three-day mandatory inpatient stay for Medicare to cover rehabilitation post-hospital visit.

“If you are holed up in a hospital bed for days on end, it shouldn’t matter what your billing status is, and this plan will save . . . seniors thousands,” Sen. Schumer said.

Similar bills were introduced in 2011 by then-Sen. John Kerry (D-MA) and Rep. Joe Courtney (D-CT), but the bills went nowhere.

The Cassutos’ story appeared in the Albany Times Union in December, and Mr. Cassuto’s wife, Thalia, mailed the article to Sen. Schumer along with copies of the couple’s Medicare appeal letters.  Mrs. Cassuto, 82 and a retired teacher, said the couple was stunned when hospital officials told them Medicare would not pay for rehab.

“What do you mean it can’t be paid?” Mrs. Cassuto later reported her reaction to the Times Union. “He’s 88 years old. He’s flat on his back. He’s been paying for Medicare since it was invented.”

The Cassutos doubt they will be reimbursed the $6,000 spent on rehab. “We are battling this now because it is so unfair and so unreasonable,” Mrs. Cassuto told the Times Union. “We are battling this for other people.”

To discuss elder law issues with an attorney, please call the Elder Law Center at 630-844-0065 or contact us via email. The Elder Law Center is located in Aurora, IL, Kane County, in the Chicago Western Suburbs.