As an attorney who assists elderly people in getting Medicaid benefits to pay for long term care, I am often asked, “why can rich people get Medicaid?”
The reality of the situation is that if you do not have long term care insurance, your monthly expenses for nursing home care, medications, etc., will be north of $10,000 per month, in Iowa. Regular medical insurance and Medicare do NOT pay for long term care. Surprised?
Even with savings of $400,000 or $500,000, you can see that it will be totally GONE in less than 4 years. Yes, I know, the average life span of a person in a nursing home is thought to be short. However, medical science is getting much better at keeping people alive longer, if not actually healthy longer. While average lengths of stay were previously around the 2-year mark, the number has been climbing exponentially since 2005, Covid- 19 excepting. I have several clients who have been in care centers for over 5 years. This means that it is very likely that by the time grandpa dies, grandma will have no savings left and will likely end up on Medicaid herself.
The Social Security Administration rules recognize this problem. There are special rules for married people that allow nearly ALL of the savings to be shifted to grandma, and we can get Medicaid benefits to pay for grandpa’s care, fairly quickly. When grandpa and grandma are both gone, Iowa Estate Recovery will come around asking what grandpa owned at the time of his death and ask to be repaid. However, usually there is nothing or very little.
California has taken a drastic step in this arena. In two years, they are completely dropping any limit on the resources a person, married or single, can have and still get Medicaid. The theory is that if they do not make someone spend all their savings before giving them Medicaid, there may be some money left, so that the state can actually recover some money back after the person has died. Personally, I think this is brilliant. Moral of the story: it takes over $1Million in savings before a person is rich if you define rich as having sufficient resources to pay for long term care without impoverishing your spouse.
