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Elder Law: Medicaid for the middle class

“Waltzing Matilda” is the unofficial song of Australia. Ironically, it’s neither a waltz nor a song about a woman named Matilda, and along with the beautiful melody, it seems misleading when one learns that the song’s story has a tragic ending.

Medicaid has a similarity although with a slight twist, in that is has a name that many people of older generations don’t like because they believe it is for the poor, which they don’t want to be thought of as such, or that it is a program that they have too much money to get help. But when you get to the reality of the Medicaid rules, it turns out that it has become a very generous program that should be called Medicaid for the Middle Class.

When signed into law by Lyndon Baines Johnson on July 30, 1965, Medicaid was based on a welfare model and was restricted to people with low incomes and limited resources. However, throughout the decades, Medicaid evolved to cover more people, including those with substantial assets in need of health care services, including long-term care services such as nursing home care.

Many people find it hard to let go of the Medicaid program from 1965. In fact, it’s not uncommon to see news reports mistakenly describing it as a program for those in poverty. A current understanding of Medicaid really requires a paradigm shift in thinking.

Medicaid is a joint program, funded 60% by the federal government and 40% by the states. There are many different programs, including long-term care, or nursing home Medicaid. To qualify for Medicaid long-term care services in Texas, in addition to citizenship, residency, and medical need requirements, a person’s income must be below a certain amount and their assets must be no more than $2,000.

Although that sounds as though a person must be in poverty to qualify for Medicaid, federal and state policymakers have changed the rules over the years and have changed it into a middle-class program.

First, certain assets don’t count against the $2,000 limit. As examples, a single person can own an equity interest in a homestead with a value of $603,000, a vehicle of unlimited value, certain retirement accounts and life insurance policies, a farm, ranch, or other business, and still be eligible to receive Medicaid.

Second, major changes in the 1980s relaxed the requirements for married people so that the spouse who does not need nursing care does not become impoverished due to paying all the couple’s assets to a nursing home. There are many specific and complicated rules related to these examples. In many circumstances, this type of planning for Medicaid services should be undertaken by an attorney who practices elder law.

During the pandemic, Congress passed legislation that increased funding for nursing home staffing and oversight, and home and community-based services. These services allow more elderly and other individuals with disabilities or chronic illnesses to receive care and assistance at home instead of at a facility. The Biden Administration’s American Rescue Plan that became law in March 2021 provided a $12.7 billion temporary boost in financing for home and community-based care, and a bill was introduced in August to make it permanent. Make no mistake — this is Medicaid for the Middle Class, and the need for these services predates the pandemic.

Medicaid is no longer a poverty program. Medicaid provides health care services for a large swath of the American public.

Visit the website at www.wrightabshire.com. Wright Abshire associate attorney Theresa A. Clarke, contributed to the article. Wesley E. Wright and Molly Dear Abshire are attorneys with Wright Abshire, Attorneys, P.C., with offices in Bellaire, The Woodlands, and Carmine. Both are Board Certified by the Texas Board of Legal Specialization in Estate Planning and Probate Law and are certified as Elder Law Attorneys by the National Elder Law Foundation. Nothing contained in this publication should be considered as the rendering of legal advice to any person’s specific case but should be considered general information.