When her elderly mother’s cognitive impairment from dementia worsened in the late 1990s, Sebra Barcuis knew she needed to get her into a long-term care program that provided the necessary supervision and social interaction.
Her mother qualified for coverage from MassHealth, Massachusetts’ Medicaid plan for low-income residents, to pay for an adult day-care program. But a slight bump in her Social Security payments, which was part of an annual cost-of-living increase, put her over the $2,000 asset limit required to maintain coverage.
Immediately, her Medicaid coverage was dropped. Barcius had to scramble to figure out how to pay her mother’s out-of-pocket care expenses while simultaneously reducing her assets to qualify. Her mother eventually got back on Medicaid, but the experience was a financial hardship for her family.
“The rules are so strict,” Barcius said of the MassHealth plan. “If you’re just a couple pennies over that asset level, they can drop you. It put a real burden on our family.”
Her mother, Sally, died in 2021 at the age of 93 under hospice care at Boston Medical Center. But Barcuis, a nursing home ombudsman for the advocacy group Massachusetts Senior Action, said she often hears stories of hardship from families struggling to figure out how to pay for their loved ones’ care.
“We were fortunate, because my mom had me to care for her,” she said. “But what about seniors who have no one? It’s really a difficult situation.”
Medicaid has become the primary safety net for long-term care in the U.S., covering more than 50% of the estimated $400 billion in long-term care costs annually, according to KFF, a nonprofit independent organization focused on health policy.
For those who can’t afford to pay for care themselves, or don’t have long-term care insurance, Medicaid is the only option.
Medicare, which provides Americans over the age of 65 with health insurance, doesn’t cover long-term care. And with most nursing homes charging more than $100,000 a year — according to Genworth’s 2023 Cost of Care study — few can afford that cost on their own.
Middle-income people must exhaust their assets to qualify for Medicaid. In some cases, it forces them to sell their property and empty their bank accounts.
“It really comes as a shock to many families when they discover they’re going to have to pay out-of-pocket or spend down their life savings to qualify for Medicaid coverage,” said Howard Bedlin, a long-term care expert with the National Council on Aging. “They’re not prepared for it.”
Bedlin said recent surveys have found that a majority of seniors believe Medicare would cover the cost of long-term care if they need it.
“With baby boomers getting older, the need for long-term care services will only be getting greater,” Bedlin said. “So we’ve got a real crisis on our hands.”
Under federal law, Medicaid is required to provide nursing home care in every state for those who qualify. In-home care is provided by state waivers, but a shortage of aides willing to work in the home care industry means most states have long waiting lists for care, according to KFF.
Asset limits to qualify for Medicaid are strict and vary by state. Alabama, Georgia, Texas, Pennsylvania and Massachusetts set the limit at $2,000 for an individual and between $3,000 and $4,000 for a couple. Maine sets the limits at $10,000 for individuals and $15,000 for couples.
New York has the nation’s highest asset limit, $30,182 for an individual and $40,821 for a couple, according to the state Department of Health and Human Services.
California is the only state that doesn’t have an asset limit, which was scrapped by that state’s Medicaid program this year. Instead, California uses income to determine eligibility for a long-term care program and other health care coverage.
Regardless of the limits — which range from $1,600 in Connecticut to $30,182 in New York — Medicaid applicants who have assets above that limit have to “spend down” their money and other assets to qualify. In most cases, that means turning over any additional money to the nursing home or long-term care facility, experts say.
There’s also a five-year “look back” period in most states where officials reviewing a Medicaid application check to see if the person has transferred money to a relative or sold property or other assets.
“It basically forces people to impoverish themselves,” said Lori Smetanka, executive director of the National Consumer Voice for Quality Long-Term Care, a nonprofit advocacy group. “They have to give up their assets and they’re left with a very minimal personal needs allowance that’s not enough to live a dignified life for themselves, particularly in nursing home settings.”
While homes are considered exempt from Medicaid asset limits, states are required under a 1993 federal law to seek reimbursement for long-term care costs from Medicaid beneficiaries after they die, a process known as estate recovery.
Medicaid Estate Recovery programs vary by state, and some won’t try to recover if the deceased’s estate is under a specified value, according to the American Council on Aging. Georgia law prohibits it from seeking recovery if a Medicaid beneficiaries’ estate is valued at less than $25,000. In Texas, the recovery limit is $10,000, according to the council.
Irrevocable trusts are one way that Medicaid applicants seek to protect their primary residence from having a lien placed on it after they pass away, but Smetanka and other experts say those agreements are subject to the five-year look back period, which can result in an applicant being denied.
Overall the process of qualifying for Medicaid puts a lot of stress on not only the individual needing services, but also their family members, she said.
“We hear from families that are moving, quitting their jobs in order to help provide care for loved ones, adult children who have to tap into savings and pool their resources to supplement their parents’ resources in order to provide care,” Smetanka said. “It’s become a very difficult situation for many.”
The demand from families to qualify their loved ones for Medicaid coverage has spawned a cottage industry of companies that charge fees for submitting the application and the mountain of required financial documents, which include bank records, tax returns, property deeds, life insurance and retirement policies. Most charge several thousand dollars to file an application with additional charges if appeals are needed.
Debi Young is vice president of the Massachusetts-based Medi-Services Inc., which files Medicaid applications on behalf of nursing home residents and their families. She said applying for Medicaid is complicated, but it’s typically the only option for people needing long-term care in a nursing facility.
“Because, no matter how much money you have, at some point it’s going to run out if you’re paying $20,000 a month for a nursing home room,” she said.
Aside from using the over-limit assets to buy a pre-purchased funeral arrangement, she said, families are left with few options but to turn over their money to the nursing home to qualify for Medicaid coverage.
“You really don’t have any other options to reduce your assets than by paying for your loved one’s care,” she said.
Experts say little has been done by Congress or any administration in recent decades to fix the problem, aside from offering pandemic-related supplemental payments for providers that have since lapsed.
Smetanka said the federal government needs to come up with solutions to help people pay for the rising cost of long-term care.
“Our country really needs a better long-term care financing option,” she said. “We just don’t have that right now.”