12 Jul Medicaid’s Maze: Jacob Wooley, Partner
Before we begin discussing Medicaid, let’s take a moment to differentiate between two commonly misunderstood, government-supported healthcare programs.
- Medicaid is a federally-funded and state-administered health insurance program for individuals of limited means. State administration signifies that qualification requirements and benefits vary state-to-state.
- Medicare is a federally-funded health insurance program providing coverage for those 65 years old and older or those who are severely disabled regardless of income. Medicare’s qualifications and benefits are regulated by the federal government and do not vary state-to-state.
While there may be some overlap in the populations served by Medicaid and Medicare, there is a large variance in qualification for service as it relates to the economic status of the recipient. Now that we have outlined the basic differences between Medicaid and Medicare, let’s explore Medicaid and its impact on long-term healthcare planning.
A typical American lives to be 79 years old, and rarely has the necessary financial resources to fund nursing home care from date of admission until he or she passes away. It is reported that the average cost of nursing home care in the state of Texas is more than $5,900 per month. As you can see, it would take a tremendous amount of money each year (more than $70,000!) to provide yourself or your loved one with nursing home care for an extended period. Let’s investigate two specific situations to further identify the best course of action when confronted with the need for medical services.
- Help! My mother/father/elderly relative needs emergency Medicaid.
- Help! I (we) need to plan for my/our financial and medical future.
Help! My mother/father/elderly relative needs emergency Medicaid. When facing an emergency medical need, including nursing home care and in-patient treatment, many of us do not know how to navigate the complex world of Medicaid applications. An attorney knowledgeable in Medicaid eligibility is a great source of assistance to decipher Medicaid complexities including how to proceed in cases of unanticipated nursing home care.
A few of the issues that our attorneys address in this process are as follows:
- Crafting your monthly income to fit in below the income cap, which is currently $2,250/individual.
- Structuring a plan to keep your total available resources below the resource limit which is currently $2,000.
- Addressing real estate to avoid Medicaid recovery claims after your death.
- Closely walking you through the complications of the Medicaid application process.
Planning for the Future
Help! I (we) need to plan for my/our financial and medical future. None of us like to dwell on the topic of our mortality, but it is better to proactively plan rather than reactively scramble to make decisions during a time of crisis. For example, did you know that a step in qualifying for Medicaid services involves a five-year look back into financial activities? This financial review takes into consideration both current and historic assets when determining eligibility. Being over the income cap is one of the most common causes for Medicaid denial. A timely transfer of assets sets the stage for smooth transition when planning for future needs. But the question remains, how does one transfer assets?
Placing your assets in a special kind of trust transfers them out of your name, but can still allow you to benefit from those assets once transferred. An irrevocable trust is not for everyone and each situation is unique. Working with a qualified estate planning attorney avails you to the expertise needed to establish a long-term care plan that best meets immediate and future needs.
Key benefits of establishing a trust are:
- Asset protection from future creditors of beneficiaries
- Ability to designate who will receive the net distributable income generated in the trust
- Ability to make assets in the trust noncountable in terms of eligibility for means-based governmental benefits, such as Medicaid and Supplemental Security Income (SSI)
- Ability to specify certain terms and incentives for beneficiaries’ use of trust assets
- Ability to determine who will receive any trust assets after the deaths of the initial beneficiaries
- Ability to create special conditions for asset distribution and many more benefits
None of these benefits are automatically included in a trust. Each potential benefit requires the inclusion of specific language in the design and drafting of the trust. Thoughtful planning and careful drafting is necessary to take advantage of benefits. Partnering with a qualified estate planning attorney is an investment into your (and your heirs) future.
Our firm is here to help you explore many avenues of planning for your future. Each situation is unique, and we take the time to work with you to discover what is best for your circumstance. Estate planning is not a one-size fits all activity. Partnering with our firm places you and your needs as top priority when either applying for emergency Medicaid or crafting trust documents that position you to remain in control of your assets even upon needing Medicaid services.