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Will Medicaid Pay for Assisted Living? 

Law Offices of Julie A. Schejbal, CHTD June 6, 2024

Happy old woman sitting in wheelchair in nursing homeChoosing to place yourself or a loved one in an assisted living facility is a significant emotional and financial decision. However, one of the most pressing questions families often ask is how they can pay for these services and whether Medicaid will cover expenses. 

Generally, Medicaid offers some foundational provisions but often does not cover all the costs and expenses related to assisted living. Some states have additional rules and programs that can help with assisted living Medicaid coverage within your jurisdiction, but the extent of these programs can vary depending on the state and eligibility requirements.  

To fully understand the extent of Medicaid coverage for assisted living, reach out to an experienced elder law attorney who can provide a focused analysis of how Medicaid regulations apply under Maryland law. 

Understanding Assisted Living and Medicaid

Assisted living communities offer older adults the opportunity to live independently while providing essential support for daily activities. These services often include personal care, medication management, and social activities, which contribute to an enhanced quality of life for seniors. 

However, the costs associated with assisted living can be substantial. According to the 2023 Genworth Cost of Care survey, the national monthly median cost of assisted living is $4,774. This price tag begs the question of whether long-term end-of-life care in an assisted living facility would be covered by Medicaid. 

Medicaid is a joint federal and state program designed to assist individuals with limited income and resources to cover their healthcare costs. The program is crucial for older adults who require long-term care services but cannot afford them out-of-pocket. However, the benefits and eligibility criteria for Medicaid vary by state.  

Will Medicaid Pay for Assisted Living in Maryland?

In Maryland, Medicaid does provide assistance for some of the costs associated with assisted living, but it does not cover all expenses. Medicaid can cover certain support services provided in assisted living facilities through programs like Home and Community-Based Services (HCBS) waivers. Some of the common covered services include: 

  • Nursing care 

  • Medication management 

  • Medical exams and assessments 

  • Case management 

These services aim to enhance the quality of life for seniors and ensure they receive the necessary care without the burden of excessive costs. However, it's important to note that Medicaid does not cover the room and board portion of assisted living, which typically constitutes the largest expense. Additionally, Maryland has specific eligibility criteria for assisted living Medicaid coverage.  

Eligibility Criteria

To qualify for Medicaid in Maryland, the applicant must have a functional or cognitive impairment that requires assistance with at least three daily living activities. They must also meet specific income, financial, and asset requirements set by the state. 

For a single senior, the income limit is typically around $2,382 per month, with an asset limit of $2,000. However, married couples may have different eligibility criteria, and there are certain exemptions for assets such as primary residence and personal belongings. To understand the eligibility requirements more fully, consult with an experienced Medicaid planning attorney.  

Alternative Payment Options

While Medicaid can provide substantial assistance, it does not cover all expenses related to assisted living. Therefore, families should explore alternative funding options to make sure they receive comprehensive coverage. 

  • Long-term care insurance: Long-term care insurance is a valuable resource for covering the costs of assisted living. While policies vary, they typically cover a range of services, including personal care, nursing care, and assistance with daily activities. Review and understand the policy details and coverage limits before relying solely on long-term care insurance. 

  • Personal savings and private funds: Personal savings and private funds are a common source of funding for assisted living. Setting aside funds specifically for assisted living can help alleviate financial stress when the time comes. Additionally, you can also choose to sell some of your assets such as real estate to cover the costs. 

  • Veterans' benefits: Qualified veterans and their spouses may be eligible for the U.S. Department of Veterans Affairs' Aid & Attendance benefit. This benefit can provide up to $2,200 per month to a veteran and their spouse, or up to $1,900 per month for a veteran without a dependent, which can be used to help with the cost of assisted living. 

Planning for Medicaid Coverage

If you want to rely on Medicaid coverage to assist with the expenses of assisted living, you will need to plan ahead. Medicaid planning makes sure that you meet the financial and eligibility criteria required to receive benefits without exhausting all your personal assets, and it is best navigated with the guidance of an experienced elder law attorney.  

When planning for Medicaid coverage, it's advisable to begin planning well in advance to improve your chances of being eligible. Medicaid has a five-year look-back period (i.e., all asset transfers made for the five years before you submitted your application), so moving assets and finances ahead of time can prevent complications. Some smart practices for Medicaid planning include: 

  • Asset reallocation: Involves strategically spending down assets on exempt expenses within the Medicaid five-year look-back period or transferring assets to loved ones before applying for Medicaid coverage. Common exempt expenses include home modifications, debt repayments, and purchasing Medicaid-compliant annuities. 

  • Establishing trusts: Setting up specific types of trusts, such as an irrevocable Medicaid trust, allows you to transfer assets out of your name and effectively remove them from your countable assets under Medicaid rules. Once your assets are placed in this trust, the state cannot claim them for Medicaid reimbursement after your death. 

  • Spending down income: If your income exceeds the Medicaid limit, you can spend down excess income on medical expenses until you qualify. This strategy includes paying for in-home care, medical equipment, and other medically necessary expenses that are not covered by insurance.  

  • Medicaid-compliant annuities: Medicaid-compliant annuities provide a steady income stream that doesn’t count toward Medicaid’s asset limits. They must, however, adhere to specific requirements such as being irrevocable, non-assignable, and convertible into immediate income. 

  • Gifting strategy: Gifting assets to family members can help you reach the Medicaid income limits, but this must be done carefully to avoid penalties associated with the five-year look-back period. Gifts made beyond this period are not counted as assets, but any gifts made within this period can impact your eligibility. 

A Medicaid planning attorney or a financial advisor who has experience with elder law can provide tailored strategies and insights to help you understand Maryland's Medicaid rules and make sure your loved ones receive the care they need without undue financial burden. By taking these steps, you can more effectively plan for Medicaid coverage and make more informed decisions about covering assisted living expenses. 

Seek Experienced Legal Counsel

Understanding the relationship between Medicaid and assisted living can be challenging, but numerous options can help you plan ahead and obtain the financial support you need.  

Although Medicaid does not cover all the expenses associated with assisted living in Maryland, it does offer valuable assistance for various support services in assisted living facilities. By exploring alternative funding options and working with professionals, you can make sure your loved ones receive the care and financial support they need. 

At the Law Offices of Julie A. Schejbal, CHTD, we are dedicated to helping clients with their Medicaid and long-term care planning needs. If you're wondering how Medicaid could help cover the costs of assisted living, do not hesitate to reach out to us. 

Located in Dunkirk, Maryland, we serve clients throughout Calvert County, Prince George’s County, Charles County, and St. Mary's County. Contact us today to schedule a free consultation.