For millions of older adults, Medicaid is the financial lifeline that makes nursing home care possible. As the largest single payer of long-term care in the United States, Medicaid covers the costs for more than 60% of the over 1 million nursing home residents, according to KFF.
But what happens when that coverage is suddenly withdrawn? From eligibility changes to administrative hiccups, there are several reasons why Medicaid may stop paying.
[READ: Does Using Medicaid Affect Quality of Care in Long-Term Care Facilities?]
What Is Medicaid?
Medicaid is a joint federal and state program that provides health coverage to low-income individuals, including children, pregnant women, people with disabilities and seniors. For seniors, it helps pay for services that Medicare does not cover, such as long-term nursing home care. It serves as a financial safety net, ensuring that vulnerable seniors can access necessary care as they age.
For those who qualify, Medicaid will pay nursing home costs, including:
— Assistance with activities of daily living, such as bathing, toileting, eating and mobility
— Meals
— Medications
— Medical supplies
— Rehabilitation services
— Semi-private room
Nursing home residents who receive Medicaid are still responsible for covering a share of their care costs. In most cases, they must contribute nearly all of their monthly income toward the cost of their stay, keeping only a small personal needs allowance to cover basic expenses like clothing or toiletries.
Benefits of Medicaid for Seniors
A U.S. Department of Health and Human Services report found that more than one-third of those over age 65 will use nursing home care at some point.
Without Medicaid, many seniors would quickly deplete their savings on long-term care, leaving them without needed medical or personal care support. According to Genworth and CareScout, the annual national median cost for a semi-private room is $111,325. That is a significant cost for anyone, especially as the average income in 2023 for those over 65 was $36,000, according to the Center for Medicare Advocacy. To qualify for Medicaid, each state sets its own threshold, but you must always earn a monthly income under their Medicaid limit. What qualifies you in one state might not in another.
Medicaid can also offer significant financial relief by helping low-income Medicare beneficiaries (called “dually eligible beneficiaries“) pay Medicare premiums, deductibles and co-pays through various Medicare Savings Programs. Medicaid assisted 10 million seniors by paying their Medicare premiums and helped 8 million seniors cover their coinsurance and co-payments in 2021, reports Justice in Aging.
[READ: How to Pay for a Nursing Home With No Money.]
Reasons Medicaid May Stop Paying for Care
If you have Medicaid, you are entitled to all the benefits that come with it. You cannot be removed without cause. Medicaid may stop paying for nursing home care if a resident no longer meets the program’s financial or medical eligibility requirements. To qualify, individuals must have limited income and assets, as well as medical need for nursing home-level care. If your financial situation improves, for example, through an inheritance, you could become ineligible.
If you are no longer in need of nursing home-level care, while your Medicaid benefits will not end, you may need to move to a place you do qualify for, such as in-home care. In some cases, mistakes in paperwork, failure to recertify eligibility annually or improper asset transfers can also result in a loss of coverage.
The most common reasons for losing Medicaid are:
— Administrative errors
— Change in marital status
— Excess assets
— Gifts or funds transfer-violating look-back rules
— Income changes
— Missed or incomplete annual renewals
“Many terminations result from paperwork issues, missed deadlines or excess assets that could be spent down or repositioned properly. An elder law attorney can often help families with these and other matters,” says Sean W. Scott, the founder of Scott Law and author of “Medicaid and Long-Term Care Handbook: The Essential Guide to Using Medicaid and Public Benefits to Pay for Nursing Home Care.”
[READ Understanding the Different Eldercare Options]
What to Do if Medicaid Stops Paying
Acting quickly and understanding your rights can help you avoid unnecessary disruption and maintain access to necessary care.
Here are some steps to take if Medicaid stops paying for your nursing home care:
— Determine why. You should receive a written notice from the state’s Medicaid agency notifying of the change in status. It needs to clearly state the reason for the termination, the effective date and instructions on how to file an appeal.
— Contact your state’s long-term care ombudsman. This is a free advocacy service that can explain your rights, help you understand the notices and assist you in filing an appeal.
— Ask for help. A local elder law attorney or legal aid office can help you navigate appeals, protect your rights and ensure you’re not unlawfully discharged. Make sure your family knows about your Medicaid change as they can be your strongest advocate.
— Gather documentation. Collect any financial, medical and other documents that support your continued eligibility or dispute the reason for termination.
— Reapply. If it is a missed renewal deadline, documentation issue or temporary eligibility issue, you may be able to reapply and fix the issue.
— Appeal. You have the right to appeal Medicaid’s decision to terminate. Depending on the state, you have 30 to 90 days to request a hearing. To ensure your services continue during a Medicaid appeal, you must act quickly. There’s often a tight deadline, sometimes just 10 days between receiving the decision letter and when your Medicaid coverage changes. If you miss this deadline, you may still be able to appeal, but you might be responsible for the cost of care during the appeal.
Seniors’ Medicaid Rights
Medicaid nursing home residents have important protections under both federal and state law to ensure their rights and access to care are upheld, even in situations like a loss of coverage or a facility closure. If you have questions about your rights, contact an elder law attorney, Medicaid or your state’s long-term care ombudsman.
“Your nursing home is legally responsible for ensuring a safe discharge. This means they assist in finding a new placement and provide relevant information. For residents with dementia or no advocate, the long-term care ombudsman is often involved to protect their rights,” says Jodi Eyigor, the senior director of nursing home quality and health regulation at LeadingAge, a trade association of long-term care facilities.
The laws are there to keep vulnerable seniors safe.
“While the loss of Medicaid coverage can feel like a financial disaster, residents have strong legal rights and options,” Scott says. “Families play a crucial role in preventing gaps in coverage. The key is to stay organized, communicate promptly with Medicaid and seek guidance.”
What Happens Next
If you lose your Medicaid coverage, several things may happen depending on the situation and ability to pay, such as:
— Alternative care. You may need to explore other care options such as moving in with family or hiring in-home care.
— Private pay billing. The resident or their family may need to cover the full cost at the facility or face discharge. “In Florida, this routinely averages $12,000 per month, which can be financially overwhelming for families,” Scott says.
— Risk of discharge. If you cannot afford continued care, the facility might begin discharge planning. Although involuntary discharges are tightly regulated by both federal and state laws, you should immediately seek the assistance of an advocate to ensure your rights are protected and procedures are followed.
Other Payment Options
To qualify for Medicaid, as mentioned above, seniors must be below a certain financial threshold, though eligibility rules vary by state. If you are no longer eligible because of an improvement in finances, you most likely will need to spend the money before qualifying again. Many ways like long-term health insurance, insurance policies or liquidation of assets like stocks and bank accounts will already have been spent down in order to qualify for Medicaid, but some ways you may be able to pay until you qualify again are:
— Family contributions. Your family may be able to help cover the cost of care if immediate and extended families pool their money together.
— Household goods. These are normally excluded from qualifying for Medicaid, so you may still have available items, such as furniture, jewelry or other goods, that may be sold.
— Primary residence. While your primary residence typically isn’t a countable asset for Medicaid qualification, this isn’t a rule in every state. If this applies, you might explore selling your home or pursuing a reverse mortgage.
— Veterans’ benefits. Veterans’ benefits for senior living may be available to certain veterans and their spouses. Also, many states operate long-term care services to eligible veterans at lower or no cost.
Effects of Recent Legislation on Nursing Home Care
The “One Big Beautiful Bill” is projected by the Congressional Budget Office to reduce federal Medicaid spending by approximately $1 trillion over the next decade. This is a significant concern as Medicaid is the primary payer in the U.S. for long-term care. While more financial responsibility is shifting to the states, how to make up that shortfall just to maintain services will be an ongoing struggle.
“Any additional funds dedicated to supporting providers or populations that were cut by the bill are likely to be outside the Medicare program. This will burden state budgets and could cause states to increase sales, income, corporate or other taxes in their states to make ends meet,” says Georgia Goodman, director of Medicaid policy at LeadingAge.
For now, nursing homes are excluded from reductions to provider taxes, which is a fee on health care providers that the states often use to fund their share of Medicaid. However, the bill does place new caps on the provider tax rates moving forward, handicapping the states as they seek ways to fund Medicaid.
“Historically, when states are faced with Medicaid budgetary pressures, they both reduce the number of people receiving community-based services and reduce the amount spent on each enrolled beneficiary,” Goodman observes.
As it is, nearly two-thirds of nursing home providers report Medicaid reimbursement is already at less than 80 percent of the actual cost of care.
“The reality is that Medicaid is underfunded, and there are limited resources available to meet the growing demand for care. Provider taxes are a necessary tool in supporting states’ ability to fund daily services and supports for those on Medicaid, and any reduction in resources within the overall care continuum cannot be taken lightly,” says Clif Porter, president and CEO at AHCA/NCAL, an association for skilled nursing centers, assisted living communities and long-term care providers.
There are currently around 62 million adults in the United States aged 65 and older, but by 2054, that number is projected to soar to 84 million, according to Pew Research Center. This increase will significantly expand the demand for nursing home care resulting in mounting pressure on the federal government, the states, Medicaid and families to support the growing costs of care, staffing and infrastructure that will be needed to support those with complex care needs.
Bottom Line
Medicaid ensures that seniors who can no longer live independently receive the around-the-clock care they need without facing financial ruin. It serves as the primary payer for low-income individuals. Eligibility is strict and varies by state.
If Medicaid stops covering nursing home costs, families must act quickly. Options may include spending down assets, selling a home, seeking family support or applying for veterans’ benefits until coverage is restored.
But cutting Medicaid support is likely unsustainable. With the senior population projected to reach 84 million by 2054, demand for care will surge, placing enormous financial pressure on families, states, the federal government and the nation’s care infrastructure.
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What Happens When Medicaid Stops Paying for Nursing Home Care? originally appeared on usnews.com
