What Happens When Seniors Run Out of Money and Still Need Care?

Aging can be complicated, physically and mentally. But it can also be quite complicated financially. The AARP reports that about half of older adults worry they will outlive their money, and with seniors living longer, their fears seem to be rooted in some truth. Even without the worries about inflation and a somewhat rocky future for Social Security, older adults are faced with rising healthcare costs as well as a longer lifespan thanks to those healthcare interventions, leaving them often using the money they have saved before they pass away.

Living longer is excellent, but the financial stress that can come with it for the older adult and their family members is not. If you’re worried that your senior parents are reaching their retirement account threshold, you have some options that do not include paying for their care costs out of your own bank account.

Veterans Aid & Attendance

If your loved one is a Veteran, begin your search for financial resources with their VA caseworker. Qualifying Veterans and their partners, for example, can receive money monthly to cover in-home care or assisted living services. VA caseworkers are also an excellent first stop when searching for ways to reduce regular bills like pharmacy or household expenses.

Private Insurance

Not all seniors have private health insurance, but if your loved one does, ensure you understand their benefits. Their insurance plan will likely not cover senior living or in-home care, but it might take some burden off by offsetting costs like medications or co-pays for medical appointments.

Long-Term Care Insurance

While long-term care insurance is a newer concept, about 7.5 million Americans currently have some type of policy. Again, make sure you understand the policy, including what it covers, what it doesn’t cover, and any stipulations.

Medicaid

Perhaps the biggest support for seniors living with financial strain is Medicaid. It is the largest program in the country that provides healthcare support for low-income people, including aged adults. This state-federal program varies greatly from state to state, making it a bit more confusing when searching for general information. Why the confusion? The program is jointly funded by states and the federal government but is administered at the state level. This means that states get to choose qualification standards as well as payment benefits.

Medicaid programs typically cover four types of beneficiaries: older adults, adults with disabilities, children, and non-disabled adults. In general, older loved ones would fall into the older adult category.

It’s important to note that Medicaid is not the same as Medicare. While most older adults who do qualify for Medicaid are also covered by Medicare, there are plenty of Medicare recipients who do not qualify financially for Medicaid support.

Medicaid and Long-Term Care

For older adults who need around-the-clock care but do not have the finances to pay out-of-pocket for the services (and most don’t because it becomes expensive quickly), Medicaid can step in and cover the bill, paying the senior living community. 

Not all long-term care communities accept Medicaid. Ensure you are touring communities that accept Medicaid so that you don’t get too far along in the process and fall in love with a community that your loved one will not be able to pay for without Medicaid support.

If your loved one has some money to spend before Medicaid eligibility kicks in, you want to be sure the senior living community they are looking at right now will also accept Medicaid when the time comes. Otherwise, you will need to move to a Medicaid community when they can no longer privately pay.

Qualifying for Medicaid

Medicaid qualifications vary from state to state, but all states have a maximum household income that Medicaid recipients cannot exceed. For example, in Illinois, a one-person household income for a Medicaid recipient cannot exceed $20,783 before taxes. In Alabama, seniors are eligible if they make less than #2,523 per month and have less than $2,000 in resources.

The American Council on Aging has a great resource with eligibility information by state here.

In most states, seniors who are married do not need to give up the family home in order for one partner to move to long-term care that is covered by Medicaid. For example, in Connecticut, if one partner moves into a Medicaid skilled nursing facility, the other partner can remain in the home. The income for both must be below the cost of the nursing home, and the senior receiving nursing care must have assets less than $1,600 while the partner at home can have up to $154,140 in assets.

Applying for Medicaid

Medicaid assistance cannot begin until the person applies for the benefit. Contact your state in order to begin the process. Your local Area Agency on Aging can also be a wonderful place to start and a point of reliable resources. Find a list of these organizations here.

If possible, work with your loved one’s financial planner years before Medicaid is needed. This can help reduce the anxiety and confusion that can come with rapidly deteriorating funds, as you and your loved one will have a plan to apply for Medicaid at the appropriate time.