How We Pulled Charlie from a Black Hole of Long Term Care

A few months back I wrote about a situation that is not all that uncommon, a nursing home resident with long term care insurance benefits but no other assets.  If the insurance payment goes directly to the resident it counts as income, resulting in too much income to qualify for Medicaid.  Changing the payment to go to the nursing home could solve the problem but what if that isn’t possible.

 We had a recent situation in which our client, Charlie had long term care insurance and Social Security and pension income that, combined, exceeds the Medicaid reimbursement rate, the amount which Medicaid pays the nursing home.  Charlie’s income plus insurance benefits totaled $7500, while the Medicaid reimbursement rate for the particular nursing home is $6000 per month.  The home charges $10,000 per month to its private pay patients so Charlie was in a bind.  He had too much income to get Medicaid but not enough to pay privately.  It would seem that Charlie had fallen through the cracks.

 We spoke with Charlie’s family about a possible solution.  Charlie was a World War II veteran, having been honorably discharged.   The nursing home bill counts as an unreimbursed medical expense, which easily reduced his income to zero for VA qualification purposes.  He, therefore, was eligible for a VA Aid and Attendance pension of nearly $1650 per month, the maximum amount allowed for his category.  That would bring his income up to $9150. 

We then approached the nursing facility to see if they would take Charlie as a resident.  It seemed to be a win/win.  The facility, while not getting quite the amount they usually charge private pay, still would receive more than the Medicaid reimbursement rate and Charlie’s family would have the peace of mind of knowing that Charlie would have a place to stay.  They could rest assured that he would fall into what I call a black hole of long term care.