The federal government shares the cost of Medicaid with the state in order to provide anyone living at or below the poverty line with health insurance. Many older people who qualify for Medicaid are also eligible to receive a federal supplement to their Social Security check, known as SSI.
There are stringent Medicaid income eligibility rules and you must apply to receive benefits. If your parents qualify, they will be able to receive healthcare services from physicians who accept Medicaid, and their hospitalizations and prescriptions will also be covered. If they are 65 or older, they will automatically receive Medicare as well; the two are not mutually exclusive. Depending upon their financial circumstances, your parents' premiums for Medicare Part A and Medicare Part B, along with the deductibles, may be covered by Medicaid.
Most people start looking toward Medicaid when they face the high cost of nursing home care. To determine eligibility, your parents' state Medicaid program will review all of their "countable income," such as wages, self-employment income, pensions, interest, dividends, annuities, entitlements and benefits. If the countable income is less than the nursing home costs, your parents would likely pass the income test. They'll also have to meet medical requirements that prove they need skilled nursing care in an approved long-term care facility.
You'll often hear the term "spending down" associated with Medicaid and a nursing home. Many people pay for a nursing home using their savings, assets and income to meet the monthly bill, eventually spending down their assets down to a level where they meet federal poverty guidelines. At that point they apply to Medicaid. Years ago, people had to spend down to such an extent that the nursing home resident's spouse would become impoverished by the time Medicaid would help out. Today, federal law prevents that from happening. A Medical Assistance Office calculates a monthly "Community Spouse Resource Allowance" and if the spouse is living in the home, it will not be considered a countable asset, nor will the household goods or the car. The state Medicaid office will determine the allowance based upon an eligibility formula.
Some people think that they can cheat the system by transferring all of their income and assets to their children as a way of "spending down," so they will immediately qualify for nursing home assistance. You should know, however, that any assets transferred within five years prior to nursing home admission are NOT exempt from the asset-eligibility test. This is often referred to as the "look-back" provision.
The Medicaid program also requires repayment of medical assistance for nursing home care from your parents' estate after they die, or from their spouse's estate if one outlives the other. Contact your local county assistance or "welfare office" listed in the Blue Pages of your phone book to determine if your parents would qualify for Medicaid. It may also be wise for you to see a certified elder law attorney. You can find one in your local area by going to naela.com