Uncertainty Surrounding Government Programs for Seniors

Whether you support President Donald Trump or not, there is no question he and his DOGE agent Elon Musk are exacting massive government cuts to reduce spending. Scores of federal employees are already feeling the effects. The question is: will these cuts affect today’s seniors who rely on the government to help pay for their care? Our office is already fielding calls from concerned elders and their families.

Most people do not realize that the government’s Medicare health insurance program does not cover the cost of lengthy nursing home stays. And that cost is substantial. Most facilities in the Tri-State charge between $12,000 and $15,000 a month. For almost all seniors, there are only three sources of payment: 1) privately paying out of their own pockets, 2) long-term care insurance, and 3) Medicaid. Unfortunately, the overwhelming majority of seniors cannot afford five-figure monthly care costs, and fewer still have long-term care insurance to help them. Therefore, 62% of nursing home residents rely on the government program Medicaid to pay for their care. And that begs the question: will the budget cuts being carried out in other government programs eventually make their way to Medicaid? Like many of the proposed reductions, we just do not know.

Medicaid imposes strict financial requirements on its applicants that vary from state to state. In Ohio and Kentucky, a single applicant must spend their assets down to $2,000. For married couples, many get to keep close to $160,000, plus a house and a car, depending on what they owned when the ill spouse went into the nursing home. Both states impose penalties if a family tries to give money away to divest themselves to become eligible for Medicaid assistance. But just as with most government programs, there are exemptions. Ohio and Kentucky allow applicants to keep their IRAs if those accounts are in payout status. Both states allow healthier spouses to purchase Medicaid-compliant annuities to convert their assets into a stream of income, allowing the couple to hold onto more of their life savings. Both states also allow Medicaid applicants to give their home to a child who has cared for them and kept them out of a nursing home for two years.

On February 18th, President Trump said in an interview with Fox News that he does not plan to make cuts to Medicaid. But then the next day, he said that he endorsed a House budget plan that extracted almost $900 billion from the program.

It’s unclear how any potential Medicaid cuts will impact seniors and their families. Will all of the exemptions discussed above be eliminated? Will the financial requirements for Medicaid become more onerous than they already are? With such uncertainty in the air, if you feel you might someday need the program to pay for your care, it may be best practice to pull the trigger and engage in Medicaid planning or even apply now to lock in the rules before they become worse with fewer options in the future.