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What is a Medicaid Crisis and What Are Your Options?

What is a Medicaid Crisis and What Are Your Options?

by | Aug 20, 2022 | Asset Protection, Elder Law, Long-Term Care, Medicaid Planning

Imagine that your parent or another aging loved one suddenly finds themselves in need of nursing home care. If they haven’t already planned for the potential cost of long-term nursing care, they could find themselves in an incredibly compromised and vulnerable position. Because of the strict income and asset limitations that dictate who is eligible for Medicaid, your parents (or even you) may end up blowing through your life savings in order to pay for the cost of long-term care.

It is well known that Medicaid has a 5-year lookback period, so those who find themselves in immediate need of long-term care often assume there is nothing they can do to get qualified.

Fortunately, that is a myth. With the help of a qualified elder law attorney, Medicaid Crisis Planning could help you or your loved ones preserve some of their assets while becoming eligible for Medicaid.

What is Medicaid Crisis Planning?

About 70 percent of American seniors will need some type of long-term care planning, many of whom will find themselves in nursing homes. Because of the high nursing home costs—the median annual cost of a private room in a nursing home is over $100,000—it is important to meet with an elder law attorney to work out a detailed plan to prepare for this situation long in advance.

If, however, you find your loved one facing an unexpected health emergency that will likely require nursing home care, you do have options. For people who have assets significantly higher than the Medicaid threshold, the best of these options is Medicaid Crisis Planning. Medicaid Crisis Planning is a way to avoid spending down your entire life savings when faced with an immediate or near-immediate health situation.

How Does Medicaid Crisis Planning Work?

With Medicaid Crisis Planning, the person facing a nursing home visit gifts a large part of their assets—sometimes up to 50 percent—to a Medicaid Asset Protection Trust, or in some cases directly to a child or another loved one. The rest of the person’s assets are then converted to an income stream through a Medicaid Compliant Annuity (or in some states a promissory note) After these transfers are completed, the patient applies for Medicaid to cover the nursing home cost.

In most cases, the application will be approved subject to a penalty period.  That penalty period is based on the amount of the gift they have made to their child or other loved one (and any other transfers for less than fair market value that have been made in the past 5 years). During this period of ineligibility, (penalty period) the person will privately pay for nursing home care using their monthly income, as well as the funds produced by the annuity or payments from the promissory note or annuity. Once the ineligibility period has expired, Medicaid will start paying the monthly nursing home bill.

While the applicant will need to use some of their life savings initially, in the long-run, they will be able to salvage some of what they’ve worked a lifetime to accrue.

Long-Term Care Planning

With proper long-term care planning, you and your loved ones can be protected from having to spend down your entire life savings when faced with an unexpected nursing home admission—without the need for Medicaid Crisis Planning. An elder law attorney will help you protect your assets and guide you through which financial moves to make (or NOT make) as you age. For example, it may be advised that you set up a Medicaid Asset Protection Trust or purchase assets that are exempt from Medicaid.  This can prevent you from incurring a penalty, should you need to apply for nursing home Medicaid in the future.

The sooner you start planning for the cost of long-term nursing care, the better.  As it goes, an ounce of prevention is worth a pound of cure.

Whether you are interested in long-term care planning or find yourself in need of Medicaid Crisis Planning, it is important that you work with an experienced estate and elder law attorney. Elder law matters are as complicated as they are essential, so choosing the right professional can make all the difference.

At Miller Estate and Elder Law, we have many years of experience with long-term care planning and Medicaid Crisis Planning. Call (256) 251-2137 to speak with a member of our legal team today or contact us using the brief form below.


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bill@millerestateandelderlaw.com

My Spouse Needs to go to the Nursing Home…Now What?

My Spouse Needs to go to the Nursing Home…Now What?

by | Mar 6, 2022 | Asset Protection, Elder Care Planning, Elder Law, Long-Term Care, Nursing Home

You’ve been married to your spouse for decades. Lately, you’ve noticed that they are losing the ability to look after themselves. You realize that they may soon need nursing home care. You know this requires a lot of planning. Are you prepared?

When a spouse needs nursing home care, most people find that they are ill-prepared for the expenses associated with it. Paying out-of-pocket is expensive. After all, you’ve worked a lifetime to purchase your home and build your nest egg you should be able to pass those down to your children and grandchildren…not lose them to the nursing home. Your other options are to apply for Medicaid, or use long-term care insurance. Sadly, long-term care insurance is often overlooked until it’s too late to get it, leaving Medicaid as the only option. However, Medicaid eligibility can be tricky, and most people wonder how their assets might be impacted.

What Happens to My Income?

If your spouse has to go to a nursing home, all of their income will go to the nursing home.  You can keep all of your income but in many cases that is not going to be enough.  Without proper long-term care planning and a loss of your spouse’s income, your life savings could be drained in a matter of months if you have to pay out-of-pocket. Becoming eligible for Medicaid is challenging, with inhibitive income and asset limitations that may leave your spouse unqualified to receive these benefits. As the spouse who is not going to apply for Medicaid (also known as a “community spouse”), your income will not be factored in to eligibility. However, your spouse’s monthly income (which cannot exceed ~$2,523 per month ) will be used to determine Medicaid eligibility, and to pay for care, if approved. This leaves you at home with just one income to cover all of your expenses.

What About My Other Assets?

The other consideration when determining Medicaid eligibility is the assets that are owned by you and your spouse, regardless of whose name they are held in. The Medicaid applicant cannot own assets valued over $2,000 to qualify, not including your primary home or car. You, as the community spouse, can keep half of your assets, up to a maximum of $137,400.

You might also wonder which assets are included—and which are excluded—in the Medicaid application process. Typically, liquid assets, like bank accounts, insurance policies valued over $1,500, stocks and bonds, mutual funds, and second homes and cars, are considered countable assets. It should be noted that your home and one car are not included. This is because the community spouse would continue to reside in and otherwise utilize these assets. Additional assets that are exempt from Medicaid include personal effects, burial plots, and life insurance policies valued under $1,500.

So, What Are My Options?

If your spouse needs nursing home care now, and you are faced with either having to pay out-of-pocket or qualify for Medicaid, you still have some options. You may be tempted to spend down or transfer your assets, but Medicaid will look back 5-years from your application date to ensure you did not give away money to become eligible. Medicaid qualification is a confusing area of law, so it is best to plan with an elder care attorney who can take the guesswork out of applying for Medicaid and help you to avoid common mistakes that may cause penalties and delays in approval.

If you expect your spouse will need nursing care in the not-so-distant future, it’s best to start planning immediately. This is also a good time to consult with an elder law attorney about best practices for maximizing retention of assets and nursing home care provisions for your spouse. Your elder law attorney may suggest actions like:

  • Paying down existing bills: Medical bills, car loans, credit cards, etc.
  • Home improvements: Repairing plumbing and heating systems, fixing the landscaping, purchasing household goods and furnishings, and making structural modifications.
  • Funeral trusts: Purchase a pre paid funeral plan which in not countable and while takes care of an inevitable expense.

At this point, you’ve probably determined that paying for long-term nursing home care can be complicated at best, with so many variances and challenges depending on your unique circumstances. Proper planning should be implemented sooner rather than later to prevent costly and stressful consequences. Miller Estate and Elder Law can help you strategize in order to yield optimum benefits for you, your spouse, and—ultimately—your entire family.

Watch our FREE webinar to learn more about Medicaid eligibility and how to get your spouse qualified for the care they need, without sacrificing your life savings.

https://millerestateandelderlaw.com/medicaid-qualification-webinar

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256-472-1900

bill@millerestateandelderlaw.com

What Are The Risks of a Medicaid “Spend Down”?

What Are The Risks of a Medicaid “Spend Down”?

by | Sep 2, 2019 | Blog, Medicaid, Medicaid Qualification, Nursing Home

There is never a “right” time to enter a skilled nursing home. For most of us, we wish to live our lives in the comfort of our own homes and never have to contemplate a time when we would leave them because we need long-term care. Unfortunately, as we age, our needs, especially when it comes to our health, may not match what we want.

There may come a time when you or a loved one will need care outside the home. This could be due to a health care crisis, a cognitive decline, or for many other reasons. The question then changes to a more immediate issue: how will you be able to afford this care for your spouse in addition to your monthly bills?

Medicaid has a fixed amount of countable assets you are allowed to own and also receive Medicaid assistance.

What happens, then, should you have more than this amount? Did you know that in our state a Medicaid “spend down” of countable assets can be done to make sure the spouse entering into the skilled nursing facility is immediately eligible for Medicaid nursing home assistance? This is done because the spouse in a nursing home, often referred to as the “institutionalized spouse”, cannot own more than $2,000 in countable assets and the healthy or “community” spouse can only own countable assets that do not exceed $126,420.

A “spend down” scenario exists when the community spouse purchases assets that result in there being less cash or available assets that would otherwise disqualify the institutionalized spouse from Medicaid nursing home assistance. The “spend down” is accomplished by the community spouse paying for things that are allowed. For example, he or she could pay cash to improve his or her residence, pay off a credit card balance, or purchase a new automobile. There is no limitation on the ways in which a spend down can be accomplished. However, the spend down cannot result in a gift being made. This would constitute a penalty that would make the nursing home spouse ineligible for assistance.

The risk of a spend down is that the nursing home spouse may suddenly die. In such an event, the cash that could have available for the community spouse’s needs over the ensuing years of comfort may no longer be available for the community spouse’s medical or other emergency needs. There are alternatives to spending down. Rather than spending down the assets and subsequently not having the cash for emergencies, the community spouse should consider using the proceeds received through an allowed Medicaid strategy. For example, he or she could utilize a reverse mortgage on the residence to pay the nursing home costs rather than leaving the community spouse without sufficient funds for future expenses.

Another strategy could be creating a non-countable asset such as a Medicaid Qualifying Annuity.

This annuity can be owned by the community spouse, regardless of its value. This annuity must meet strict rules including being irrevocable, non-assignable, have no cash value, and payable over no more than the owner’s life expectancy. Since the community spouse may also eventually need long-term care, the community spouse’s purchasing a Medicaid Qualifying Annuity may be the best solution for protecting assets since the investment in the annuity, if not used for care, could be paid back to the community spouse and then be available for his or her subsequent long-term care.

We know this article may raise more questions than it answers. There is never a wrong time to plan for the potential need for long-term care in a skilled nursing facility and, often, pre-planning can help you achieve the strategies you need early on. Whether you are in a crisis or pre-planning today, know that we have solutions available for you. Do not wait to contact our firm and schedule a meeting to discuss your needs.

3 Little Known Facts About Medicaid

3 Little Known Facts About Medicaid

by | Sep 7, 2018 | Medicaid

Most people have heard of Medicaid. Most people know that Medicaid is a massive program funded by the federal government. However, these three little known facts about Medicaid are important to help you understand how Medicaid might help you.

#1 – Medicaid Pays for a Limited Number of Doctor Visits

Becoming eligible for Medicaid benefits does not mean you can go to the doctor any time you want. Well, you can go but Medicaid typically pays for only 14 doctor appointments per year.

However, if you need to see the doctor more than 14 times a year, check with your local public clinics and federal health clinics. Otherwise, additional office visits will be self-pay.

Eye care and dental care appointments are separate from general office visits. Medicaid pays for one exe exam every three years. Most dental services are covered for Medicaid recipients.

#2 – Medicaid Might Pay for Transportation to Doctor Appointments

In general, Medicaid benefits include ambulance transportation when medically necessary. However, many people don’t know that Medicaid’s Non-Emergency Transportation Program may also cover transportation to and from scheduled appointments. There are some limitations, though:

  • Visits must be medically necessary;
  • The Medicaid recipient must be unable to find or pay for other forms of transportation; and
  • The transportation must be approved by Medicaid five (5) days before it is needed.

If you may need this program, check out the FAQs or call 1-800-362-1504.

#3 – Medicaid Is the Nation’s Largest Primary Payer for Long-Term Care

As the baby boomer generation hits retirement age, more people will need some form of long-term care. The cost of that care continues to increase, and many people are just not prepared for it.

In this current climate, Medicaid has become the source of long-term care funds for many people. However, although 72.2 million people qualified for Medicaid in 2016 (including children and caregivers), the application process is long and hard. Many people are denied benefits.

Not Everyone Qualifies for Medicaid.

At Miller Estate and Elder Law, we help clients with long-term care planning and the Medicaid application process. For a free consultation, contact us at 256-251-2137 or use our convenient Contact Form. Download a copy of our free guide, What You Need to Know About Medicaid Planning in Alabama.

We have offices in Anniston and Birmingham and we assist clients in the Leeds, Gadsden, Hoover, Talladega, Vestavia Hills, and surrounding areas.

Five Year Plan for Medicaid Eligibility

Five Year Plan for Medicaid Eligibility

by | Jun 12, 2018 | Medicaid, Medicaid Planning

You may be wondering, “What are the chances I will ever need Medicaid.” Well, about 72 million people received Medicaid benefits in 2017, including younger disabled people, pregnant women, children, and older adults. About 52 percent of people currently age 65 will need long-term care in the future. Many of these people will need help paying for that care. Even people who are currently in good health should start thinking about their five year plan for Medicaid eligibility.

Who is eligible for Medicaid benefits?

Caseworkers review several factors to determine an individual’s eligibility for Medicaid. Each Medicaid program has different requirements. We’ll just be considering two programs: Medicaid for Elderly & Disabled and Medicaid in the Nursing Home.

To receive Alabama Medicaid benefits, applicants have to meet medical, income, and citizenship requirements. An individual might meet those requirements if they:

  • Are medically proven to need nursing home care;
  • Have lived in the facility for more than 30 continuous days;
  • Have a monthly income less than the limit, which is currently $2,205;
  • Own resources valued below the current limit; and
  • Are citizens of the U.S. and Alabama.

What might block Medicaid eligibility?

Sometimes eligibility is denied for preventable reasons.

For example, Medicaid reviews income and expenses for the 60 months prior to the application date. Large transfers of property or income during that 5-year time frame – the “look back” period – could make the applicant ineligible for months or years – the penalty period. The length of the penalty period varies depending on the amount of money given away.

Proper estate planning before the Medicaid benefits are needed could transfer an individual’s assets in a way that is acceptable to Medicaid. Creating and funding an irrevocable trust may protect the assets for your heirs without affecting your Medicaid eligibility.

It’s great to start Medicaid planning five years out … but we have no way of knowing when or even if we will be incapacitated.

Start your Medicaid planning today.

Even if you haven’t started planning five years in advance, you can still benefit from the advice you’ll receive from the attorneys at Adams Miller.

Don’t let Medicaid eligibility issues give you an unpleasant surprise. Know where you stand now, and how to plan for the future. Talk to an Alabama attorney with experience and training to handle your concerns. ContactMiller Estate and Elder Law, at 256-251-2137 to schedule an appointment.  We help clients in Anniston, Talladega, Birmingham, Gadsden and surrounding communities.