7 Questions to Ask a Medicaid Planning Attorney
Before hiring a Medicaid planning attorney, there are things you need ask to find the right professional. Use the questions in this guide.
According to the most recent stats, over 7 million American senior citizens currently qualify for the Medicaid program. Many of these individuals also qualify for Medicare and use a combination of the two programs.
However, as healthcare and long-term care costs rise, many senior citizens and their families are learning more about what Medicare doesn't cover. They're becoming concerned about depleting their assets as their medical bills climb.
Medicaid planning is a complex but vital step you need to take to be sure your assets are protected while still receiving the healthcare you need. Use this guide when speaking to an elder care attorney about the best ways to qualify for Medicaid.
1. What Is the Difference Between Medicare and Medicaid?
The differences between Medicare and Medicaid are subtle and confusing for even the savviest people among us. The two are similar in that they're both government-funded healthcare programs, but the differences are striking.
In simple terms, Medicare is a taxpayer-funded insurance program based on age. Typically only people aged 65 or older are eligible for Medicare. Medicare functions like any other health insurance program, which means you'll still pay deductibles and out-of-pocket expenses.
Standard Medicare does not cover nursing homes, assisted living facilities, or skilled nursing facilities for stays longer than 100 days.
Medicaid is based on income and is a state assistance program. Each state has its own income criteria that applicants must meet before becoming eligible. With Medicaid, nearly all healthcare costs, including nursing homes and other long-term care situations, are covered.
Those who qualify for Medicaid and are over 65 can use both programs. In Arizona, Medicaid is commonly referred to as ALTCS, or Arizona Long Term Care System.
2. What are the Eligibility Requirements for Medicaid?
As previously mentioned, Medicaid is income-based, and each state sets its income limit. For instance, someone in Arizona would be eligible for Medicaid if their monthly income before taxes is less than $2523 (as off 2022).
Income is not the only criterion. The applicant's assets are considered as well. Arizona has strict rules regarding the value of assets and home equity.
Since most older people consider using Medicaid as a solution for long-term care for a spouse, both parties' assets and income are considered. Assets include bank accounts, stocks, and real estate.
If one or both spouses live in the home, the state may exempt the value of that home from assets. However, the state does have the right to place a lien on the home to recover monies paid for long-term care.
Speak with a Medicaid planning lawyer for clarification on your assets and income.
3. What Is the Five-Year Look-Back Period?
When a Medicaid application is submitted, the state will carefully review your financial records for the past 60 months. This is known as the five-year look-back period. Any sale or gift of assets (including your home) during this period can mean you'll be ineligible for Medicaid, and you won't be able to reapply for a certain period of time.
It's vital that older Americans and their families understand this aspect of the Medicaid application process. If you have any reason to think a Medicaid application might become necessary, speak with an attorney before selling or gifting property or cash.
Working with an attorney from the beginning will help you qualify. Most attorneys don't do appeal if you get denied as it is impossible to erase the paper record already created.
4. What Is the Spend-Down Period
Sometimes, Medicaid applicants find themselves above the asset and income requirements. They must reduce their net worth to qualify. Due to the look-back period, this must be done very carefully and, ideally, with the advice of a lawyer.
Excessive spending on gifts or items like furniture, electronics, and cars can raise flags during the look-back period. Selling items for less than market value or not being able to account for income from the sale will also create eligibility problems.
Spending money to pay healthcare-related costs like medical bills and in-home care is permissible during this period. In some states, pre-paying for funeral costs and life insurance are also allowed during the spend-down period. You can also pay off credit card debt and make needed home repairs.
5. What Is an Income-Only Trust?
The safest way to lower your assets and plan for Medicaid eligibility requirements is by setting up an Income-Only trust. With the help of an attorney with a practice in elder law, excess income is directed into the trust, bringing the applicant's income down to a qualifying level.
The money in the trust can only be used to pay for medical expenses and long-term care. The state is listed as a beneficiary and will have access to those funds as reimbursement for healthcare costs. This type of irrevocable trust cannot be dissolved before the state receives payment.
6. Is All Income Directed into the Trust?
When your attorney creates your plan for Medicaid, they'll be able to explain the Income-Only trust and its limitations. As mentioned above, the state is a beneficiary, but a trustee is also included. The trustee can be your spouse, legal guardian, or the person who holds your power of attorney.
In some cases, all payments received each month go directly to the trust account. These payments may include social security and any pensions. However, the Medicaid recipient is often granted a monthly allowance from these funds.
Lastly, since the state is the beneficiary and will seek reimbursement, funds are rarely left after they take their share.
An elder law attorney may also be able to protect some of the assets to take care of the healthy spouse. Talk to an attorney today at Citadel Law Firm to see if we can help you.
7. Could This Have Been Avoided?
With the cost of nursing home care averaging around $100,000 per year, creating an estate plan is essential to your financial health. And since many people are unaware that an average Medicare plan doesn't pay for long-term care, many families are left scrambling to meet the Medicaid requirements.
Advanced Medicaid planning can help you or your loved ones get to a place where they qualify for Medicaid when it's needed. Early planning can help you avoid the asset limitations and the look-back period, which may become more strict as states tighten their financial belts.
Talk to a Medicaid Planning Attorney Today
Early Medicaid planning is more critical than ever. The attorneys in our Chandler, Arizona office have years of collective experience helping families like yours qualify for the benefits they deserve.
Please don't wait until it's too late. Contact us for a free consultation (click here) and learn more about how to protect your family's assets while still qualifying for healthcare services. If you prefer call (480)565-8020 to schedule today.