Today’s blog goes past the recent budget changes, to talk about an issue that is concerning to the families of Alzheimer’s patients, and that is not commonly known. Because of the problem I am about to discuss, people who could qualify to stay in a less restrictive setting like assisted living, are forced to go into nursing homes in order to obtain coverage for their long term care needs. I call it “the Group C Problem.” This problem happens because the income limits that Wisconsin uses for long term care outside of a nursing home are different than the ones used for inside a nursing home. As a result, it is much harder for people to qualify even when their income is not enough to pay for assisted living. Because income limits are calculated differently in a nursing home, people may need to move into a nursing home in order to get Medicaid.
Wisconsin offers elderly and disabled people the opportunity to receive care in a setting that is less restrictive than a nursing home, and still qualify for Medicaid to pay for some of the care costs. This program in Wisconsin is called “Family Care” (or in a few remaining counties who were not able to get Family Care because a proposed expansion was eliminated from the recent budget, the program is Community Options and has waiting lists).
The Family Care program is a type of Medicaid program so it is subject to federal rules. However, Wisconsin asked for and received a “waiver” of some of the federal requirements so that care could be funded outside of a nursing home. These types of “waiver” programs have been encouraged by the federal agency that runs Medicare and Medicaid. The purpose of these “waiver” programs like Family Care, is to allow people to remain in their homes, or home-like settings, for as long as possible. Another purpose is to generate cost savings, since care in the community is generally less expensive than care in a nursing home.
Families have come to my firm for help after paying privately for as much as two years for assisted living care, in a facility where they were told they could use Family Care benefits after a certain amount of time (this waiting requirement is another issue I will touch on later.) When their loved one’s assets have been depleted by paying privately, they apply for Family Care and are denied because of the “Group C Problem.” They have run out of options and cannot continue to pay privately. The loved one must move into a nursing home in order for Medicaid to pay. Why does this happen?
To understand the problem, you need to understand how nursing home Medicaid and Family Care differ when it comes to income. As I have explained before, Medicaid (and Family Care) are programs that have eligibility requirements based on meeting certain qualifications on the amount of assets you can have, and the amount of income you can have. Today’s blog, and the “Group C Problem,” has to do with the income requirements. So for our examples, we will assume everyone meets the asset requirements.
When a person goes into a nursing home, and meets the asset requirements for Medicaid, the only income requirement is that the person’s income be less than the monthly cost of care. With a cost of nursing home care between $7000-$9000 per month on average in Wisconsin, this is usually not a problem. Once the person qualifies, he or she must pay all income to the nursing home as a “cost share” (like a co-pay on your insurance) except for certain limited deductions like a personal needs allowance, money needed for medical expenses not covered by Medicaid, and amounts that can be transferred to a spouse living in the community in some cases. So, if we create an example: Roberto is a widower who has monthly income of $2300 in Social Security and $1500 in pension income, for a total of $3800 monthly income. He is in a nursing home. The private pay rate for the home would be $8000 per month. Because his income is less than that, he qualifies for Medicaid as long as his assets are below $2000. He must pay all but $45 per month of his income as a cost share, for a total of $3755 per month. Medicaid would cover the rest, for as long as he lives and remains in the nursing home.
However, let’s change the story. Now, Roberto is in a “memory care” assisted living facility that charges a monthly fee of $5500. When he moved into this facility, he and his family were told that if he paid privately for two years, the facility would take Family Care benefits for his care. Two years are up, and Roberto’s assets are down to $7000. His family begins the Family Care application process, knowing he will soon be down to the allowable $2000 asset limit for Family Care. When they complete the financial application, they are told that because of Roberto’s income, he is considered “Group C.” Group C is the Family Care income category for anyone whose gross income is over $2130 (in 2013). Roberto is told he must “spend down” his income on medical expenses until there is only $591 left every month. Well that doesn’t seem like a problem, does it? His care is $5500 and his income is only $3800. Easy!
No, not so easy.
The catch here is that Family Care does not allow Roberto to use what he actually pays for his care to determine if he is meeting the required spend down amount. In assisted living, he must use what the State calculates as its rate for care, which is generally less than what he will pay as a “private pay” patient. Also, under federal rules, Medicaid cannot pay for “room and board” so there is a part of the assisted living fee that is considered “room and board” and cannot be used to meet this spend-down.
So, let’s assume that the state’s rate for “care” at this facility is $75 dollars per day. This means that Roberto is allowed to use about $2281.25 per month for his spend down. He ends up with over $1520 in “excess” income. He does not qualify for Family Care because he ends up with more than $591 per month in the State’s formula. Unfortunately the State’s formula does not connect with reality. His income alone is not enough to continue to pay the private pay rate of $5500 for much longer. Ironically, if he moves into a nursing home, because of the different formula, he will qualify immediately. The tough part is that because his assets are already depleted, it will be difficult to get into many of the better nursing homes.
Reality check: The better assisted living facilities and nursing home facilities screen people’s finances in making admission decisions. They are allowed to do this, even if the facilities do take Medicaid or Family Care. They can deny admission to a person who does not have enough finances to pay privately. If you think you can show up at the door of a good nursing home when your assets are depleted, and get in as a voluntary admission, you will face disappointment more often than not. You will be in a better position if you have long term care insurance, assuming the policy pays a decent amount (something you should check carefully.) It is also different if you come in from a Medicare-covered hospital stay. But the bottom line is, your choice of facilities is limited if you have no funds. This is why my firm always tells people, “money is good.” It is not a wise choice to completely impoverish yourself by drastic Medicaid planning if finding the best quality care is a priority.
So in any event, families might face a nasty surprise if their loved one’s income is more than $2130 (for this year.) This is something to be aware of well in advance of the time a person needs to apply. There are some limited planning options for single people, and for married individuals a support order may be necessary to reduce the spouse’s income below the Group C limit. Unfortunately, most people find out about this when it is too late to make other good choices for care.
The reason that it is important to look at this well ahead of time, is that the State also allows assisted living facilities to set a waiting period where a person may pay privately for some time, like one or two years, before the facility will take Family Care. Also,the state allows assisted living facilities to limit the number of residents for whom they will take Family Care. (Nursing homes are not allowed to do this. In a nursing home, if you qualify for Medicaid and they accept Medicaid for any patient, they must allow you to apply for and use the Medicaid without a waiting period. This is why the good ones screen carefully before letting someone in.) It would be a real shame to pay privately at an assisted living facility for one or two years, expecting to get Family Care, and then learn that you have too much income. This problem particularly impacts Alzheimer’s patients since a typical “memory care” assisted living facility has a higher cost, and since the impact of moving a loved one with Alzheimer’s is significant.
The state could easily solve this problem. All that it needs to do is make the income eligibility rules for Family Care the same as they are for nursing home Medicaid. That way, a person with an assisted living facility cost of $5500 and income of $3800 would qualify for Family Care and would be able to remain in place. Unless that happens, it makes sense to check out your individual situation to see if you will end up with a “Group C Problem” when it is time for long term care. Don’t take a chance on being forced to move from a place that your loved one cannot afford.