Home Based Medicaid – A Deceiving Benefit – Part 2 #HomeBasedMedicaid

            I told you last week that Jim’s dad was running out of money.  Living at home with aides providing him with round the clock care, Jim was thinking that once the cash runs out he can apply for Medicaid under New Jersey’s home based Medicaid program #NewJerseyMedicaid.

            Jim’s plan won’t work for a few reasons.  First of all, the home based Medicaid program in New Jersey does not pay for round the clock care.  On average it pays for maybe 10 to 15 hours per week, occasionally more than that but certainly not the 24/7 care that his dad needs.  The only place that the State will pay for all the care is in a nursing home.

            Secondly, Jim figured that Dad’s income of $3500 per month would be enough to cover the taxes, insurance and upkeep on the home and his food bill.  Medicaid could then pay the cost of the aides.  Unfortunately, it doesn’t work that way.  Medicaid works like a cost share.  Your income is applied to the cost of your care with the only exceptions being that some of that income can go towards your Medigap supplemental insurance and Part D premium and a small amount can be set aside for personal needs.  That’s it.  The rest must be applied towards the cost of care and can’t be used to pay the expenses of the household.

            Thirdly, the aides must be Medicaid certified in order for Medicaid to pay any of their fees.  Although his dad is very comfortable with his current aides, Jim might need to hire different ones, at least for the part that Medicaid will cover.

            How then does his dad pay for the rest of his bills that Medicaid won’t cover?  Good question.  A reverse mortgage could be a possible solution although he must be careful how Dad takes that mortgage because it could make him ineligible for Medicaid if he exceeds the $2000 asset limitation.

            There is also the danger that at some point his health deteriorates to the point where staying at home is no longer feasible and he needs to move to a nursing facility. If he withdraws all the equity from the home he might not have enough funds to pay the private pay cost of a facility of his choosing before making a Medicaid application.

            Jim was completely blindsided by the issues I raised.  This is a good example why home based Medicaid is such a deceiving benefit.  I told him that a move to a nursing home in 6 to 9 months or so just might be a better and more realistic option.  He wasn’t sure the home would net more than $150,000 in a sale because he said it needs “a lot of work”. He also acknowledged to me that maintaining the home and managing his dad’s care was getting to be too much for him to handle with a wife and young children of his own.  Plus he has not money to fix up the home if a major repair is needed.

             I told him we could guide him on the process of spending down and applying for Medicaid after his dad moves to a suitable nursing facility. I also recommended that he look into getting a reverse mortgage that would allow him to tap into the equity while Dad continues to stay at home with aides and also will allow him to pay a nursing facility once Dad makes the move there until he sells the home.

            Jim expressed relief that I was able to show him a roadmap of how to utilize Dad’s remaining assets and tap into Medicaid at the right moment.  It’s all about knowing how to navigate through the complex maze of laws and benefits so that Jim’s dad gets the best care possible with the resources available to him.