Medicaid planning is important because not everything counts the same for Medicaid eligibility.
It is a “means-tested” government support program, “safety net” program. “Means-tested” refers to the thresholds set by the government that a person much meet or fall below in order to qualify for the support of the program. Means-tested programs like Supplemental Security Income, Medicaid, SNAP, TANF, in some cases, have similar buy slightly different thresholds.
Medicaid provides base-level services for low income individuals and families in the United States. It also provides support for those who meet a diagnosis of “aged, blind, and disabled.” This program covers the long-term care assistance to pay from nursing homes for elderly.
Medicaid planning provides a strategy for a person-in-need to receive cost of care assistance. Medicaid becomes the financial backstop to the elderly who need long-term care, which is defined by a deficiency of 3 or more Activities of Daily Living.
Medicaid Thresholds – “Sick and Broke”
There are two sets of qualifications that must be met in order to qualify for Medicaid. The applicant must be “Sick” and “Broke.” Now, neither the Medicaid application nor manual uses these terms; neither will a nursing home. However, proper Medicaid planning should account for these simplified terms – “sick” and “broke” – it meets these thresholds.
Medicaid Planning: The Definition of Sick
Medicaid’s definition of “Sick” means that the applicant has a documented need for long-term care. The person meets this need when he or she requires assistance to accomplish 3 or more of 6 Activities of Daily Living or ADLs (Feeding, Toileting/Continence, Dressing, Bathing/Showering/Personal Hygiene, Transferring, and Ambulatory read more about ADLs). A doctor can make this assessment if the the applicant is under care in a hospital or rehab center. Also, a regional Area Agency on Aging (AAA) has staff that can come to an applicant’s home to make the assessment on-site to determine the person’s care need. AAA’s in our area include Northwest Indiana Community Action (Lake, Porter, Newton, Starke, Jasper Counties), Real Services (LaPorte, St. Joseph, Marshall, and Elkhart Counties), and Area IV Agency on Aging (many of the surrounding counties of Tippecanoe). If the applicant is seeking long-term care in a nursing home, then a Medicaid bed must be available and ready for the person to occupy upon Medicaid qualification. When those requirements are met, the person is “Sick” in Medicaid’s formula.
Medicaid Planning: The Definition of Broke – Countable Resources
In order to meet the “Broke” threshold, an applicant must have less than $2,000 in Countable Resources. Countable Resources include
some real property,
cash value of some life insurance policies,
applicant’s retirement accounts,
some bonds and annuities, and
high value art and effects.
“Some” in the prior list means that some of those assets are not “countable” for Medicaid purposes.
For example, a primary residence can be considered non-countable, as one vehicle of any value, personal property (i.e. things around the house), the retirement plans of the applicant’s spouse, also referred to as the Community Spouse. A life insurance policy assigned to pre-pay a funeral up to $10,000 is non-countable as is a burial plot. Income-producing property can be a non-countable resource as are properly structured personal notes and annuities.
This means that some countable assets can be shifted to non-countable if done properly and in a timely manner. This is what Elder Law Attorneys evaluate when creating a Medicaid/Long-Term Care Plan. Once the applicant’s countable resources are less than or equal to $2,000, that part of “Broke” is met for Medicaid’s purposes.
Medicaid Planning: The Definition of Broke – Income
For nursing home level of care, Medicaid has a soft Income cap of $2,205/month. This is called a Special Income Limit (SIL) since other Medicaid programs have a hard cap of $735/month. It is a soft cap because if the applicant has income greater than the SIL, then a Qualified Income Trust (QIT) or Miller Trust can be used to receive at least the amount over the SIL. All money diverted to the Miller Trust is paid to the nursing home as the applicant’s contribution to his/her long-term care expense. However, the applicant will have the gap between his/her income and the cost of care covered by Medicaid.
For Medicaid income counting purposes, the income of applicant’s spouse in not considered in the SIL.
Once the applicant meets the “Sick and Broke” threshold, the applicant will qualify for Medicaid support to assist with the expense of a nursing home.
Medicaid Planning is Important But How Expensive
Anyone can access the application for Medicaid in Indiana. However, if the applicant does not meet the above threshold, a lot of time will be spent waiting to hear that he/she is rejected. Unfortunately, it may mean that another month or two goes by and the issue causing ineligibility is not corrected. This will result in those months, and any future months until the issue is fixed, will be privately paid.
Attorneys charge to prepare for Medicaid planning, for the actual application, and to work with Medicaid through the application process. It may seem unnecessary since you can do it yourself online. However, an experienced Elder Law attorney sees problems which prevent meeting Medicaid’s qualifications before the application. This allows, the Elder Law attorney to do Medicaid planning to adjust assets and income to meet qualifications. The Medicaid plan may also manage the spending necessary to reach the qualification thresholds.
In some cases, attorneys will charge $5,000 to $10,000 for Medicaid Planning. Some base pricing on the complexity of the plan. It may also be based on the premise that the plan could qualify someone for Medicaid sooner,. This could save a month of private paying a nursing home; possibly $7,000 to $9,000.
My Approach to the Planning Process
As an Elder Law Attorney, I focus planning on first helping the client understand the issue first. Then I share options to consider. Not everyone wants to take on the responsibility of the tasks necessary to execute some of the Medicaid planning techniques. Also, the needs and health of the person needing care might limit some techniques. Certainly, for some, the cost is a major factor. You may have very limited money to cover a private pay period and do not have $5,000 to spend either to create a plan.
My base fee for a Medicaid application and some simple organization/planning to put assets in places to allow a person to be eligible starts at $2,000. That includes conducting the follow-up meeting with Medicaid (by phone or in-office) and submitting requested material. I do no charge for the initial consultation to help get our hands around what is needed or possible. If there is a charge over the $2,000, I will tell you during that meeting or as soon as some discovery of an asset or issue is made that warrants an increase in fee.
Another consideration in working with me is that I schedule meetings with clients within days of the initial conversation…in some cases, the next day if possible and the situation warrants it. As I said previously, with Medicaid planning and applications, time is of the essence!
So, Let’s Get Started
I encourage you not to wait until a spouse, parent, family-member or child is ready for a nursing home to start the conversation. Take advantage of my free consultation so that you can understand what to do and when to do it. Call (219) 230-3600 or visit here to look at my upcoming appoint availability.
Also, before you apply yourself, take advantage of the free consult. I have tried to help people after they have submitted information. Unfortunately, after information is submitted, it is too late to change things that I recognize will cause a denial. And the process to figure out how to correct things after the fact can sometimes be more difficult that putting things in order before you submit the information.
Remember, each day, week, and month that ticks by creates a bigger window of private pay. Let’s do it best the first time.