An Introduction to Medicaid Planning
Medicaid Planning ensures that family assets are used to supplement state and federal benefits by providing planning techniques that won’t jeopardize government benefits or entitlements.
Medicaid planning is very complex, with complicated laws and exceptions, difficult calculations, and the potential for substantial changes in the law, especially in Illinois. Illinois has recently taken steps to implement the new Medicaid rules under the Federal Deficit Reduction Act of 2005 (DRA). On May 10, 2011 the Joint Committee on Administrative Rules (JCAR) met and unanimously voted to prohibit the rules. JCAR determined that the provisions as proposed by the Illinois Department of Healthcare and Family Services (DHFS) constituted a threat to the public interest and welfare of the citizens of Illinois. We will continue to monitor ongoing developments related to the implementation of DRA in Illinois and update our website as more information becomes available.
It is imperative you seek expert assistance to protect your assets and get you qualified for Medicaid benefits as soon as possible. An attorney with proven experience with the Medicaid rules and regulations can be of a great value to you and your loved ones. You must be careful not to apply for Medicaid without knowing whether you legally qualify, because you may delay qualification. An experienced Elder Law attorney can identify when you qualify, and determine the best time to submit the application to receive the greatest amount of asset protection and Medicaid benefits.
An experienced Elder Law attorney can help you with Medicaid Preplanning while you and your loved ones are healthy, to protect you and your loved ones in the event of disability. An attorney with knowledge of the current Medicaid rules will be able to ensure that your estate plan takes into account the possibility that you or your loved one may need to apply for Medicaid benefits in the future.
If you do not have a plan in place and you or your loved one is currently facing the difficulties of dealing with disability or long-term care, an Elder Law attorney can still be a great help to you and your family. It is never too late to begin Medicaid planning! Even if you or your loved one is already in a nursing home or about to enter one, you can still act to save assets and qualify for Medicaid.
The Myths and the Facts of Medicaid Planning
MYTH #1- Medicaid Can Take Your Home
Medicaid cannot take your home. If you’re married and you or your spouse needs to go into a nursing home, your home is exempt and cannot be taken when applying for Medicaid. Married people need to be careful in their planning, because if one spouse dies, your home may become available under estate recovery rules if proper planning was not put in place. If you are unmarried or widowed and go into a nursing home, your house may be exempt if you can establish your “intent to return home.” Like much of the Medicaid law, rules regarding the home can be complex, so it is a good idea to contact an experienced attorney to help you protect your home. For example, transferring the home to the children may result in immediate ineligibility for Medicaid, and it could also trigger a gift tax and result in your child’s spouse (the in-laws) inheriting your home. Attorney Leasa J. Baugher can advise you on how to carefully protect the value of your assets as well as ensure that they go to the people you love.
MYTH #2- You Must Give Away Your Assets to Protect Them
You don’t have to give away your assets to protect them. Medicaid law provides specific rules for determining the amount (if any) you may be asked to contribute to the cost of nursing home care for your spouse. While it may be necessary to legally protect some portion of your assets, there is no reason to give them away. Giving away your assets means losing control. It’s not safe even if you trust to whom it is given. If that person divorces, goes bankrupt, or is sued, all of the money you transferred is at risk. Also, giving away your assets can create unforeseen penalties under Medicaid laws for years. Assets in a Revocable Living Trust are not protected from Medicaid. There are Medicaid Asset Protection Trusts (MAPT) that permit you to keep 100% control of your assets without the risk of losing them if nursing home care is needed. We can help you retain control over your assets, now and in the future, without your assets being at risk to Medicaid.
MYTH#3- If You Give Assets Away, You Must Wait 36 (or 60) Months to Qualify for Medicaid
This is a common misunderstanding that confuses Medicaid’s look back period with the transfer penalty period. When you apply for Medicaid, you need to show every financial transaction you have made for the previous 36 months. In the case of transfers to or from trusts, you need to show every transaction for the previous 60 months. This is merely the time period that the Illinois Department of Human Services (DHS) will review during the application process. Certain transfers within that time period may result in a transfer penalty period, but depending on the transfer, you may still immediately qualify for Medicaid. Be careful, because applying for Medicaid prior to qualification could result in being disqualified for a longer period of time. We can determine the best time for you to apply for Medicaid.
Medicare and Medicaid Facts
Medicare is a health-care benefit provided by the federal government to individuals over age 65, or under age 65 and disabled. Medicare covers doctor visits, tests, and care provided in a hospital and limited benefits in a nursing home. Medicare will only pay for up to 100 days in a nursing home, depending on the Medicare coverage and the individual’s recovery.
Medicaid is health insurance for the poor. To qualify, you must not exceed certain income and asset limits. If your income or assets exceed the qualifying limits, you will not be eligible. Proper planning can ensure that you qualify while still protecting a significant portion of your assets.
To qualify for Medicare, you must be over 65, and eligible for Social Security benefits. You may also qualify if you are under age 65 and disabled for two years. An application at the Social Security office will get your benefits started.
To qualify for Medicaid, you must submit a multiple page application and provide detailed proof of all your financial transactions (banking, CD’s, stocks, bonds, income, expenses, annuities, etc.) for the previous 36 months. We will help guide you through the preparation of your financial transactions for submission to Medicaid, and communicate on your behalf to clarify any transactions. A clear presentation of financial transactions is important to qualify for Medicaid benefits. Nursing Home Costs Nursing home costs in the Chicago area are around $5,000 to $10,000 per month, depending on the level of care needed. This monthly cost of care can deplete your assets quickly.
The laws around Medicaid qualification are extensive, and there are many exceptions and traps for the unwary. Often, hospitals and nursing homes will offer to do this for you at no cost. Be careful, because they do not represent you, but the institution for which they work. Even with the best intentions, they often do not have the legal knowledge necessary to determine whether or not your qualification is accurate. This is where a legal professional can really be of value, and often times, be able to get you benefits much sooner and save you a larger portion of your assets.