Beware of Medicaid: You May Pay for Your Parents’ LTC

Your parents’ long term care (LTC) plans may be derailed if they choose to rely on Medicaid. Although this option may pay for their future needs, it does come with some repercussions. Let’s find out what these are and how you can help your parents to prevent falling into this trap.

Will Medicaid work for you and your family?

Medicaid is a joint federal and state social health care program designed to help elderly individuals and those with limited access to financial resources. The health program is also the largest and known source of funding for medical and health-related expenses and services for those with low income in the United States. Because of Medicaid’s large consumption of resources, it has been stated that the health program spends approximately 22% of a participating state’s general funds budget.

People who wish to use Medicaid must first be eligible, with an income rating of up to 133% of the poverty line needed before receiving any benefits. Additionally, the recipient must also make sure that the health facility they are in (or plan to be located in) is approved by Medicaid.

Your parents may need to think about these factors before opting to use Medicaid to pay for care and support during their twilight or retirement years:

Eligibility – declaration of income and assets to prove that the individual belongs to the designated income level may be a hurdle too high to jump.

State Funds – for the worst case scenario that a state has no means to fund medical practitioners and facilities, the expenses will then be shouldered by the recipient’s family.

The filial support laws (or filial responsibility laws) state that adult children of Medicaid recipients must look after their parents’ needs, in case the state does not have the resources and capacity to pay. These needs range from assistance with activities of daily living, such as eating, bathing, and toileting. Additionally, any unpaid expenses (bills for nursing homes, caregivers, care facilities, and medical equipment or consumable medication) will also be shouldered by the recipient’s children.

To rub more salt to the wound, several states in the country allow civil court actions for nursing homes, medical entities, and related facilities to recover lost resources due to lack of financial support and compensation, and for criminal and civil penalties to be imposed on recipients’ children, should they choose not to support their parents.

A 2012 Pennsylvania Superior Court hearing (Health Care & Retirement Corporation vs. Pittas) illustrates this in a clearer light. The lower court ruling gave authority to a nursing home to collect payment for health services provided, from the son of one of their residents, due to the fact that the said resident relocated overseas without settling the bill. The nursing home resident’s son, although with no evidence of wrongdoing, had to settle the outstanding bill which amounted to a total of $93,000.00.

The legal liability and repercussion of an otherwise helpful health program can take its toll not only to the elderly but for their children and loved ones as well.

What do you need to do?

First and foremost, open up the discussion of long term care with your parents. This issue does not only deal with their future welfare – in fact, planning for long term care should (and is) a group or team discussion, which directly affects an elderly individual’s family and loved ones. Even if your parents have set aside savings in case something drastic happens (and for the Medicaid scenario, not possible, since a recipient needs to belong in the given poverty line to be eligible), inflation rates and price hikes still need to be factored in – what may be a big amount for them may not be the case in the near future.

Next, consider other sources of income or create a separate savings bank account solely for this LTC case alone. Every penny counts and money saved today may be of significant and additional help for your parents in case they find themselves in financial turmoil. Have a mindset that doing this is essentially giving back to your parents – they deserve the best with everything they have provided you through the years, so make sure that your actions count.

Lastly, consider other options that you and your parents can take advantage of in the future. Out-of-pocket spending, with you, your parents, and potentially other siblings’ savings pooled together may give the assurance of a secured future. Even better is by informing your parents of long term care insurance (LTCI). This way, your parents will get their money’s worth, by paying for proper and optimum care and support that will best suit their (and basically, you and your family as well) lifestyles.

Reach out to LTC Global Agency if you need any help on setting up a plan for your parents. If you have any questions or thoughts on Medicaid and insurance for long term care, please leave a comment below.