What you didn't know you didn't know about senior living: The cost Part 2.
In ‘The cost Part 1’ I explained the financial aspect of Assisted Living Facilities (ALFs), and how those costs can be covered out of pocket. But what if you started saving too late for retirement, or didn’t save at all? What if your mom needs the care of an ALF, but has sold her house and doesn’t have any assets and only receives a pension of $1,500 a month? How will you afford to keep her in an ALF that costs around $4,000 a month without breaking your bank?
My ALF is a Medicaid licensed building, which means we are a part of the main program that assists seniors in paying for care once they have spent all their money. Now that people in general are living longer, it’s more common to exhaust all funds before passing away. Medicaid is a government program that supplements the payments that residents make at an ALF or other senior living community. Not every ALF is Medicaid licensed, so if you’re thinking of moving your parent into an ALF but you know they have limited funds, make sure they won’t have to move out if they transition onto Medicaid. The process of running through private funds until Medicaid assistance is necessary is referred to as a spend down. I highly recommend being up front with any senior care facility you are interested in about mom’s financial situation. The last thing you want to do is move her in, get her settled, and then have a high bill surprise you, or realize she’ll have to move apartments or even buildings once she’s out of money. If families are up front about finances with me, I can be up front about costs and options with them.
Most of the information I’ll share with you here is from my self-taught knowledge base after working in a Medicaid building for a year and a half, and then supplemented from ‘Paying for Senior Care: Understand Your Financial Options for Long Term Care,’ which I have cited at the bottom of this post. I am not a certified Medicaid financial planner, so please do not take this as set-in-stone guidelines, but rather an introduction to and loose description of the program.
Each state has different Medicaid policies and eligibility requirements. If mom lives in Arizona and you want to move her closer to you here in Oregon, she will need to qualify with the Medicaid office in Oregon. Lack of funds alone doesn’t qualify someone for Medicaid; they need to also require assistance with some Activities of Daily Living, or ADLs. The six basic ADLs are dressing, bathing, eating, toileting, transferring, and continence. Typically a Medicaid case worker will meet with each individual to ensure that they really need the assistance that an ALF will provide. This is where spending down at a facility comes in handy; the ALF will have documentation of the services being provided to your mom to prove to the state that she really is requiring assistance.
A common misconception is that Medicaid is overstretching and covering anyone and everyone, but because it’s a government program, they definitely do their research before approving an applicant. Besides requiring assistance with some ADLs, a Medicaid candidate must also be a US citizen or a permanent legal resident and pass an extensive financial check, including an asset search. Medicaid is looking for proof that an applicant is truly out of funds, and not just hoarding their money and attempting to not have to pay for services. I had a resident who did not qualify for Medicaid because she sold her house to a family member way under market value, and Medicaid counted that against her. Again, Medicaid is very thorough in their background checks, and I have full confidence that they are only qualifying those who truly meet the requirements.
The income cap is usually set federally, and it’s at $2,205 per month currently, meaning anyone who has assets and incomes totaling $2,206 a month or more will not qualify for the program. There are ways to get around this, and that’s where a Medicaid planner comes in handy. They can sometimes establish trusts for extra funds therefore limiting the amount that the candidate is actually receiving, and therefore helping them meet the financial requirement. Married couples are eligible for Medicaid, but the asset and income limit is different for them. They can apply jointly or separately, and again, a Medicaid planner can suggest whether they’ll have a better chance qualifying individually or together.
The actual application process can take a long time, so I usually suggest to families that once they’re at a point where they look at mom’s funds and think, ‘Oh, she might run out of money eventually’ they should start the conversation with the Medicaid office. There’s a lot of paperwork to complete and documentation to gather before applying, and then the Medicaid office has up to 45 days to process the request. In my experience, they usually take the full 45 days. This can be tough if you pay mom’s ALF costs one month, realize there’s only one more month of funds left in her account, and then start the process. Some ALFs are more lenient than others, but you don’t want her getting kicked out due to non-payment while Medicaid is processing her application.
Once mom is approved, Medicaid will tell the ALF how much money she owes each month. The minimum that a Medicaid resident pays (again, in my experience in the state of Oregon) is $571 a month, which is considered the room and board cost. They may also be responsible for a liability on top of that, and again, that’s all determined by Medicaid and not by the ALF. Medicaid will essentially determine how much money mom has coming in every month through Social Security, pension, etc, and then give her an amount to pay that will leave a small amount behind for spending money. Typically our residents are left $164 each month for spending money. That’s not a very large sum, but keep in mind we cover the majority of their costs, including rent, utilities (often including cable and internet), meals, toilet paper and other essentials, activities, and more. Medicaid then supplements the rest of the money owed to the ALF. I will say that we do not receive nearly as much money from a Medicaid resident (even with the state supplemented amount) as we do from a private pay resident. This then creates a revenue issue, and that’s why not every building is Medicaid licensed. Some buildings only accept Medicaid, and these have a reputation for being older, more dilapidated facilities with smaller apartments (usually just studios) and fewer staff. I don’t like it, but that’s how it is.
I want to mention a few more things in passing that I think are important to note. It is easier to get accepted into a facility as a private pay resident and then spend down onto Medicaid versus coming into a building directly on Medicaid. Often communities are limited on how many (if any) Medicaid beds they can have, and there is a waiting list at nearly every facility for Medicaid apartments. Medicaid and Medicare are different programs and it's possible take advantage of both simultaneously. Medicaid typically covers housing, and Medicare is health-care related. The Medicaid program may be called something different in your state, like Medi-Cal or MassHealth in California and Massachusetts, respectively. The Affordable Care Act doesn’t have a large impact on Medicaid for the elderly, so repeal by the Trump Administration would mostly impact other state-assistance programs.
If you have waded through all this information and made it this far, congratulations! You are now a Medicaid expert. Well, not really, but you definitely know more than the average person, and I think it is a very important resource to be aware of. I highly recommend increasing your knowledge of this program prior to moving mom or dad into a facility, especially if there’s any chance at all that they could run out of funds. Again, I don’t claim to know everything about Medicaid, but please don’t hesitate to reach out if you have questions, and I will do my best to answer them or point you in the right direction to find more information.
Additional source: https://www.payingforseniorcare.com/longtermcare/resources/medicaid.html#title3
