Federal Medicaid Eligibility Overview
While Medicaid eligibility is complex and varies by state and constituent group, there are some general eligibility principles. Medicaid eligibility is determined by both functional and financial requirements, with each state having its own specific requirements that can change annually. Within the aged and disabled category, Nursing Home Medicaid and Medicaid Waivers providing home and community-based services (HCBS) may have different eligibility criteria.
Because Medicaid is a federally based program, our office can assist clients nationwide.
Understanding Medicaid, Costs, Options, & How to Plan
What is Medicaid Planning?
While most of us are familiar with the existence of the Medicaid system, many of those who have never personally experienced the intricacy of applying for Medicaid are unaware of complexities that often come along with the process. Medicaid planning is an essential tool for anyone planning to apply for Medicaid or anticipate applying for benefits. Since this process follows a case-by-case structure, Medicaid planning may be the simple act of preparing documents for an application, or as complex as diving into a complete financial overhaul.
Since Medicaid is only available to those who fall under a specific income limit, Medicaid Planning becomes more intricate to ensure that the applicant meets their eligibility requirements. Although solutions such as a Qualified Income Trust (or Miller Trust) exist and converting resources into non-countable assets (such as home, car, and furnishings), doing so requires the support of a financial or legal expert to navigate this process. Some states do not allow senior citizens to convert their resources, and in some cases doing so will make them ineligible to receive Medicaid benefits altogether.
This process is even further complicated by special circumstances, such as when one spouse lives independently, and the other requires some sort of long-term care. The process of converting and dividing assets is an often-arduous task, one that requires professional guidance in most cases.
How Medicaid Planning Can Help
Due to the rigorous nature of successfully applying for Medicaid benefits, many families turn to experts for assistance with Medicaid planning to ensure that their loved ones receive the care and resources they need, without losing all of their assets. Each family’s case is unique, but here are a few reason why one would choose to work with a Medicaid Planning expert:
Long Term Care
No matter where you go, long-term care options are an expensive, and often unaffordable, necessity. Families who have a loved one in need of long-term care will do what is required of them to ensure that their loved one receives the necessary care that they would be unable to afford without benefits.
Medicaid eligibility requirements are fickle, and if done incorrectly will result in penalization and/or a denial of benefits. For those in need of care or resources, being denied benefits is a heartbreakingly devastating blow, and one that can be avoided with the proper guidance.
Not only is it difficult to prove eligibility, but the application process itself is very time consuming and cumbersome. To save themselves time, energy, frustration, and stress, many families will opt to work with a qualified Medicaid planning professional to help them expedite the process and avoid the many potential pitfalls along the way.
Supporting a Spouse
When one healthy spouse lives independently in their own home, and the other must live in a long-term care facility, many families panic over the fact that they do not have sufficient funds to afford both. Working with a Medicaid planner will ensure that the healthy spouse is able to maintain their lifestyle at home, while their spouse receives the care they need.
If your family has limited assets, you will want to conserve as much as possible for as long as possible. This is especially important if you plan to pass your home or savings along to future generations, rather than give them up to Medicaid’s estate recovery program.
Who Can Help With Medicaid Planning?
The route you take to find assistance in applying for Medicaid benefits is largely dependent on your family’s unique needs. Elements such as income, health, location, age, marital status, or veteran status will have an impact on who you should seek help from for the application process. There are a number of professionals who may assist you, including:
Elder Law attorneys
Geriatric care managers
ADRC and AAA Benefits Counselors
Long-term care ombudsman
Other non-professional entities
Cost of Medicaid Planning
Rather than try to bill our clients on an hourly bases which can result in confusion and dispute, we charge on a flat rate basis. Our fees range from 1x to 1.5 times the month’s nursing home rate in your state. This averages $10,000 to $15,000. Depending on who you turn to for assistance with Medicaid planning, your services may or may not include developing an asset protection plan, professionally filing the application, and working with the department to ensure the process goes smoothly, filing appeals when necessary, and appearing with you before an administrative law judge if denied. We also look for opportunities to request retroactive benefits as well.
Penalties can be very costly. If you are using someone at a care facility to assist, what is their incentive, and will they justify their actions at a fair hearing with you? You need an independent professional to maximize your award.
Why Planning Ahead Is Important
Unfortunately, those who are presently enjoying good health don’t think to plan ahead in the event that their circumstances or health status changes. Just because the path you are on does not include a need for Medicaid, that does not mean that it may become necessary due to unforeseen circumstances in the future. Planning ahead will give you the peace of mind of knowing that should a situation arise; you have a well-thought-out plan in place and will be prepared.
For families who choose to not plan ahead, they will often end up paying unaffordable out-of-pocket costs for nursing homes or long-term care until all of their assets are depleted, which will eventually result in Medicaid eligibility. Planning ahead of time will help to secure your assets, while still qualifying for Medicaid benefits if or when the need arises.
Is Medicaid Planning Legal?
Many families wrestle with the misconception that Medicaid planning is an illegal or unethical practice. However, rest assured that it is indeed legal, and is carried out by legal professionals such as Elder Law and Estate Planning attorneys. There are no laws against Medicaid planning in any of the 50 states.
Deciding whether or not it is an ethical decision is a very personal opinion. Across the board, there doesn’t seem to be just one clear-cut answer, and the topic has been heavily discussed among professionals, politicians, and the media. It is important to understand that each family’s situation is unique, and many of them are doing what they feel is best to ensure that their loved one has the funds and resources they need to afford necessary medical care.
What is Medicaid Estate Planning?
For Medicaid applicants who wish to legally protect their assets to preserve them for family members or future generations, it is best to work with an estate planning attorney. No estate is too small, and no matter how nominal one’s finances may seem to others, it may be all they have to give as an inheritance to their family. Medicaid estate planning will allow you to preserve your assets to ensure that your family has access to their rightful inheritance.
Medicaid Planning vs. Estate Planning
While they may seem to be one in the same at first glance, Medicaid planning and estate planning do have their differences, and it’s is important to know which option is best suited for your family.
Estate planning is done by working with an attorney to protect and manage your assets for legal beneficiaries, while also lowering the estate taxes that a beneficiary will be responsible for paying. An estate plan is drawn up to have a legal document stating what the plan is for one’s assets or resources in the event of their death.
When you create an estate plan, you and your attorney will draw up a will, and name an executor who will manage the estate to make sure that the stipulations within the will are carried out. At this point, a power of attorney is appointed, which gives the individual legal authority to make medical and/or financial decisions in the event that their loved one is rendered incapacitated and unable to make those decisions on their own. Although an estate plan is an incredibly valuable tool to have in your back pocket, it is not always appropriate for Medicaid planning purposes. That being said, it is always best practice to ensure that part of your estate planning process includes planning for the possibility of needing long-term care or Medicaid at some point in the future.
Medicaid planning differs from estate planning because Medicaid planning involves having assistance in the application process. This may include gathering all of the appropriate documents and expediting the process of meeting Medicaid’s specific eligibility requirements. This will allow you to make the most of the benefits you receive and save on the cost of any long-term care that you may require.
Many people know that Medicaid has strict income and asset limits, and assume that if they or their loved one is over the limit, that automatically means that they are not eligible to receive benefits. In fact, one of the key benefits of Medicaid planning is creating a strategy to move assets around in such a way that would put the individual within eligibility limits, without sacrificing their resources. Medicaid planning will help to maximize the inheritance left to family members, and for this reason, estate planning and Medicaid planning often go hand-in-hand.
If estate planning is done long before one may need Medicaid benefits, family members have a greater opportunity to protect even more of their assets. This is why it is beneficial to have a plan in place well before the need for care or benefits arises.
Medicaid Asset Limits
As of 2023, in order to qualify for Medicaid benefits, one’s assets must be below $2,000, although this may differ depending on the state of residence. It is important to note that not all assets are included in this calculation, and assets such as a home are usually exempt from this limit.
Asset Spend Down
When an individual’s assets go over the limit of eligibility, they will have to spend down their assets in order to reach that limit. To spend down assets, one may choose to pay off some debt, make home renovations, or pay for care out of pocket.
It is important to note that assets cannot be given to family members or sold at market value to spend down to meet eligibility limits. Medicaid has what is called a “look back period”, which means they will sift through all assets that are gifted or given away and will disqualify those who are found to have broken this rule. We will go into greater detail about the look back period in the following section.
Look Back Rule
The look back rule is the process in which Medicaid will look into all assets that were transferred to other entities, gifted, or sold at market value in a specific time frame prior to the Medicaid application. In most states, the time frame is 60 days prior to the application, but states such as New York and California look back as far as 30 months. If an applicant is found to be in violation of this rule, they will be immediately disqualified, and will be unable to reapply for benefits for a time frame that is determined by the Medicaid office at the time of the offense.
Oftentimes, estate plans are found to be in violation of the look back rule, so it is crucial to have your estate plan in place well before the need for Medicaid arises to avoid this detrimental pitfall.
Medicaid Estate Recovery Program (MERP)
Each state has their own Medicaid Estate Recovery Program, also known as MERP, that will try to collect funds for expenses that were paid for following a benefit recipient’s death. For most individuals, their home or property is their most valued asset, which means they may try to force family members to sell the home in an attempt to receive their compensation. Although this is a stressful possibility for many families, rest assured that if a spouse of the deceased is still living in the home, they are not able to force them to sell.
Medicaid Asset Protection Trusts (MAPTs)
Medicaid Asset Protection Trusts are a great way to convert countable assets into non-countable assets to increase the odds of being eligible for Medicaid benefits. It is also a valued tool to be used against MERP to protect your loved one’s home in the event that they attempt to collect payment by forcing the sale of the home to pay for the long-term care of a deceased beneficiary.
When creating an MAPT, the trust maker’s assets will be transferred over to a trustee who will manage the trust moving forward. This trust is irrevocable, which means once it is written and signed, no changes may be made to the trust, and it may not be terminated. Although the creation of a MAPT means that the funds involved no longer belong to the trust maker, they are still able to live in their home for the remainder of their lives. The creation of an MAPT will violate the look back rule, so please note that these steps should be taken well before you think you may need to apply for Medicaid benefits.
Modern Half a Loaf Strategy
The Modern Half a Loaf strategy is a technique used in Medicaid planning to ensure that an applicant will qualify for benefits. To achieve this, the total value of an individual’s assets are calculated, and half of that value is given to a family member or friend. The assets that still remain after the transfer, one would purchase a short-term annuity, which is a contract between the buyer and their insurance company in which a lump sum is reformed as a source of income.
While utilizing this strategy will bring your assets down below the eligibility limit, you may be disqualified for gifting assets. This strategy also violates Medicaid’s look back rule, but the funds received from the annuity will help cover the cost of the individual’s care while they are penalized for gifting their assets.
Spouse Refusal (FL & NY)
While spousal refusal is only practiced in the states of Florida and New York, it is worth mentioning for those who may benefit from this strategy.
This is a strategy in which the spouse of an applicant refuses to assist with the cost of care for their spouse. Since spouses are required by law to financially support one another, refusing to do so creates a more complicated issue for Medicaid. They are not allowed to refuse someone the long term care that they need simply because their spouse refuses to pay.
Using this strategy, all assets that set you over the limit for Medicaid eligibility are transferred to the spouse who is not applying for benefits, which does not violate Medicaid’s look back rule. Spouses are allowed to transfer assets amongst themselves without being penalized. That being said, there is a chance that Medicaid will attempt to sue the non-applicant spouse for their assets in an attempt to receive compensation that will go toward the cost of the applicant spouse’s care.
Some couples will choose to end their legal marriage in an attempt to qualify for Medicaid benefits. The intention is to prevent a couple from losing all of their assets on the cost of their care, and instead will allow them to set aside more assets for the spouse who does not require long term care. Although some couples still use this estate planning strategy, it has become less popular over the years due to spousal impoverishment rules. Spousal impoverishment rules are in place to prevent a non-applicant from falling into poverty so that their spouse will qualify for Medicaid benefits. This is one of the lesser-recommended strategies and is typically not necessary with so many other options available today.
About Our Services
Elder law attorneys work to help elderly individuals and their families prepare for long-term care and death. Since each individual has different needs, experiences, and assets, elder law attorneys are well verse in a variety of legal services including:
Wills & Trusts
Powers of attorney
Long-term care planning
It is important to note that not every elder law attorney does Medicaid planning, and not all Medicaid planners are elder law attorneys. Whether you choose to work with an elder law attorney or a Medicaid planner, it is important to ensure that they have particular expertise in the laws and regulations in your state of residence.
Cost of Elder Law Attorneys
The cost of working with an elder law attorney varies, and many factors must be considered before an accurate price can be provided. Our fees are set at a flat rate based on 1- 1.5 months stay in a nursing home and do not increase based on factors you cannot control such as:
Value of assets
How soon Medicaid is needed
Amount of gifted assets
Whether or not any advanced planning or documentation has been completed
While many hopeful applicants feel a sense of sticker shock when they first begin researching the process of working with an elder law attorney, it is important to remember that the cost will end up balancing itself out in the long run. With the help of an attorney, you will protect more of your assets that may otherwise be lost to long-term care costs, so the investment will be well worth it in the end.
Medicaid Application Assistance
The process of successfully applying for Medicaid benefits is often complex and time consuming. Medicaid attorneys will assist you in applying for benefits by preparing the appropriate paperwork, collecting additional documents, and will also file the application for you. Although Medicaid attorneys are a valuable resource, filing a Medicaid application does not require an attorney. That said, you need be sure you meet all of the Medicaid criteria before filing to avoid a severe penalty. You should also be prepared to present your claim to an administrative law judge if necessary. We can help you with both.
Meeting Income and Asset Limits
If your income or assets exceed Medicaid’s eligibility limits, qualifying for benefits becomes immediately more arduous and complex. Even if you are currently over the eligibility limits, that does not mean that you will never be able to qualify for benefits. Working with a professional who is proficient in Medicaid’s rules will help you create an effective strategy to get the benefits that you need.
The best way to ensure a smooth Medicaid application process is to plan ahead and make the necessary changes well before you will require Medicaid benefits. Doing so will help you avoid any potential issues with Medicaid’s look back rule. If possible, it is best to make all financial arrangements at least 5 years prior to your Medicaid application so that none of your arrangements are found to be in violation of the look back period. Planning ahead will help you avoid penalties and will get you the benefits you need more quickly, with less hassle.
Protecting Income and Assets
For seniors who are healthy, planning to miss the lookback period is the best way to obtain Medicaid eligibility. Elder law attorneys have the option of implementing Medicaid asset protection trusts (MAPTs). In addition to preventing Medicaid eligibility from declining due to gifting assets (if done in advance of the look back period), it also protects assets for spouses to enable them to live independently. MAPTs also protect an individual's assets, including his or her home, from Medicaid's estate recovery program upon the death of the Medicaid recipient. These assets are not liable to reimburse the state for long term care costs paid for the Medicaid beneficiary by them.
The Modern Half a Loaf, which we discussed in a previous section, involves another planning strategy that does not aim to avoid the look back period. By reducing one's countable assets, the family is able to retain some for themselves during long-term care, or after the death of the Medicaid beneficiary. An applicant for Medicaid typically gives half of their "excess" assets (wealth over Medicaid's limit) to their loved ones, then with the other half they purchase an annuity. (An annuity turns money invested into a small income stream.) If the applicant violated the look back period, he or she could be penalized, but income from the annuity could cover long term care costs during the penalization period.
Medicaid lawyers and specialists are also available to help with crisis planning when seniors need Medicaid benefits within 30 to 60 days. In this case, a Miller Trust, commonly referred to as a Qualified Income Trust (QIT), may be used to meet the income limit. A Medicaid recipient's excess income over the income limit is put into an irrevocable trust (meaning the trust cannot be changed or canceled) to be used only for a very specific purpose. Medicaid recipients, for example, face medical and long-term care costs. Medicaid does not include the income that goes into the QIT when determining eligibility, but not all states allow QIT’s.
Maximize Assets for Healthy Spouse
If only one spouse applies for Medicaid in a nursing home or for a waiver for home and community-based services, spousal impoverishment rules apply. The objective is to take steps to prevent the healthy spouse, also known as the well spouse or community spouse, from living in impoverished financial conditions. A Medicaid attorney will assist couples in maximizing their resources, so that the healthy spouse may preserve more of their assets, as well as the monthly income that is provided to the non-applicant spouse.
What Medicaid Attorneys Will Not Do
Medicaid attorneys play a key role in many aspects of Medicaid planning, but it's also important to cover the tasks that a Medicaid attorney is not responsible for. An immediate annuity can be purchased with an insurance company to lower one's countable assets. The purpose of an annuity is to take a lump sum of cash and turn it into a fixed income stream, generally for the spouse of the applicant. A Medicaid attorney typically does not hold a license to sell insurance, and one requires a license in order to sell annuities.
Although Medicaid attorneys do not sell irrevocable funeral expense trusts, they may team up with a licensed insurance sales agent in order to do so. This trust is a legal contract between the Medicaid beneficiary and the insurance company and serves as a means to spend down resources while retaining funds for future costs that may arise after death such as funeral costs.
This type of trust is a legal contract between the Medicaid recipient and an insurance company. It provides a way for one to “spend down” extra assets, while also setting money aside for future funeral / burial costs. The value of the funeral trust does not count towards Medicaid's asset limit if the trust is less than the limit for the state where the Medicaid beneficiary lives.
Powers of Attorney (POA)
What is a Power of Attorney (POA)?
A power of attorney (or POA) is the process of legally appointing an individual (known as the agent) to make medical or financial decisions on behalf of another person (known as the principal or the grantor) in the event that they become mentally incapacitated and unable to make decisions on their own.
The principal will not lose control over finances or healthcare simply by signing a POA. As long as they are still of sound mind, the grantor will remain in control of their own finances and medical decisions. It is not until incapacitation occurs that the POA comes into play.
On the topic of powers of attorney, it is important to recognize that there is a difference between a standard power of attorney, and a durable power of attorney (DPOA).
A standard power of attorney becomes effective immediately when incapacitation occurs, and immediately expires
It is important to touch on the difference between a general power of attorney versus a durable power of attorney (DPOA). A general power of attorney, also called a non-durable power of attorney, begins immediately and ends after the principal becomes mentally or physically incapacitated. The legal representation provided by an enduring power of attorney, also known as a durable power of attorney, continues once principal becomes incapacitated.
There is another type, called a conditional power of attorney, in which the POA is ineffective until a specific time frame in the future. A conditional power of attorney may become effective in the event of incapacitation due to dementia, Alzheimer’s, terminal illness, brain injury, and other catastrophic illness or injury.
A POA may be terminated at any time, and changes may be made to the document including the type or the appointed agent. One similarity that all POAs have is that the document is terminated immediately following the death of the grantor.
Importance of Having a Power of Attorney
Powers of attorney can be very useful in assisting a family member in becoming eligible for Medicaid, maintaining eligibility, and making Medicaid-related benefits decisions.
Without an official Power of Attorney, an adult child or another person may be unable to access the documents necessary to apply for Medicaid on behalf of a loved one. Documentation requirements for Medicaid applications include proof of income and assets, bank and pension statements, and life insurance policies.
A POA is necessary if an elderly individual becomes mentally incapacitated. Without one in place, legal authority for the elderly individual will have to be sought in court. This is an extensive process that will force the family to pay out of pocket for their loved one’s care until guardianship is appointed and they can proceed with Medicaid applications.
When Medicaid applicants have assets or income that exceed the state limit(s), POAs may give the family the authority to hire a Medicaid planner to gain financial eligibility for the program.
POAs are also vital when a check must be written for Medicaid-related co-payments or other expenses. A durable power of attorney for finances is necessary when it comes to managing finances.
Medicaid requires a durable health care power of attorney, which provides the agent with legal authority to make health-related decisions on behalf of the principal. This is necessary when a nursing home needs a healthcare decision made on behalf of an incapacitated patient.
Medicaid For Nursing Home Care
Will Medicaid Cover the Cost of a Nursing Home?
Medicaid does cover the cost of nursing home care of eligible recipients in all 50 states, although the requirements and stipulations for Medicaid eligibility are different in each state. Medicaid will cover the cost of care, food, the room, and all necessary medical supplies during the duration of the Medicaid recipient’s stay. They will cover the cost of care long-term, even up to the end of the Medicaid recipient’s life, if necessary.
It is important to note the difference between Medicaid and Medicare. Medicare covers part of the cost of nursing care for a maximum of 100 days. It is reserved for short-term nursing care such as rehabilitation, not for long-term care needs.
Applying for Nursing Home Medicaid Coverage
Getting approved for Medicaid nursing home benefits can be a complex process. If you are certain that you will qualify for benefits, you will first want to submit an application online. It will require you to compile supporting documents, and may take hours, or even days, to complete. From there, you will be asked to complete a medical assessment to confirm that the level of care needed meets the requirements of a nursing home.
Medicaid Long Term Care
When applying for Medicaid’s Long Term Care benefits, you will want to first determine if the applicant is automatically eligible. If not, you will want to work with an experienced Medicaid Planner to guide you through the complicated application process.
If the applicant is automatically eligible, you will need to compile all of the required documentation to support the application. These documents typically include:
Financial Account Statements
Social Security Administration Letter
Income Verification Letters
Proof of Health Insurance Coverage
Family Trust Documents
Proof of Life Insurance
Durable Power of Attorney
Funeral Trust Document
You will then want to find your designated Medicaid office, and hand in your application and supporting documents either online, in-person, or through the mail. It is worth noting that online applications typically have a faster turnaround time, so it may be in your best interest to apply electronically.
Once your application is reviewed, you will receive your determination letter within 90 days. Carefully review your determination letter, whether approved or denied, for any mistakes that may have been made by the Medicaid office. If your application was unjustly denied, you will want to open up an appeal.
Denial of Benefits & Appeals
Reasons for Denial
In order to come up with a plan to appeal a denial, it is important to understand why your application was denied in the first place. The reason will be included in your denial letter that Medicaid will send out within 90 days of submitting the application.
Your application may have been denied due to:
Exceeding income or asset limits
Violation of Medicaid’s look-back rule
Medical needs are not severe enough to be covered by Medicaid
Errors on application
How to Appeal
Appealing a Medicaid denial can be an extensive and time-consuming process. While it is a viable option, many applicants will choose to go another route in the hopes that their application will be approved more quickly, without having to go through the entire appeals process.
Request a Reversal
Requesting a reversal is a less formal version of an appeal. You will communicate directly with a caseworker via phone or email, and will discuss the circumstances surrounding the denial of your application. If your application was denied due to an error on your application, you may bring up the error to the caseworker, provide the required information, and if the caseworker finds it satisfactory, they may simply reverse the decision and change your status to approved.
If an error was made on the caseworker’s end, you may want to work with a qualified Medicaid Planner to help you approach the situation appropriately. Your Medicaid Planner will likely act as a middleman and handle the communications with the caseworker on your behalf. They will also help you come up with the supporting information to present to the caseworker to reverse the decision.
If your application was denied because your income or assets exceed Medicaid’s limits, you may re-apply for benefits. Many applications are denied simply because the applicant did not understand which assets are counted toward the limit and failed to spend down their assets to meet eligibility requirements. You may also want to consult a Medicaid Planner if your income is over the limit to see if you can restructure your finances in order to qualify. Your Medicaid Planner will be able to explain all of the different restructuring strategies that are available to you to help you meet Medicaid’s eligibility requirements.
Appealing a Denial
Going through the appeals process is by and large the most complex and time-consuming option. You have a 45-day window to file your appeal, and once requested, you will have a hearing date scheduled by the Medicaid office. This process often requires the support of an attorney, and at the very least you should work with a skilled Medicaid Planner to guide you through this process. Your appeal may take months to complete, but if the court reverses the decision, your benefits will be granted retroactively to the date of your application.
The term "Medicaid pending" refers to the period after one has applied for Medicaid and is now awaiting an approval or denial. Many individuals and families have a difficult time during Medicaid pending, because they are responsible for paying out-of-pocket for care until they receive a determination. Since they are requesting Medicaid benefits, most families cannot afford this financial burden.
Some senior care facilities will still accept seniors who have a Medicaid pending status under the assumption that they will be approved for benefits and the facility will be reimbursed for the care provided during this period. In this case, Medicaid applicants and their families are not required to pay for the cost of medical care during Medicaid pending.
Other nursing facilities may require their patients to pay most of their income to the facility, save for a small allowance that may be used for personal needs or expenses. This is called a “share of cost” and must be paid even after the care recipient begins receiving Medicaid benefits.
If the applicant is married and their spouse does not require Medicaid benefits, the applicant may transfer some or all of their income to their spouse, which is called a monthly maintenance needs allowance. The purpose of this is to prevent the applicant’s spouse from living in poverty and not having the money they need to support themselves while their loved one is receiving care.
How Long Does Medicaid Pending Last?
Most Medicaid applications take anywhere between 45 - 90 days to be approved or denied. Although, depending on the state and circumstances, some may take more or less time.
This time frame is added onto the weeks, and sometimes months, that it takes for applicants and their families to gather the necessary paperwork prior to submitting their application. If your first application is denied, appealing their determination will also add more time to this process.
Irrevocable Funeral Trusts
Irrevocable Funeral Trusts (IFTs) allow an individual to pay for their final expenses, such as funeral costs, prior to their death. In addition to providing peace of mind for families, IFTs are also a valuable Medicaid planning tool, allowing Medicaid applicants to spend down their countable assets to meet eligibility requirements.
In order to meet Medicaid’s requirements, a funeral trust must be irrevocable, which means that the funds in the trust may not be altered, refunded, or canceled. When the Medicaid beneficiary passes away, the funds in the trust are only to be used for their final expenses including a memorial service, funeral, and burial.
Benefits of an Irrevocable Funeral Trust
They transform countable assets into non-countable assets to help an applicant meet Medicaid’s eligibility requirements.
IFTs will not violate the look-back period, so even if a trust is created just before applying for Medicaid, the applicant will not face a penalty.
There are no restrictions surrounding where your funeral will be held
Relatives are still in full control of funeral arrangement details
The cost of a funeral and burial does not fall on the family
Both funeral and burial expenses are paid for
Although there is quite a bit of freedom involved with IFTs, most states do set a limit of about $15,000. For married couples, each individual may set up their own IFT, meaning that each spouse will have about $15,000 in their respective account, giving them a total of approximately $30,000 worth of countable assets.
It is advised that you work with an experienced Medicaid Planner when setting up an IFT to ensure that you are following all of your state’s rules and guidelines. If done incorrectly, this process may actually lead to becoming ineligible for benefits. To prevent undesirable results, it is best to work with a professional to ensure that everything is done right to save yourself time and frustration in the long run.
Required Documentation for Long Term Care
Along with your detailed Medicaid application form, applicants are required to provide proof for all information that is included on the application form. Your Medicaid office will ask for documentation to prove that the applicant’s income is equivalent to what was provided on the application form. This means you may be required to provide documents such as:
Current pay stubs
Social Security award letter
Social Security income
A statement from your employer
Income tax return
The Medicaid agency will cross-reference your information to verify that the supporting documentation backs up the claims made on the application form.
In addition to proof of income, Medicaid requires that applicants also provide proof of their assets. Not all assets are created equally, and in terms of Medicaid eligibility, assets such as a home, vehicle, life insurance, appliances, and burial plots are not included in Medicaid’s asset limit. The Medicaid agency may ask that you provide documents to verify your assets such as the deed to your home, life insurance policies, bank statements, 401k accounts, stocks and bonds, annuities, and funeral arrangements.
They will then cross-reference your information and will search for any violations of Medicaid’s look-back period.
If an applicant tries to intentionally mislead Medicaid by reporting false asset or income information, that individual may be punished with a hefty fine, loss of benefits, repayment of the benefits that were paid out, and in severe cases, even jail time. The individual will also be banned from ever receiving Medicaid benefits in the future.
Minimum Monthly Maintenance Needs Allowance
When applying for Medicaid for long-term care, such as nursing homes, assisted living, or adult foster care homes, applicants must meet specific asset and income requirements. In accordance with Medicaid’s spousal impoverishment rules, some married couples may choose to utilize the Minimum Monthly Maintenance Needs Allowance (MMMNA). The MMMNA is to support non-applicant spouses with minimal assets and low income, to ensure that they have all the resources they need to support themselves at home while their spouse moves into a long-term care facility.
The MMNA has very strict stipulations, and to qualify, married couples must have income and assets that fall below their specified limits. If approved, the spouse receiving Medicaid benefits may transfer some or all of their income to their non-applicant spouse.
If applicants wish to transfer more of their monthly income to their non-applicant spouse, the Medicaid agency will consider the non-applicant’s shelter costs which includes their rent, utilities, mortgage, property taxes, and homeowner’s insurance.
An applicant spouse might be entitled to more income if his or her shelter costs are high compared to their MMMNA.
Medicaid is a nationwide low-income healthcare program, and each state manages its own program. Some state use creative names for their programs. California has its own program called Medi-Cal that has been designed specifically for elderly California residents. Medi-Cal focuses on long-term care solutions, whether at home or in a facility, and even pays for non-medical care that allows senior citizens to remain in their homes for as long as possible. Other names include SoonerCare and TennCare.
Seniors may qualify for a variety of entitlement programs, including:
Nursing Home Medicaid
Each program has unique eligibility requirements and may vary depending on the applicant’s marital status. As with Medicaid, there are very specific eligibility requirements that must be met before an applicant may begin receiving benefits.
Medicaid offers nursing home care as well as five programs and waivers for the elderly who want to stay in their homes or live in assisted living facilities.
In-Home Supportive Services (IHSS): Provides individuals with a variety of support and care services, including the ability to hire family members as personal caregivers.
Medicaid Assisted Living Waiver (ALW): This waiver helps pay for some of the costs associated with assisted living. This waiver is not statewide.
Community-Based Adult Services (CBAS): This program provides adult day care and adult day health care services throughout the state.
Multi-purpose Senior Services Program Waiver (MSSP): Provides assistance for home modifications, personal emergency response, and other in-home support to seniors.
Home and Community-Based Alternatives Waiver (HCBA): The program offers similar services to MSSP but is targeted more at people temporarily living in nursing homes who plan to return home.