Medicaid Planning - Asset Protection

It is an unfortunate fact of life that either you or your spouse – or both of you – or a loved one – may wind up needing to be placed in a nursing home one day.

This is becoming an increasing common problem for many as our life expectancy continues to grow longer and longer. Once you reach 65 years of age, you will likely live until you are in your 80's. As a result, nearly one of every two women and one in four men will find themselves in a nursing home at some time in their lives.

Unfortunately, Medicare will usually not pay for it, which means that you could be faced with having to pay thousands of dollars per month in nursing home costs out of your own pocket.

In Florida, as in most states, you are required to "spend down" all of your income and give up most, if not all, of your assets before Medicaid will help pay their nursing home costs. Fortunately, there is another option, however. With proper planning, you can protect your income and assets and you can get Medicaid to pay for those expensive nursing home costs for you or your loved one.

We can show you legal techniques and strategies that will allow you to be covered by Medicaid and still keep your home and many of your assets or to allow you to give some of your assets away to family members or other loved ones now.

We focus on preserving assets accumulated over a lifetime from dangers presented by the need for long-term custodial care, as well as protecting those assets from unnecessary taxes and probate costs.

Qualifying for Medicaid is a far more difficult undertaking than qualifying for Medicare. Medicare, like Social Security, is an entitlement program with automatic coverage based on eligibility. Medicaid is also an entitlement program but it is also means tested, with different levels of coverage based on income. Medicaid eligibility policy is complex, making the program difficult for elderly and other low-income Americans to understand and for state Medicaid officials to administer. Yet within this complexity are options that enable states to use their Medicaid programs as a policy tool for increasing financial protections for the low-income elderly against the cost of nursing home and other long-term care, as well as improving access to care for this population.

Nursing homes perform a vital function in the long-term care continuum by providing nursing care around the clock to the elderly and disabled. By entrusting these institutions with society's frailest members, the general population relies on government agencies and their regulations to ensure that the elderly receive quality care.

We have helped thousands of families and individuals like yourself, who are either facing the devastating costs of long-term nursing home care or planning for the future, to better understand how the Medicaid program works and how to avoid spending more on long-term care than required under the law.

The high cost of nursing facility services -- on average, $84,000 -- makes Medicaid an important benefit for the elderly at risk of nursing facility care. It also makes nursing facility residents a high-cost beneficiary population for state Medicaid programs. The tension between beneficiary need for financial protection and state concerns about costs has led to the development of Medicaid eligibility policies specific to the coverage of nursing facility services for the elderly (and disabled).

OVERVIEW OF MEDICAID ELIGIBILITY POLICY

Medicaid is a federal program run by the State. Eligibility requirements and services available vary from state to state. Medicaid eligibility is determined by the Department of Children and Families (DCAF).

Medicaid is a means-tested, federal-state, individual entitlement program with historical ties to the Aid to Families with Dependent Children (AFDC) and Supplemental Security Income (SSI) cash assistance programs. Medicaid eligibility policy reflects the basic program structure. Because Medicaid is means-tested, it has extensive rules for determining income and resources. Because Medicaid is not a uniform federal program like Medicare, there are substantial variations in eligibility policy from state to state. Medicaid's historical links to AFDC and SSI are reflected in its coverage of certain categories of low-income individuals, such as the elderly.

An individual who establishes Medicaid eligibility is not, on the basis of that initial determination, entitled to maintain eligibility indefinitely. Federal Medicaid regulations require that states re-determine the eligibility of a Medicaid beneficiary at least once every 12 months. This re-determination, like the initial eligibility determination, is designed to ensure that a beneficiary continues to meet each of the financial and non-financial requirements for eligibility. Those beneficiaries who no longer meet the eligibility requirements in their state lose their entitlement to Medicaid coverage.

INCOME / RESOURCE ELIGIBILITY

Being in a Medicaid eligibility category is essential to qualifying for Medicaid coverage. It is not, however, sufficient. Because Medicaid assistance is limited to those in financial need, the program also imposes financial eligibility requirements. These requirements take two basic forms: income tests and resource (or assets) tests. For most eligibility categories in most states, individuals must have resources of less than a specified amount in order to qualify for Medicaid. Resources include items such as cars, savings accounts, and savings bonds.

TRANSFER OF RESOURCES

Federal Medicaid law attempts to discourage individuals from transferring savings and other countable resources to adult children or siblings or others in order to satisfy the Medicaid resource test and qualify for nursing facility coverage. It does so by imposing, for a specified period of time, an exclusion of nursing facility coverage upon those individuals who engage in such transfers. Although an individual's home is generally not a countable resource, for this purpose it is considered a resource and subject to transfer prohibitions unless it is transferred to the individual's spouse, minor or disabled child, or, in some circumstances, sibling or adult child.

More specifically, if an elderly individual who is living at home (or the individual's spouse) disposes of resources for less than fair market value within 60 months of applying for Medicaid, then the individual is subject to a period of exclusion from coverage for nursing facility services (or home and community based care).

The period of exclusion from Medicaid coverage is related to the amount of resources transferred, the average monthly cost or nursing facility care in the state, and the date on which the transfer was made.

SUMMARY

Medicaid serves as essential supplemental coverage for low-income elderly Medicare beneficiaries. Eligibility pathways lead to assistance with services particularly needed by the elderly but not covered by Medicare - long-term care and prescription drugs - and to assistance with Medicare premiums and cost-sharing. Due to its complexity, Medicaid eligibility for the elderly is difficult for beneficiaries to understand and for eligibility workers to administer.

Contact us at The Law Firm for Family Law to discuss how we can protect the assets of your loved one.