According to recent news reports, the State of North Carolina may have to repay a staggering $20 million in Medicaid reimbursements because of a retroactive rule change. For those of you who question the amount of money spent on Medicaid to begin with, be careful as there is a very good chance you may eventually need to depend on Medicaid benefits during your Golden Years. In the meantime, the repayment of $20 million is something that will impact all North Carolina residents.
It appears that Health Departments that serve North Carolina’s 100 counties may be faced with paying back $20 million in Medicaid reimbursement received by the departments back in 2013. The reason stems from a Medicaid rule change that is being applies retroactively back to 2011. Medicaid provides healthcare coverage for low income individuals and families as well as the elderly and disabled. Medicaid is primary funded by the federal government though administered by the individual states. The states, therefore, provide Medicaid services and then bill the federal government for those services. The federal government then reimburses the states according to a designated formula. This is what occurred back in 2013 – the State of North Carolina provided Medicaid services for which it billed the federal government and received payment; however, it appears that a change in the formula is being considered. If the change is implemented it will apparently be imposed retroactively back to 2011, resulting in an overpayment to the state totaling close to $20 million.
One North Carolina county (Pitt County) alone stands to lose $532,000 which could cause a reduction in services, according to Dr. John Morrow, the County Health Director. “It is a lot of money and it’s a real concern for public health,” Dr. Morrow said. “[We] potentially could be looking at cutbacks in services.” Cutbacks would likely be across the board for counties like Pitt County that cannot afford to lose such a large amount of money.
Why Is Medicaid So Important?
When most people think of Medicaid they think of providing health services to the nation’s poor. While Medicaid does provide healthcare coverage to millions of low income children and families, Medicaid also provides benefits to almost half of all seniors in the United States. Why do so many seniors need Medicaid benefits? Because of the high cost of long-term care.
Nationwide the average cost of a year stay in a long-term care facility is fast approaching $100,000. With an average stay of two and a half years that means that the average stay in a long-term care facility could cost a quarter of a million dollars. Don’t count on private health insurance to cover the costs nor Medicare. Most private healthcare policies exclude long-term care costs unless you purchased a separate long-term care rider at a significant additional expense. Medicare won’t help either as the program only covers long-term care costs under very limited circumstances and then only for a limited amount of time (100 days). Fortunately, Medicaid does cover long-term care costs for those who qualify.
Qualifying for Medicaid and the Need for Medicaid Planning
By age 65 you stand a 50-50 chance of needing long-term care at some point in your life. Those odds increase to a 75 percent chance if you make it to age 85. Unless you can afford to pay for care out of pocket you also stand a good chance of needing Medicaid benefits to help cover the costs. Medicaid, however, imposes both income and asset limits that cannot be exceeded by program recipients. For many seniors who have worked hard and saved all their life the asset limit can be a problem, considering the limit of often as low as $2000. Medicaid’s five year look-back period also means that transferring assets in anticipation of applying for benefits is not an option. That’s what makes Medicaid planning such an important component in most estate plans.
If you have addition questions about Medicaid planning, or would like to work on a Medicaid plan for your comprehensive estate plan, please contact the experienced North Carolina estate planning attorneys at Clarity Legal Group® by calling (919) 484-0012 to schedule an appointment.