The Elder Law practice at Allen Legal focuses on Medicaid Planning for long-term care benefits. Let’s face it, long-term care is incredibly expensive (averaging roughly $4,500/month for assisted living and $8,000/month for skilled nursing). Most people do not want to spend their life’s savings on nursing home care. Most wish to choose how and what they spend their money on, and pass the rest on (or what they have specifically set aside) to their beneficiaries. The #1 rule when confronted with a long-term care issue is this: seek advice from an experienced Elder Law attorney as soon as possible! That is because Medicaid Law (governed by federal law, administered and interpreted individually by the states) is extremely complex, is riddled with exemptions and exceptions, and exceptions to those exceptions. Additionally, interpretations of the federal law can lead to policy changes at the state level, which can change Indiana’s Medicaid program rules (though no law has actually been changed).
Medicaid is a means-tested government benefit; which means if you meet certain eligibility requirements you’re entitled to receive the benefit. Medicaid benefits for long-term care generally fall into 2 categories: “Traditional” Medicaid and Medicaid Waivers. The same rules of law apply to both, but the application process is a bit different. “Traditional” Medicaid is used when someone is in a skilled nursing facility and applying for benefits. Medicaid Waivers are used for those needing care at home, or in an assisted living facility. Why the difference? Traditionally, Medicaid benefits were only available for those in skilled nursing facilities; and for Indiana’s Medicaid program to expand and fund Home and Community Based Services (HCBS) like home and assisted living care, certain eligibility requirements had to be “waived” by the federal government; thus, Medicaid Waivers. The specific HCBS Waiver for those in need of benefits for care at home or in assisted living is the Aged and Disabled (A&D) Waiver. To qualify for waiver services a person must first meet the level of care necessary to receive services in an institution (hospital or nursing home); thus, the applicant must go through the waiver eligibility process with the local Area Aging Agency, where the applicant’s medical needs and assistance with daily activities (ADL’s) are reviewed. After waiver approval, the actual Medicaid application can be submitted to the Family and Social Services Administration (FSSA) / local Division of Family Resources (DFR) to determine benefit eligibility.
Medicaid Crisis Planning & the Application Process
When a loved-one needs long-term care now or in the immediate future, it is often overwhelming and can present as a crisis to the family. and leave many feeling overwhelmed. Our job is to alleviate the burden of the Medicaid application process, and help take some of the pain away.
The Medicaid application process is extensive and it is all about proving the applicant’s identity, citizenship, medical eligibility, and officially documenting all of the applicant’s finances. Proving identity, citizenship, and medical eligibility is the simple part; the financial aspect of the application is where it gets complex, and here are some of the key things we’ll be analyzing as we complete the Medicaid game-plan (keep in mind that the applicant has a $2,000 resource allowance, and that income and spousal allowances change on a yearly basis):
- Full Financial Disclosure: determining the types, values, and ownership of all the applicant’s resources (assets) and sources of income. If the applicant is married, the spouse’s resources and income must be disclosed and reviewed as well, and we’ll also need to establish the “Resource Assessment Date” (RAD).
- Single vs. Married Applicant: since different rules apply, determining if there are any special circumstances to consider for the healthy spouse.
- Income: determining the applicant’s total monthly gross income, and if above the “Special Income Level” (SIL) then a Qualified Income Trust (QIT), sometime called a “Miller” Trust is required. If married, is there a minimum monthly maintenance needs allowance (MMMNA).
- Resources: determining the “countable resources” and “exempt resources.” Then seeing if any resources can be transferred appropriately without penalty or if countable resources can be converted to an exempt resource. If married,
- Transfers and Penalties: determining transfers and their resulting penalties; and seeing if there is any way to “cure” or shorten a penalty. Exploring the exceptions to the rules to see if any transfers can be made that are exempt from a penalty.
- Estate Planning Documents: determining if any additional estate planning documents are necessary for the applicant or spouse.
- Eligibility Target Date: determining the Medicaid eligibility date.
- Liability Amount: How much to pay the facility each month after factoring in allowances; or in Waiver cases, the process for paying your liability on a monthly basis.
- Estate Recovery Considerations: Mitigating, or eliminating it altogether.
As you can see, there are numerous factors to consider when applying for Medicaid. Once you’ve provided the documentation we need, you can focus your and your family’s needs; Allen Legal will handle the rest. Finally, here are a couple of things to always consider:
- Always consult with an experienced elder law attorney to understand the options available when it comes to long-term care or Medicaid.
- Never “spend down” because you think it is the only option.
- The “5 Year Lookback” is commonly misunderstood, and “gifting” does not automatically make you ineligible for 5 years.
- As a general rule of thumb, a single individual can protect and preserve roughly 50% of their estate in a crisis situation.
- As a general rule of thumb, a married couple can protect and preserve nearly 100% of their estate in a crisis situation.
Pre-planning for Medicaid / Medicaid Asset Protection Planning
Not everyone has long-term care insurance or the financial means to private pay for an extended stay in a long-term care facility. Medicaid Asset Protection Planning is our estate planning approach that factors in the potential future expense of long-term care; and we use sound legal planning strategies to organize and protect your estate in such a way that allows Medicaid as a funding option for long-term care if it’s needed in the future. Generally, an asset protection trust serves as the foundation for Medicaid Asset Protection Planning. Just as trusts aren’t only for ‘rich’ people, Medicaid isn’t only for the ‘poor.’ Part of the planning process also involves analyzing the types of assets you own which may not be currently eligible for placement in trust, and advising you (and your financial advisor) of possible risks it poses should you ever need to apply for Medicaid and of the strategies to mitigate potential loss. There are many benefits to pre-planning for Medicaid, and since we don’t know what the future holds in regard to our health, Allen Legal educates and advises clients about this area of law on a daily basis.