Medicaid Planning 101 – Single People

If an elderly relative needs to qualify for Medicaid in order to pay for long-term care costs, including at an assisted living facility or nursing home, where do you start? We posed this question to Madeline Thorn, an attorney at Fendrick Morgan, a Life Care Planning Law Firm in New Jersey.

Typically, eligibility is first determined by looking at the applicant’s marital status. “The process is more straightforward for a single person,” Madeline says, noting that the Medicaid qualification criteria and application process vary by state. “In order to qualify for Medicaid as a single person in New Jersey, you need to have less than $2,000 in assets and your gross income cannot exceed $2,349.”

The state’s asset and income limitations can create difficulties for many applicants. “You can still qualify for Medicaid if your gross income exceeds $2,349, however, in that instance, you’ll need what’s referred to as a Qualified Income Trust (QIT),” Madeline explains. “All of the applicant’s income is filtered through the QIT and essentially goes to the long-term care facility. But the applicant is entitled to a portion of his or her income every month, which is referred to as their personal needs allowance. This amount can be used to pay certain personal expenses not covered by Medicaid. They can also hold back funds for private health care insurance premiums.”

There’s the clinical eligibility hurdle, as well. This requires a comprehensive needs assessment of the applicant to ensure that he or she needs the services provided in a long-term care facility. In New Jersey, a nurse is sent to conduct the Pre-Admission Screening, which provides the information needed to establish clinical eligibility.

Getting on Medicaid is one thing; staying on Medicaid is another. Once a person is eligible, he or she cannot hold more than $2,000 in assets. In New Jersey, Medicaid will perform periodic redeterminations to make sure that its recipients still meet the financial criteria. “The Board of Social Services will request financial information about any changes in assets and income,” Madeline notes. “If the assets exceed $2,000 at the end of any month, the recipient becomes ineligible for Medicaid until they spend down their assets and reapply.”

If you or someone you love might need Medicaid to help pay for long-term care, what should you do? Madeline says your best bet is to schedule an appointment with your local Life Care Planning Law Firm and start the Medicaid planning process now. “Don’t wait for a crisis,” she recommends. “If you start the process early enough, there may be ways to preserve some of your loved one’s assets from their future care costs and anticipate any issues that may arise during the application process.”

How early is early enough?  Though there’s no one-size-fits-all answer, Madeline acknowledges that certain life events are reliable indicators that it’s time to start planning. “A diagnosis, an accident, or memory problems often mean that a person may need long-term care in the future, either in the home or in a care setting outside the home,” Madeline adds. “Advancing age can also be a good reason to start planning, even if the person is otherwise healthy.”

What’s the key takeaway? “The ideal time for anyone—single or married—to start the Medicaid planning process is before the crisis hits. The earlier you start planning, the more options you’ll have and the better those options will be than if you had waited.”