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Financial, Legal, & Other Services in Pennsylvania

This article provides an overview of the various options available to pay for senior living, including insurance strategies, tapping into home equity, and taking advantage of government assistance programs.

Long-term care insurance, hybrid insurance policies, life insurance with an LTC rider, and annuities are all options to pay for senior care.

Reverse mortgages and liquidating assets are other ways to pay for senior living.

Veterans have access to a range of benefits and programs, and Medicaid covers long-term care for those with very little income and assets.

Article Summary

Aside from using personal savings, other ways to pay for 

 include various insurance strategies, tapping into home equity, or taking advantage of government assistance programs.

Life insurance, long-term care insurance, and annuities are often used to pay for senior care.

 can offset the costs of long-term care but it generally must be purchased quite a bit before it’s needed – it gets very expensive as people age or develop serious health conditions. Policies don’t always cover care in every type of senior living setting, so look closely at the terms of each specific policy.

combine life insurance and long-term care insurance so you can pass a death benefit on to a beneficiary if you don’t end up needing long-term care. Most hybrid policies are more limited than traditional LTC insurance, covering only five years of long-term care.

Life Insurance with an LTC Rider or Accelerated Benefits 

allows you to access life insurance benefits early if needed to cover long-term care expenses.

are special contracts with insurance companies. They provide a reliable stream of income over time in exchange for an upfront lump-sum payment. Different types of annuities exist for different circumstances, such as paying for long-term care or planning for 

Many seniors sell or rent out their homes in order to pay for senior care. In some cases, they get creative – for example, by selling to a family member who, in turn, rents it back to them.

are loans for older homeowners who owe little or nothing on their primary residence. A reverse mortgage provides a lump sum or monthly income that can be used to pay for needs like long-term care. Instead of making payments on the loan, it gets larger over time. You pay back the entire amount borrowed, plus any upfront and ongoing fees when you die, sell the home or move out.

Selling artwork, jewelry, collectibles, extra vehicles, or other assets can sometimes provide enough cash to cover long-term care needs.

have access to a range of benefits and programs. Some offset the costs of long-term care and others provide board and care in nursing homes, assisted living facilities, group homes, or other senior living settings.

covers long-term care for individuals who have very little income and very few assets – provided they haven’t compromised their eligibility by giving away assets, for example. Many seniors plan ahead for Medicaid eligibility or engage in complicated Medicaid planning strategies in order to keep their spouse out of poverty or protect certain assets to pass on to their loved ones.

What Are My Options to Pay for Senior Living?

The national average cost of care per month (Genworth Cost of Care Survey, 2021):

Period (hourly, daily, monthly, or annually)

A different number of weekly home care hours

How Much Does Senior Living Cost?

Depending on your situation, different professionals may be most helpful in helping you pay for senior living.

A CFP will look over your entire financial picture, analyze your options and help you develop a plan to pay for senior living and meet any other financial goals. Read more about finding and selecting the right CFP here.

Look for an agent specializing in the type of insurance you’re interested in exploring – long-term care insurance, life insurance with an LTC rider, annuities, etc. Learn about finding and selecting the right insurance agent here.

Find a reverse mortgage counselor at the U.S. Department of Housing and Urban Development (HUD) 

. A HUD-approved counselor can help you determine whether a reverse mortgage would be a sound move in your situation and guide you to finding a reputable lender.

The veterans' benefits available to you vary based on a number of factors such as your need, service history, and location. Learn more at the 

U.S. Department of Veterans Affairs website

If you have less than $2000 in monthly income and less than $2000 in assets, you can 


If you’re interested in planning ahead for Medicaid eligibility, there are a number of different types of professionals who can assist. The 

American Council on Aging’s Medicaid Planner Finding Tool

 can help you find the best planner for your situation.

Who Can Help me Take the Next Step?

Annual Report on Long-Term Care Insurance: 2021

Is Hybrid Long-Term Care Insurance Right for You?

Should I Get Hybrid Long-Term Care Insurance? | Policygenius

Health Savings Account (HSA) - HealthCare.gov Glossary

HSA savings can be used for long-term care in retirement | Employee Benefit News

How HSAs (Health Savings Accounts) work with HDHPs | HealthCare.gov

Sources

Explore available finance options and assistance programs to help afford senior living for your loved one. Our concise guide provides insights and resources to simplify the process, ensuring a comfortable and secure future for your loved one.

Financing Senior Living: Uncovering Options & Assistance Programs for Care - Olera

Paying for Senior Living: Exploring Finance Options & Assistance Programs

This article provides an overview of the differences between Medicare and Medicaid, and how they relate to elder care.

Medicare is a federal program that is open to all seniors once they reach age 65, while Medicaid is a joint program between the federal government and each individual state.

Medicare is divided into four parts that provide coverage in different situations, while Medicaid provides health insurance and covers the cost of long-term care under certain circumstances.

Medicare does not pay for personal or long-term care, while Medicaid covers care in a nursing home for those who qualify.

If you’re feeling confused about the differences between Medicare and Medicaid, and what each program does – or doesn’t – cover, take comfort in knowing that you’re not alone! They’re both incredibly complex systems that are hard for most people to untangle. We’ll lay out the basics of both and help get you pointed in the right direction for your senior loved one’s situation.

Introduction

Both Medicare and Medicaid are government programs that provide health care benefits for American citizens or permanent residents who meet their eligibility requirements.

 is a federal program that is consistent throughout the nation. It’s generally open to all seniors once they reach age 65.

 is a joint program between the federal government and each individual state. It’s run at the state level, so details can vary widely from one to the next. Even the name of the program differs in many states! Some simply call it their State Plan or Title XIX, but others have special names such as Medi-Cal (California), KanCare (Kansas), or MassHealth (Massachusetts).

Medicare is divided into four parts that provide coverage in different situations.

 - Hospice, Skilled Nursing Facility, Inpatient Hospital Care

- Outpatient Care, Durable Medical Equipment, Home Health Care

These special plans are sometimes available through private insurance companies. They provide the same benefits as Parts A and B – and sometimes D – plus additional areas, such as dental, vision, or hearing. Some plans now also include adult daycare, respite care, personal care assistance, housekeeping, home modifications, or meal delivery. Coverage varies from plan to plan, so check with your loved one’s plan administrator about any questions.

Medicaid provides health insurance and also covers the cost of long-term care under certain circumstances.

 include many common medical expenses, such as doctor or hospital visits or lab and x-ray services. Beyond these basics, Medicaid benefits vary tremendously from state to state.

What are the Differences Between Medicare and Medicaid?

Under most circumstances, Medicare will NOT pay for personal or long-term care. Skilled nursing coverage is limited, and is reserved for those recovering from a significant hospitalization.

Medicaid is the largest source of long-term care coverage in the nation

, supporting over sixty percent of nursing home residents.

Medicaid covers care in a nursing home for those who qualify. It also pays for personal care in other settings to a limited extent.

Nursing home care is considered an “entitlement”, which means that the state will always cover it for enrolled seniors who require that level of care.

medical specialist determines that your loved one doesn’t need a “nursing home level of care”

 they may still be eligible for “home and community-based services” (

), such as care in the home, at an adult day care program, or in an assisted living facility.

In many states, Medicaid will cover the cost of 

 in a home or assisted living facility, but not room and board (which is often the bulk of the charges). Additionally, home and community-based care is not an entitlement – it’s considered a “

Waivers are special Medicaid programs that cover costs outside of nursing homes under certain circumstances. However, even if your loved one is eligible, they may not be able to participate, because enrollment is limited to a certain number of “slots”. There are sometimes long waitlists for waivers.

Waivers vary by state. They sometimes have different eligibility requirements than the regular state Medicaid plan. Even the exact definition of terms like “assisted living” can vary from state to state, so it’s important to get information directly from your state’s Medicaid office, or from an advisor familiar with your state’s specific rules.

Call 1-800-MEDICARE (1-800-633-4227) to find 

contact information for your state's Medicaid office

“Dual Eligibility” for Medicare and Medicaid

Seniors can be eligible for both Medicare and Medicaid at the same time. Medicare’s eligibility is based on age while Medicaid’s is based primarily on financial need.

In some cases – such as when a senior has less than $2,000 in assets and less than $2,000 in monthly income – Medicaid eligibility is fairly straightforward.

However, in many cases, the application process can be pretty complex. The rules change frequently and vary based on many things, including marital status, state of residence, and which assets are “countable” and which are exempt. Depending on the situation, there are different pathways to eligibility.

A few examples of common circumstances include:

A Single Senior with High Medical Expenses

A single senior who has high medical expenses may be considered “

”, which may allow them to qualify even if their income exceeds limits for other pathways.

The cost of care for one spouse can easily deplete a couple’s resources. Fortunately, Medicaid’s 

 make allowances for the healthy spouse to retain their home, vehicle, and a moderate amount of income and assets. They don’t have to deplete all their resources in order for their partner to become eligible for long-term care assistance.

When both spouses require long-term care, their financial and care needs can quickly overwhelm the entire family. It’s advisable to start consulting with a professional Medicaid planner early in the process to ensure that support is available when needed.

Many seniors aren’t eligible for Medicaid when they initially begin the application process. Ultimately they become eligible through strategies such as “spending down” their assets or rearranging them through trusts. This process often requires professional help to navigate.

Will Medicare or Medicaid Pay for Long Term Care?

If your loved one has too much income to qualify for Medicaid but is considered “medically needy”, some states will allow them to “spend down” their assets to become eligible. Spending down is a defined process. Seniors who just give away their assets will be denied coverage, so it’s important to understand and follow the rules!

For more information on spending down or becoming eligible in other ways, such as creating an 

, contact your state’s Medicaid program or a professional Medicaid Planner.

Many seniors find it worthwhile to consult with a Medicaid Planner to help navigate the confusing process of becoming eligible for the program. More than a matter of convenience, professional assistance can make the difference between qualifying for the program or not.

, each with their own strengths and weaknesses.

 won’t charge your loved one for their service, but they won’t have any incentive to advise in any direction other than purchasing 

 (one way to spend down to create Medicaid eligibility).

 usually charge several hundred dollars per hour, with the total cost of service coming in between $3,000-$15,000, depending on the complexity of the case and where it’s located. Elder law attorneys offer well-rounded advice and have no conflict of interest in representing the best interests of your loved one. They can also assist with the creation of trusts to meet eligibility requirements.

 tend to charge lower fees than attorneys (in the range of $1,500-$2,500) and can assist your loved one to 

 for managing their complete financial and care situation.

 work through your local Area Agency on Aging or Medicaid office. They won’t charge for their service, but are often very busy and may not be able to provide the same level of service as a privately-paid planner. They don’t advise on how to restructure assets in order to qualify for Medicaid, but they can be a good resource for those who already 

meet their state’s eligibility requirements

There are also many other types of professionals who can assist with 

. Finding the right one to assist you through this process can make a big difference in minimizing the hassle, and ultimately securing the best outcome for your loved one’s financial and health care future.

How Can My Loved One Become Eligible for Medicaid?

The process of applying for Medicaid is complex and can be overwhelming. Take comfort in the knowledge that over 

75 million people – around one in five Americans – have navigated it successfully

 and are covered as of May 2021. And you can too! Just take it one step at a time and seek the support you need along the way.

Take it One Step at a Time

ElderCare Resource Planning: Services, Fees, Pros & Cons

A Beginner's Guide to Medicaid and Eldercare

Medicaid Planning: Pros & Cons, Costs and Strategies

Find a Medicaid Planner / Determine Eligibility Status

Frequently Asked Questions on Medicaid Long Term Care

Discover the essential criteria for determining if your loved one is eligible for Medicaid. Our concise guide helps you navigate the qualification process, ensuring you understand key factors, requirements, and insights for seeking assistance.

Medicaid Eligibility: Determining if Your Loved One Qualifies - Olera

Is My Loved One Eligible for Medicaid?

This article provides an overview of Medicaid eligibility requirements, including income and asset limits, and how to use Medicaid Spend-down to qualify for coverage.

Medicaid eligibility requirements vary from state to state.

Income and asset limits must be met in order to qualify for Medicaid coverage.

Spend-down strategies can be used to reduce countable assets and qualify for Medicaid.

Medicaid is a program that provides health insurance and long-term care for low-income Americans. It’s jointly run by the federal and state governments. Specific benefits, program details, and eligibility requirements vary from state to state.

Generally speaking, in order to receive Medicaid-funded health insurance, your loved one must meet their state’s financial eligibility requirements. For Medicaid to cover long-term care, your loved one must also meet the “functional eligibility” criteria, which is determined by a medical specialist.

In many cases, older adult meets the functional eligibility criteria, meaning that they require long-term care, but they have too much income or assets to qualify for coverage. This is where the process of Medicaid Spend-down comes in.

This article will discuss both income and asset spend-down, along with an overview of the key concepts you’ll need to understand as you consider helping your loved one apply for Medicaid.

Intro

Like so much in the Medicaid world, the income limit varies depending on factors such as your loved one’s state of residence and marital status. Be sure to check 

your state’s specific eligibility requirements

, as they may differ from the generalized figures listed here.

: Income is generally limited to $2,523 per month for applicants over 65 years in age.

: In most cases, each spouse is allowed $2,523 each month ($5,046 together).

: Usually, only the income of the applicant is considered, and it’s typically limited to $2,523 per month. The non-applicant spouse’s income is not usually considered. However, if they have very little income, the applicant can sometimes allocate income to them under the Minimum Monthly Maintenance Needs Allowance (

What is Medicaid’s Income Limit?

Medicaid uses the Modified Adjusted Gross Income (MAGI) to 

 for eligibility purposes. This includes taxable income such as:

They don’t count non-taxable income, such as SSI payments, veteran’s benefits, gifts, or beneficiary payments.

What Counts as Income for Medicaid Eligibility?

If your loved one’s income exceeds their state’s Medicaid eligibility limit, they can sometimes “spend down” to meet it by deducting medical expenses from their total income.

 If your loved one’s income is $500 above their state’s income limit, but they have over $500 in qualifying medical expenses, they may still meet Medicaid’s eligibility requirements.

Qualifying medical expenses typically include:

Some states use different terms for income spend-down, including:

What is Medicaid Income Spend Down?

Certain states – called income cap states – don’t allow spending down. However, they may allow Medicaid applicants with excess income to qualify for coverage by converting their surplus income into special types of trusts, called Qualified Income Trusts (QITs) or 

. Funds in these special trusts can be spent only on the person’s medical expenses or care.

What are Income Cap States, QITs, and Miller Trusts?

The asset limits listed here can give you a general idea of what to expect but bear in mind that limits vary from state to state and program to program. Be sure to check with 

 or a professional Medicaid planner for the exact numbers you need to know.

: The asset limit in most states is around $2,000.

: In most states, when both spouses apply for nursing home care they may retain $3,000 of countable assets. When applying for regular Medicaid health insurance, each applicant can usually keep $2,000 ($4,000 together).

: When applying for nursing home Medicaid, the applicant spouse is usually allowed to retain $2,000 in countable assets, while the non-applicant “community” spouse can keep a higher amount, called the “Community Spouse Resource Allowance” or CSRA. (Read more about the CSRA below.)

When applying for regular Medicaid health insurance, there is no CSRA and, in most cases, the couple is limited to $3,000 in joint assets.

What are Medicaid’s Asset Limits?

Some assets (or “resources”) don’t count toward Medicaid’s asset limit. These are called “non-countable” or “exempt” assets.

Primary home (if the applicant or their spouse lives there)

 (must be set up years in advance of applying for Medicaid)

Term life insurance, or life insurance policies not exceeding $1,500 in total cash value

Which Assets are Exempt from Medicaid?

If your loved one meets all other Medicaid requirements, every state allows them to “spend down” their assets to qualify.

Asset spend-down is a strategy used by many Medicaid applicants to reduce their countable resources by converting them to non-countable resources and/or by paying for eligible expenses.

Not all expenditures are allowable. If your loved one breaks the spend-down rules, they’ll be ineligible for Medicaid for several years, so it’s vital to understand how they can safely spend down their money.

Which Expenses are Allowed for Medicaid Spend-down?

Certain expenses are allowable for Medicaid spend-down while others are not.

The main expense to avoid when spending down for Medicaid is transferring assets for less than market value – for example, giving or selling a car, house, or other property to someone for less than its worth.

Although this may sound straightforward enough, it can get nuanced and grey at times – and any mistake can result in ineligibility for the 

 (typically five years.) Therefore, it’s recommended to consult with a Medicaid planner for guidance on the spending down process.

Generally, Medicaid applicants can spend their money on things that truly benefit them.

Non-countable assets (including purchasing or replacing a primary home or vehicle)

Updating personal belongings (clothing, furniture, electronics, or other needed items)

In-home care (be sure to sign a life care agreement for any care provided by family or informal caregivers)

A life care agreement (sometimes called a personal care agreement) is a written contract between an older adult and a caregiver (usually a family member, friend, or other informal carer).

Paying informal or family caregivers without a life care agreement can affect eligibility for coverage because Medicaid will likely determine that these payments were actually gifts.

Always obtain caregiving agreements in writing, pay fair market value and ensure taxes are paid properly on these earnings.

 (MCA) helps some seniors spend down their assets to achieve Medicaid eligibility. It can be an especially good move for couples in which only one spouse is applying for coverage.

An annuity is a contract with an insurance company in which an individual gives the company a large sum of money. In turn, the company provides that person – or their named beneficiary – with a reliable monthly income lasting either a defined period of time or the rest of their life.

Regulations regarding annuities differ from state to state, and it’s recommended to consult with a 

 when purchasing an annuity for Medicaid spend-down purposes.

Ensure that the annuity is Medicaid-compliant

Be careful that the annuity doesn’t put your loved one over the income limit 

(if their spouse is not an applicant, putting the annuity in their name may help keep this income exempt)

What is Medicaid Asset Spend Down?

Because nursing home care is so expensive, it can quickly drain a couple’s assets and resources. In the past, this left the “community spouse” without enough assets or income to live on, as everything went to pay for the care needed for the “nursing home spouse”. Now the government protects the community spouse from destitution with their 

Community Spouse Resource Allowance (CSRA)

In addition to any non-countable assets, the community spouse is permitted to retain a certain amount of countable assets. The maximum “community spouse resource allowance” (CSRA) varies from state to state, but it can’t exceed the limits set by the federal government. In 2021, no state could set the CSRA at less than $26,076 or more than $130,380.

In most states, the community spouse can keep half of the couple’s countable assets, up to the maximum CSRA. The applicant’s half must be spent down (at least to the $2,000 exemption allowed) before they reach eligibility requirements. Some states have different rules, so be sure to check with yours.

 by waiting until the applicant spouse moves into a nursing home to start the spending down process.

Consult with a Medicaid Planner to ensure the applicant spouse qualifies for coverage as early as possible, while also protecting the community spouse’s assets.

What are Spousal Impoverishment Rules?

Medicaid spend-down is a complicated process. The rules change frequently, and vary depending on the state your loved one lives in, their marital status, and the program they’re applying for. Furthermore, even a small mistake can render them ineligible for coverage for years.

If your loved one’s assets and income don’t exceed the limitations set by Medicaid, applying for service is fairly straightforward. However, most applicants don’t immediately qualify for coverage and need to engage in some sort of Medicaid planning to achieve eligibility.

Consulting with a Medicaid planning professional is a smart move that can ultimately make a huge difference in the overall outcome, including how soon your loved one qualifies for coverage and how much income and resources their spouse is able to retain.

In the meantime, these helpful tools can help you quickly gauge your loved one’s eligibility and locate your state’s eligibility requirements.

Consult with a Medicaid Planner to Spend Down Strategically

Medicaid Eligibility Quick Screen for Long Term Care

Medicaid Eligibility Requirements by State

Medicaid Eligibility Tools and Resources

What is Medicaid Spend-Down & How Does It Work?

Qualifying for Medicaid Eligibility using Trusts

Uncover the essentials of Medicaid Spend Down, with crucial information on eligibility, strategies for asset protection, and how it benefits seniors in need of long-term care. Navigate this complex process with our in-depth guide and expert advice!

Financial, Legal, & Other Services in Pennsylvania

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Important things to know about Financial, Legal, & Other Services

Paying for Senior Living: Exploring Finance Options & Assistance Programs

Is My Loved One Eligible for Medicaid?

What is Medicaid Spend Down?