Medicaid Crisis Planning

Sudden Changes and Big Decisions

Change is life’s only constant. Sometimes these changes strike without warning. If you or a loved one has experienced a sudden illness or serious accident, you understand how abruptly everything can change. Are you or a loved one suddenly in need of long term care, at home or outside the home? Finding and affording quality care on short notice can be stressful and draining. We can help you determine the best options for care and how to qualify for Medicaid to help finance them.

Long-term Care: Counting the Cost

Long-term care is expensive, and these costs only continue to increase as baby boomers age. Although the range varies depending on where you live, according to the American Association for Long-Term Care Insurance, the annual cost of care will double in the next 20 years, increasing from $73,000 to $131,800, and in New Jersey, those costs can be from a low of a few thousand dollars a month to $180,000 per year, or more! With improved medical care, the average life span of adults also is increasing; this translates into more years of care at increasingly higher rates. Without some sort of financial assistance, these costs could be financially devastating. In fact, your entire life savings could be quickly depleted within a few years of needing long-term care. This is where Medicaid can help.

Medicaid is a joint federal and state program to assist those with low income and limited resources. While Medicare provides very limited long-term care coverage, Medicaid is much more extensive. However, because of its restrictions, qualifying for Medicaid can be extremely difficult. But paying for a nursing home without it could be all but impossible.

The Medicaid Maze

Although Medicaid requirements vary from state to state, they all share one common element: complexity. Each state specifies a maximum allowed income for individuals and couples in order to qualify for Medicaid. Also, the applicant’s total assets cannot exceed a specified amount called the Individual Resource Allowance, which is consistently very low, often less than $2,000*. Although certain possessions, like your home and automobile, are “exempted” for purposes of determining Medicaid eligibility, this figure is still alarming. If the applicant is married, the process becomes more complicated. For the recipient to qualify for Medicaid in any state, the applicant’s spouse can keep only half the couple’s assets up to a Maximum Community Spouse Resource Allowance of about $129,000. So, if a couple has about $129,000 in assets, they must “spend down” to all but about $64,500 – $2,000 (or whatever the state Individual Resource Allowance is) for the applicant and about $64,500 for the spouse – on long-term care.

What can you do if the value of your “non-exempt” assets exceeds $129,000 Maximum Community Spouse Resource Allowance? If you give your extra assets away, which seems like an obvious choice, you will encounter greater problems. Violating this “Transfer Penalty Rule” could disqualify you from receiving Medicaid for months or years, depending on how much you gave away.

If your need for nursing home care is immediate, time is not something you can afford to lose. Why? If you wait too long and your non-exempt assets fall below the maximum $129,000 limit, then the applicant’s spouse can only keep half of what is left … with about $26,000* as the Minimum Community Spouse Resource Allowance. In other words, about $64,500 truly is the Maximum Community Spouse Resource Allowance!

While meeting any private pay obligations, and ensuring the health and care of the applicant are not compromised. With our financial and tax backgrounds, we can save significant assets, often more efficiently than involving other professionals, however we CAN work with your trusted advisors. 

This is only a brief and oversimplified review of a few Medicaid rules, of which there are myriad more. Navigating them on your own could be a nightmare at best and subject you to penalties at worst. Fortunately, though, our experienced professionals can guide you through the Medicaid maze. We can advise you throughout the application process, ensuring that you retain the maximum income and total assets allowed by law.

Conclusion

Seek appropriate counsel before you apply for and seek to qualify for Medicaid. We can give you – and your family – peace of mind during a difficult and uncertain time. When dealing with Medicaid, legal advice is something you cannot afford to go without.

* Since these amounts (e.g., the “Community Spouse Resource Allowance,” etc.) are adjusted annually, these numbers may vary slightly depending on when the most recent figures are released. We have used approximate numbers that we do NOT want you to rely upon – these numbers are close to the actual numbers in effect when this article was posted, but this article may not be updated annually, and these numbers can and usually do change. We urge you to consult with a qualified attorney before making a financially devastating mistake.

Surrogate Decision Making

Are you seeking a POWER OF ATTORNEY (POA) for legal/financial transactions? For healthcare decisions?

A Financial Power of Attorney allows you to act as the agent for the principal (the one giving permission). These powerful documents can be subject to abuse, and institutions can often give the recipient a hard time about the validity of the documents.

The Financial POA can take effect immediately, or only when a circumstance occurs, like two doctors required to indicate the individual can not manage his/her own affairs. (That type is called a springing power of attorney).

A Healthcare Power of Attorney allows the agent to make MEDICAL decisions on behalf the the principal in the event he/she is unable to – whether from stroke, dementia, adverse reaction to medication, etc. If you have one of these documents, and it indicates two agents to serve at the same time, you have a poorly drafted document, and the rest of the work done by that attorney should be suspect (we run across this far too often – it is in violation of the statute, and also makes for practical issues when needed).

Though both forms of Powers of Attorney are part of nearly any of our plans, we strive to ask, “WHY do you want a POA?” – if the answer is that a loved one is acting erratically, forgetful, or needs help, that is a sure sign that they need far MORE than a mere legal document, and appropriate planning can save heartache and dollars.

Life Care Plan

With the Life Care Plan, we say “the health drives the law.” Healthy? You may not need a Life Care Plan, and a Legacy Plan or Elder Care Protection Plan may be appropriate. But, if we have immediate or near future health concerns, whether a loved one is being discharged from a hospital stay/rehab, or a new diagnosis, or issues with Activities of Daily Living (ADLs) – we can help with the Life Care Plan – which is an interdisciplinary approach involving Legal, Health, Financial, and Tax (our four pillars) to help promote the health, safety, wellbeing, and quality of life of the elder.

The Activities of Daily Living are generally uniform across the Country, both to determine the need for governmental benefits, but also to trigger benefits from Long Term Care Policies. They include, unassisted, transferring (the ability to get from a bed to a chair, or a chair to sitting up), bathing (the ability to bathe oneself safely which can include personal hygiene of grooming, dental hygiene, nail and hair care), toileting (the ability to get to and use the toilet, use appropriately, and clean oneself), continence (the ability to “hold it in,” – control bladder and bowel function), feeding (the ability to feed oneself, and dressing (the ability to select appropriate cloths and to put the clothes on).

Cognitive impairment can “override” these ADLs – someone can be in relatively good physical shape, but if they don’t have the capability of performing these functions unassisted, then the cognitive impairment can serve as the trigger for governmental or long term care benefits.

As mentioned, the Life Care Plan is holistic. Generally, there is far more work involved in getting the elder to a safe, stable situation. Thereafter, the functions of our office include handling issues when they arise, monitoring the changing situation and needs, and helping keep the elder (and plan) on track. Unlike transactional, or “ala carte” work, the Life Care Plan includes virtually everything that can be done for the elder – whether helping sell a car, arrange for the clean out of a house, or finding good care, and determining the best way to pay for it.

 

Practice Areas

The Activities of Daily Living are generally uniform across the Country, both to determine the need for governmental benefits, but also to trigger benefits from Long Term Care Policies. They include, unassisted, transferring (the ability to get from a bed to a chair, or a chair to sitting up), bathing (the ability to bathe oneself safely which can include personal hygiene of grooming, dental hygiene, nail and hair care), toileting (the ability to get to and use the toilet, use appropriately, and clean oneself), continence (the ability to “hold it in,” – control bladder and bowel function), feeding (the ability to feed oneself, and dressing (the ability to select appropriate cloths and to put the clothes on).