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.