The Importance of Keeping Up-To-Date With Your Aging Plan

Nima Ashtyani
September 21, 2020

Potential changes are coming to Medicaid Long Term Services and Support Spousal (LTSS) Impoverishment Rules. The Affordable Care Act Medicaid rules (ACA), also known as Obama Care, are set to change. Is your aging plan ready to respond to the changes?

It has become a strategy for many baby boomers to gift out monies well in advance of the federal five year look back rule to qualify for Medicaid LTSS. Long-term care private insurance is costly; even if you already have it, the premiums are skyrocketing in many cases. But spending down your estate can put a healthy spouse or partner at risk of financial insolvency and the so-called “Medicaid divorce” is a heartbreaking solution for a long time married couple.

Section 2404 of the ACA changed Medicaid’s spousal impoverishment rules so that Medicaid home and community-based services (HCBS) and institutional care are treated equally when determining eligibility for long-term services and supports. Previously states were required to protect some of a married couple’s income and assets when determining nursing home eligibility, but applying the rules to HCBS waivers was optional. Some states plan to stop or are undecided about applying the HCBS waiver, and the number may increase.

What are the implications to your aging plan if Congress does not extend Section 2404? Many aging baby boomers prefer to age in place which means HCBS care will be more important than ever. If LTSS and HCBS have different eligibility rules, it creates a bias in favor of institutional care and incentivizes a spouse to choose nursing home care to protect a healthy spouse’s assets and income. Without Section 2024 in place, the law will not be supporting the current aging in place trend and can impact the progress states have already made in expanding access to HCBS.

The future of Section 2024 is one of a myriad of potential changes to federal policies and state laws that can wreak havoc with your aging plan. That is why it is essential to have trusted elder counsel help you interpret federal policy changes and how they affect your plan in your state.

As health care needs and costs continue to increase with the aging boomer population, more changes are likely to come to address the affordability and sustainability of specific programs. You need to stay agile and be able to shift your strategies for the protection of you and your spouse.

According to the National Center for Assisted Living about 15% (nearly one in six) of assisted living residents rely on Medicaid to pay for daily services. As the population of elderly increases and continues to live longer lives, this Medicaid reliance will scale up as well. Currently, only 55% of baby boomers have some retirement savings, and 42% of those have less than $100,000. These statistics mean about half of the retirees plan to or are living off their Social Security benefits which by the Social Security Administration’s admission will be out of cash reserves by 2034. That does not mean the program will go bankrupt but its current payout schedule will be unsustainable and therefore benefits will have to be reduced. The Motley Fool website

reports that benefit cuts may need to be as much as 23% to sustain payouts through 2091.

Health care policy and law, Social Security benefits; many of the standards will be changing to accommodate the increasing needs of the baby boomer population. Is your aging plan responsive to the changes on the horizon? Contact our office today and schedule an appointment to discuss how we can help you with your planning.

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