Will Infrastructure Plan Include Funding for Elder Care?

The lawmakers in Washington have been wrangling with the White House with regard to an infrastructure spending package. There is an element that would impact elder care, so we will look at the details in this post.

Demographic Shift

During the post-World War II years between 1946 and 1964, an unprecedented number of babies were born. This phenomenon has been dubbed the “baby boom,” and if you do the math, you can see that these people are attaining senior citizen status right around now.

The Social Security Administration has been receiving about 10,000 applications a day for years, and these numbers will persist into the foreseeable future.

Long-Term Care

Approximately 70 percent of elder Americans will require help with their activities of daily living at some point, and just over 50 percent will need paid care of some kind.

According to the Department of Health and Human Services, 35 percent of seniors will eventually reside in nursing homes. You are looking at six figures for a year in a nursing home in the Los Angeles area, and 12 months is the average length of stay.

Medicare does not pay for the custodial care that nursing facilities provide, and it does not cover in-home care, so there is a costly gap that should be a source of concern.

Medi-Cal and the Home and Community-Based Services Waiver

Medi-Cal will pay for long-term care if you can gain eligibility, but there is a $2000 asset limit because it is a need-based program. There is also a Medi-Cal Home and Community-Based Services (HCBS) waiver that will cover in-home care.

Because of the aging of the population, a large number of elders are receiving paid long-term care. The Biden administration would like to expand the waiver program so that more people can receive the care that they need in their own homes.

To that end, they have included $400 billion for this purpose in the infrastructure package that is being negotiated. The people on the other side of the aisle be not want to include this component because they say that senior care does not meet the definition of infrastructure.

If this funding is not included in a final infrastructure package, the need will not go away. It is likely that the White House will attempt to obtain the funding in another manner at some point in time. We will monitor the situation and pass along updates if and when they become available.

Medi-Cal Eligibility

As we have stated, there is a $2000 limit on assets for Medicaid applicants, but this is the figure for countable assets. There are some things that do not count, including your home. In other states in the union, there is an equity limit, but we do not have one in California.

One vehicle is not counted, and wedding rings, engagement rings, and heirloom jewelry are exempt. Household items and personal effects are not counted, and you can have a prepaid burial plot, unlimited term life insurance, and $1500 of whole life insurance.

You could establish and fund an irrevocable Medi-Cal trust to remove countable assets from your personal possession so you can qualify for Medi-Cal coverage.

Even though your home is not a countable asset, you could make the trust the owner of your home to protect it. If you are in direct possession of the property at the time of your passing, Medi-Cal can place a lien on it during the recovery phase.

Income-producing assets can also be conveyed into the trust, and you would be able to accept distributions of the income until you apply for Medi-Cal. As long as you fund the trust at least 30 months before you apply, the principal would not count.

Attend a Free Webinar!

We are conducting a number of webinars over the coming weeks, and they cover some very important and interesting topics. There is no charge to attend the sessions, and you can join us from anywhere, so this is a great way to invest some spare time.

You can see the dates if you visit our Los Angeles estate planning webinar page, and when you identify the session that works for you, follow the instructions to register.