The term Medicaid planning encompasses a wide variety of services provided by an equally wide variety of professionals and volunteers. A general definition of Medicaid planning is any assistance provided to a potential Medicaid applicant in advance of and in preparation for their Medicaid application. Medicaid planning can be as simple as assistance with the collection and preparation of documents or as complicated as a complete re-structuring of one’s financial assets.
Much of the complexity associated with Medicaid planning occurs when individual’s monthly income or resources are near, or over, the financial eligibility limits. Incomes can be converted into Qualified Income Trusts or Miller trusts and resources in excess can be converted into non-countable assets. However, these transactions require legal and / or financial expertise. For example, not all states allow seniors to convert their excess income into pooled income trusts, and in those states, doing so may result in Medicaid ineligibility. One other major complicating factor is when one spouse requires long-term care and the other can live independently. How are their incomes and assets divided? This is a challenge many Medicaid planners strive to overcome.
Why Engage in Medicaid Planning?
In short, families engage in Medicaid planning to ensure the best possibility of acceptance into the Medicaid program. However, the motivations behind this simple answer are diverse and complicated. A sampling of reasons follows as to why one would engage in Medicaid planning.
How Much Does Medicaid Planning Cost?
The cost of getting assistance for Medicaid planning ranges from free to as much as $5,000, or even $10,000, in some areas of the United States. The cost associated with planning is typically related to the amount of income and assets an individual has and other complicating factors, such as marital status, home ownership, life insurance, and what veterans’ benefits they may be receiving. Another variable in cost is the type of service provider; elderlaw attorneys may charge more for the service than specialized Medicaid planners who are not attorneys.
Why One Should Plan in Advance?
One might think that if they, or a loved one, are healthy that there is no reason to move forward with contacting a Medicaid planner. However, even if one does not foresee a need for Medicaid in the near future, advance preparation is key. In fact, the best time to start preparing for long-term care needs is before an actual need arises.
Without advance preparation, many families end up paying out-of-pocket for nursing home costs, or other long-term care costs, until their assets run out. Thus, qualifying them for Medicaid. That being said, if one plans in advance, there are many notable planning opportunities in which Medicaid planners can assist. Advance preparation is the best action to help protect one’s assets, while still being able to qualify for Medicaid when the need arises.
Is Medicaid Planning Legal? Ethical?
Yes, Medicaid Planning is legal. In some states, there are laws that limit who can provide legal advice on Medicaid Planning, but in no states are there any laws about families engaging in Medicaid Planning to qualify a loved one for their state’s Medicaid program. The ethical question is more complex and many attorneys, educators and politicians have expressed opinions on the subject including the New York Times. It is not our position to express an opinion on this subject. The creators of this website feel it is a decision each family needs to make for themselves in the context of their financial situation and their loved one’s need for care.
American Council on Aging - Last updated: January 16, 2019
Medicaid eligibility is very complex; the rules change frequently, they differ in each state, they differ by program within each state, the application is time consuming and the review process lengthy. The consequences of being denied by Medicaid are severe and can negatively impact the comfort, happiness and even the health of the individual applying and their entire family.
Many people simply do not want to face this issue or somehow have faith that they will avoid needing such care when they get older. According to the U.S. Department of Health and Human Services, “Someone turning age 65 today has almost a 70 percent chance of needing some type of long-term care services and supports in their remaining years.”
By David Cutner
Long-term care in the United States is overwhelmingly provided by unpaid caregivers; researchers estimate the value of this unpaid caregiving at well over $450 billion per year. By contrast, paid caregiving costs the public and private sectors about $219.9 billion, more than a quarter of which is paid out-of-pocket by individuals and their families. Nursing home care costs more than $81,000 per year on average, with 36% of that paid out-of-pocket by individuals and their families. It is in this context that families needing long-term care services engage in financial planning to pay for those services. The Medicaid aspect of that planning has given rise to a number of myths.
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