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A Medicaid professional consultant helping an elderly woman to protect her assets and money from the nursing home spend down.

What is Medicaid?

Learn what is Medicaid before planning for it

Those who plan to apply for Medicaid need to understand what it actually is. Medicaid is a Federal program that provides resources to the states. These resources are then used to provide medical care and services to those who cannot afford other insurance. The program is also available to patients who are in a nursing home. Each individual state is required to manage these resources and distribute them accordingly.
There are certain rules that each state must follow. Some things are left completely to the discretion of the state. Some Medicaid rules do apply to every state in the country, but each state will have their own rules and regulations. This could include eligibility guidelines and the limitations of services that will be provided under Medicaid coverage.
For individuals who are in need of long-term care, Medicaid is typically only used for skilled nursing facilities. The program will only cover expenses that are incurred while the patient is in the skilled nursing facility. Private funds will then be needed for other means of care. This can present a problem for many people because they have limited financial resources, which means they must find a way to pay for their care or go home.
The rules regarding Medicaid eligibility can vary, but these rules will always include an assessment of the assets the person applying has. This can include joint assets. All assets are then considered to be a resource, so if a person has too many assets, they may be denied Medicaid coverage. This is why many people are forced to spend down their assets to be eligible. Each state has the ability to determine what assets will be considered.
Married couples applying for Medicaid will face a different set of rules. The goal of the healthy spouse is to keep the other from going completely broke by paying for health care expenses out of pocket. The Spousal Impoverishment Act was developed to determine exactly what resources must be spent prior to the spouse receiving any aid from Medicaid.
Medicaid planning can become very difficult when trying to find resources and deplete assets. In 2005, the Deficit Reduction Act was introduced and many rules suddenly changed. Many of these changes were not in the best interest of the clients (i.e. the person applying for Medicaid coverage. This is why many advisors that are now helping clients plan for Medicaid have quit their jobs. Under the new rules, things became even more difficult and as a result, there are fewer advisors that can help people, especially married couples, to plan for Medicaid.
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