Q. The Deficit Reduction Act has made Medicaid a less desirable solution for funding LTC. I do mention the disadvantages of relying on Medicaid during my client presentation. Do you have a list that I can use if asked more questions about Medicaid?
A. A discussion of Medicaid is an essential part of the presentation. However, I believe it is much better to keep the explanation brief and simple. Here?? 1/2 s why:
- From the agent?? 1/2 s perspective, Medicaid rules keep changing and can vary by state. If we provide specific advice, it could be wrong. And we are not attorneys; therefore, our E and O insurance may not cover that situation.
- From the client?? 1/2 s perspective, they do need to hear information from us so they can be convinced that they need LTCI. If we add to this a lengthy explanation of Medicaid, we risk having them suffer from information overload.
As National Marketing Coordinator for the AHIP Partnership Training Program, I use as part of the curriculum a list of disadvantages that my students find to be very comprehensive and easy to communicate. Use this list when you need to provide a more in-depth discussion of Medicaid disadvantages.
1. To qualify, a person must generally spend almost all her assets and income on care. An elderly person who has worked hard and been self-supporting her whole life becomes now indigent and must depend on the government for her needs.
2. The types of long-term care available to a Medicaid recipient are often limited. Benefits for home and community-based services are not offered everywhere, eligibility for them may be restricted, and funding is generally limited. Only a few state programs pay benefits for care in assisted-living residences. Consequently, some Medicaid recipients who could be cared for at home are forced to enter a nursing home.
3. Possible limited choice of nursing home facilities. Facilities considered the most desirable may not be available to them because in most states facilities receive less dollars to care for Medicaid recipients than from private patients. If fewer facilities are open to Medicaid recipients, they may have to go wherever a bed is available.
4. Medicaid is not automatic or guaranteed. If your LTCI benefits run out, and you have to apply for Medicaid, you may or may not be accepted. You might not meet Medicaid standards for functional eligibility (need for care), and in some states your income might be too high for you to qualify.
5. Medicaid is subject to change. In the future it could be more difficult to qualify, and benefits could be more limited.
6. Only assets are protected, not income. If you qualify for Medicaid, you will generally have to spend most of your income on care.
7. Some, not all, assets are protected. Under the DRA, assets are protected to the amount of LTCI benefits received when you apply (plus the amount you are entitled to under the spousal impoverishment provision).
No guarantee any assets will be preserved. If your LTCI benefits don?? 1/2 t cover most care costs, you could spend all your assets before you run out of LTCI benefits and apply for Medicaid.
9. Home may not be protected if the value is greater than the amount of LTCI benefits received. If a home is deemed a countable asset by Medicaid and subject to spend-down requirements, a partnership policy protects it only if the amount of home equity is less that the amount of protected assets. If a home is subject to estate recovery, partnership coverage protects it only if the equity is less than the LTCI benefits received.
10. Reciprocity may not apply. If you move to another state, the new state might not have a partnership program, or it might not have reciprocity with the old state.
11. Partnership programs are subject to change. Federal or state governments could change the programs in the future, possibly affecting asset protection.
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