Archive for the ‘Nursing Homes’ Category

Medicaid is heading for a squeeze. No doubt. One of my jobs is to try to keep up on how that Medicaid squeeze may come about. My guess is it will come in the form of something called a “waiver.” Learn about waivers here and see what may be coming to a state near you.

In case you have been busy mapping tributaries on the Amazon, the US is in the middle of a budget crisis. I do not believe anyone can dispute that something must be done; the dispute will be over what that something will be.

Currently Congress is playing chicken with a looming government shutdown while arguing over $30 to $60 billion for the 2011 budget (a budget year half over, by the way).

It is on the 2012 budget where the REAL fun will start. The federal budget is divided between Mandatory and discretionary spending. Discretionary spending includes numerous programs, notably defense. Mandatory spending includes Social Security, Medicare and Medicaid. As can be seen from the charts, “mandatory” spending chews up 55% of the current budget.

Remember, the House of Representatives writes/approves the budget. The preliminary action comes in the House Budget Committee. The chairman of that committee is Wisconsin Representative Paul Ryan.

Ryan was on Fox News Sunday on April 3 to discuss Republican proposals to cut $4 trillion in spending over the next 10 years. One of the targets will be Medicaid, and Ryan mentioned the word “Waiver.”

To understand what a “Waiver” is one must understand a bit about how Medicaid is paid for.

Let’s look.

The Overview

Think of Medicaid in two parts: Acute care (hospitals, doctors, drugs) and long term care (nursing homes and community care).

Medicaid is actually jointly funded by the states and the federal government. The feds pick up a larger share of the tab for states with lower per capita income. On average, the feds pay for 57% of Medicaid costs. The 2011 federal share for Medicaid acute care is $155 billion and for long term care it is $71 billion. The more states spend, the more the feds kick in. According to the Congressional Budget Office (or “CBO”), the outlays will increase dramatically over the next decade as the Boomers continue to age.

When it comes to benefits provided and eligibility standards under Medicaid, the feds set the general rules. The states are somewhat free to improvise, but that ability is limited because the feds set the minimum rules. In other words the states must “color inside the box” the feds have drawn for them.

A state may color outside the lines, however, if the feds “waive” the usual rules. Thus the term “Waiver.”

The CBO Waiver Option

In March, the CBO issued a  report called Reducing the Deficit: Spending and Revenue Options. The report lays out extensive suggestions for budget cutting together with projected revenue savings associated with each cut.

With respect to long term care (nursing home) Medicaid, the CBO offers an alternative that would grant the states effective waivers to devise their own benefit levels and eligibility standards. The CBO suggestions are couched in terms of block grants – essentially give the states money and have them devise and run individual long term care programs.

The block grants would be tied to the fed’s 2010 payment levels and would be indexed according to one of two suggested methodologies. Projected savings would vary from $41 billion to $73 billion through 2016.

Presumably Representative Ryan is thinking along these lines.

Pros and Cons of CBO Waiver or Block Grant

On the plus side, the idea would eliminate the extra federal subsidy for big-spending states and provide greater predictability in federal outlays. Further, once freed to devise their own program standards, states would be free to save by imposing more stringent eligibility rules.

Of course, one of the drawbacks of such an approach is also a disadvantage to some: The states would be free to impose much stricter eligibility requirements. Further, much of the growing burden of caring for aging Boomers would simply be shifted to the states . . . or simply shifted away someplace . . . . perhaps to a galaxy far, far away . . . . Finally, such an approach would create greater disparities between the states on benefits offered and eligibility criteria. Medicaid would cease to be a federal program (which, depending upon one’s point of view, may or may not be bad).

My biggest criticism of the approach is that it fails to address the underlying problem or need. I have suggested an insurance-based solution to long term care costs based upon a strategy similar to the CLASS Act and the current Medicare Supplemental Insurance scheme. Alas, Congress does not consult with me.

Plan Ahead!

My advice: Plan Ahead! This is no time to sit around to see what might happen.

Coastal Senior is a monthly periodical covering the South Carolina and Georgia low country.  Bob Mason is its legal columnist.

For many people, Medicaid may be the only financing option for nursing home level of care. Medicare has limited benefits. Most people do not own long term care insurance. And for most, private paying $6,000 a month is not an option.

Qualifying for Medicaid is another matter. It can be difficult . . . or it can be easy. Here is the easy answer along with some free legal advice. Fix up the house, buy a new car and simply spend the rest down on the spouse’s nursing home care. When everything has been spent down, go apply for Medicaid.

Is that the smartest approach? No. But the advice was “free”! Also, the nursing home and the Medicaid people in Atlanta will love you.

The better way just may be a bit more difficult. While every case is different, many strategies can save a tremendous amount of money, not to mention aggravation and worry.

The answers do not come easily. As the United States Supreme Court observed in the Schweiker v. Gray Panthers case, the “Byzantine construction” of the Social Security Act (of which Medicaid is a part) makes the rules and regulations “almost unintelligible to the uninitiated”.

You’ll need a guide with the knowledge and experienced to shepherd you through the process.

In addition to a thorough understanding of the nuances of the Medicaid rules, many of the successful strategies require an advanced understanding of trust law, taxation, real property law and the interconnections among Medicaid and other programs (VA benefits, for example).

Is it necessary to hire an attorney to complete a Medicaid application? No, not if the “easy” answer mentioned above will suffice.

Will people advise that it is not necessary to hire an attorney? You bet! Occasionally it is someone with a local Department of Family and Children’s Service office. More often it is a nursing home.

The problem with that sort of advice is both parties have a vested interest in keeping someone on “private pay” as long as possible. It is not in their interest to move someone to Medicaid.

Further, many, if not most, nursing home business office staff who offer to complete (sometimes they’ll insist on completing) a Medicaid application do not have more than a basic understanding of the complex rules and advantageous strategies available.

Also, neither has the knowledge, skills and ability, much less a law license, required to draft trusts, devise appropriate estate plans and stand by to advocate for you (in court if necessary) should the need arise.

Finally, if a lawyer is “the way to go” keep in mind that lawyers, like doctors, are not all the same. A great attorney in one area of the law may not have any idea of what to do with Medicaid rules that are “unintelligible to the uninitiated”. Ask for references, ask how many similar cases have been handled, ask for credentials and certifications and satisfy yourself they know what they’re talking about and are ready to get on your side.

Medicare will only pay for up to 100 days of nursing care following a hospital stay, and there are serious limitations on those benefits. Further, Medicare will not pay for long-term care that involves non-medical help with daily tasks, e.g., bathing, dressing. Also, Medigap policies and regular health insurance do not pay for long-term care that involves non-medical help.

Medicaid, the federal-state public assistance program for the poor, does pay for nursing home costs but only after a person essentially gives up many of his or her assets and qualifies for aid. See NC Medicaid Rules Explained on this website.  Although we can assist you with Medicaid Planning, for many individuals and couples the process is either impractical or emotionally trying. The rules are constantly tightening.

According to an article in Kiplinger’s Retirement Guide, nursing home care costs an average of $72,000 per year. In North Carolina the costs can easily climb to $75,000 to $80,000 per year. The American Council of Life Insurance projects that by 2030, nursing home care will average about $190,000 per year.

Most people prefer to receive care in their homes. According to an article in Kiplinger’s Retirement Guide, nation-wide, daily home-care costs average $45,000 per year. If you purchase long-term-care insurance and select the right benefits then you can decide where and what care you will receive. If you purchase long-term-care insurance, you will receive care and at the same time protect your life savings.

As a law firm, we do not sell any insurance; our job is to counsel and advise you. However, we can assist you with the evaluation and selection of an appropriate long-term care insurance policy suitable for your needs.