The Importance of Medicaid Planning and the Attorney’s Role

Jim Wolverton, J.D.
elderly woman with attorney

As an attorney, Medicaid planning allows you to help clients develop a plan to accelerate their eligibility for benefits that cover the cost of long-term care. The earlier they plan, the more control and flexibility your client has. However, even if your client did not plan ahead for their long-term care and has an immediate care need, it’s not too late to help them protect what they have left. This is known as crisis Medicaid planning.

Crisis Medicaid Planning

Many families face the difficult decision of placing a loved one in a nursing home without fully understanding the associated costs. According to the U.S. Department of Health and Human Services, over 50% of individuals turning 65 today are expected to require long-term care at some point. Meanwhile, less than half of seniors have set aside funds to pay for their care, leading many families into financial distress. The unfortunate reality is that the average monthly cost of a nursing home in the U.S. is about $8,000—a cost that will quickly deplete one’s life savings. When families realize the financial ramifications of ensuring proper care for their loved ones, they often seek assistance from an elder law attorney to qualify for Medicaid as quickly as possible.

Why Medicaid?

Medicaid is the only government program that offers assistance for an extended long-term care stay. For those who qualify, Medicaid covers room and board in a Medicaid-approved facility, pharmacy, and incidentals. While Medicare, VA, and other public programs may cover a small portion of the bill or a short rehabilitative stay in a nursing home, they do not extend to a prolonged care need. Likewise, long-term care insurance can help policyholders privately pay for their care, but few individuals have the foresight to purchase this coverage while they are still relatively young and healthy.

Read More: Why Talk to Clients about Long-Term Care Insurance?

Qualifying for Medicaid

To qualify for long-term care Medicaid, individuals must meet specific requirements, including both non-financial and financial stipulations. In terms of the non-financial requirements, applicants must be 65 or older, blind, or disabled; a U.S. citizen or qualified non-citizen; and currently residing in a Medicaid-approved facility. When it comes to the financial tests, both income levels and asset ownership are considered. In most states, the applicant’s income must be less than the private pay rate of the facility where they are residing. Resources belonging to both the applicant and their spouse (if applicable) must also be below specific limitations. The institutionalized individual can only retain $2,000 of countable income (in most states), and the community spouse can only keep resources below their Community Spouse Resource Allowance, which varies by state.

Read More: What Is the Asset Limit for Long-Term Care Medicaid?

The Attorney’s Role in Crisis Planning

Attorneys play a crucial role in advising clients with regard to spending down assets if they own resources above Medicaid’s limits. The Medicaid Compliant Annuity is a vital tool that can be used to legally transfer and protect assets while accelerating eligibility for benefits. Also exempt from Medicaid is the funeral expense trust, which can be used to set aside funds for funeral and burial costs, thus alleviating the burden on their loved ones. As an attorney, it’s crucial that you have a comprehensive understanding of your state’s Medicaid program, asset categorization, and allowable strategies in order to provide guidance and support to families in crisis.

If you’re interested in incorporating Medicaid planning into your law practice, feel free to contact our team at 866-605-7437.

Jim Wolverton, J.D.
By Jim Wolverton, J.D. | Director of Legal Education

Jim is responsible for creating, curating, and promoting high-quality content related to the estate planning and elder law industry. He also plays a primary role in designing and maintaining a robust education and content calendar for Attorney Access.

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