What is Medicaid planning?
Medicaid planning is a form of estate planning focused on helping a disabled person or senior pay for long-term care. Through the Medicaid planning process, an applicant can get help with each stage of the application process and avoid common mistakes. There is no singular way for someone to get this help. Medicaid planning can be simple as only including aid with the application or as complex as attempting to re-structure an applicant’s assets so that they meet the resource limits imposed by the program. Here, we give an overview of Medicaid planning, how you can get Medicaid planning assistance, and some common strategies that people use.
Why should I participate in Medicaid planning?
Applicants and families generally participate in Medicaid planning because it helps them avoid mistakes that would cause the applicant to be ineligible for coverage. It is easy to be ineligible or become ineligible for the Medicaid program. Spending time preparing for the application process can increase an applicant’s chances of receiving Medicaid acceptance.
It’s wise to prepare early for Medicaid enrollment. Getting long-term care before the need arises is important because it gives you and your family more time to work out any issues preventing you from qualifying for Medicaid coverage.
Some reasons to engage in Medicaid planning include:
- Avoid simple errors that would make you ineligible for Medicaid coverage.
- Protect family assets (including the family home) from the Medicaid Estate Recovery Program.
- Ensure assets remain in your estate so your children can inherit the property you leave for them.
- Help pay for long-term care and ensure access to the medical and home- and community-based services you need.
How much does Medicaid planning cost?
The cost of Medicaid planning depends on the assistance you receive. Below is a list of professionals that can help you plan for applying for Medicaid coverage, and their fees range from free to several thousand dollars. You can also attempt to apply for coverage on your own, but without the experience of a trained professional, you may be vulnerable to losing Medicaid eligibility.
Where can I get professional Medicaid planning assistance?
Applying for Medicaid coverage can get complicated. A single wrong step can cause your application to be denied. You may benefit from the experience of a knowledgeable professional to assist you during the application process. Here are some types of professionals you can attain to get competent help as you apply for Medicaid.
Elder law attorney
An elder law attorney is a licensed attorney representing seniors with end-of-life legal matters. The attorney you choose should also have experience in Medicaid planning. All elder law attorneys help seniors with end-of-life legal matters, but not every attorney has expertise in Medicaid planning, so it’s important to find the right one.
Public benefits case manager
Public benefits case managers work for the state. They may be an economic choice because they generally do not charge for their services (because the state employs them), and they have extensive knowledge of the Medicaid system. They may help you avoid becoming ineligible for coverage.
Community-based Medicaid planning professional
These professionals help Medicaid applicants with assets that exceed the resource limit set by the agency. The downside of using their services is they are compensated through commissions earned if you buy a Medicaid annuity. Their paychecks depend on you purchasing an annuity, so you should be cautious about choosing the right one.
Your insurance provider may be able to help you navigate the Medicaid application process. In the same way as community-based Medicaid planners, you should know the agent’s motive to sell you a product. The insurance agent is loyal to the insurance company, and their focus is on profit. The company earns money by selling its customers’ insurance policies. You may learn valuable information about protecting your assets, but do not be surprised if the insurance agent attempts to sell you a policy.
If you have a financial planner, speak to them candidly about your desire to apply for Medicaid coverage. Ask them if they have experience or a specialty in elder care. These professionals usually have a wide range of skills to help protect your assets as you transition through different stages in life.
State health insurance program counselor
The state trains these professionals to provide unbiased advice to seniors and other Medicaid applicants. State counselors are typically experienced in working with applicants for state public benefits. They do not charge for their services.
Medicaid planning strategies
There are some strategies you and your family can use to put yourself in the best position to get Medicaid coverage while protecting your property. You should speak to one of the above professionals to protect your assets, home, and income.
Medicaid spend-down is the process of a Medicaid applicant depleting their assets to become financially eligible for benefits. Medicaid spend-down works by the applicant gifting or selling their assets for fair market value to reduce their resources so they fall under the asset limit set by the program. An applicant can spend-down by paying off credit card debt, paying off their mortgage, and buying medical equipment not covered by insurance, among others. Spend-down acts as asset protection because it is an appropriate way for applicants to move their assets to ensure they remain or become qualified to receive coverage.
Medicaid counts income as assets for resource calculation. Your application may be denied if your income exceeds the resource limit or if your income combined with other assets puts you over the asset limit. A qualified Medicaid planning professional can help you create a Miller Trust or find ways to spend your extra income so your resources fall under the limit.
Many applicants are unaware of the risk to their homeownership after receiving Medicaid benefits. Medicaid is repaid for the assistance it provides during a beneficiary’s lifetime. After their death, Medicaid has the right to pursue the beneficiary’s estate, including their home, to collect the money spent on their care. You can protect your interests in your home through trusts, child caretaker exceptions, and sibling exceptions.
Penalties for abusing Medicaid planning laws
Medicaid fraud and abuse are illegal in every state. Keeping Medicaid planning services free of fraud and abuse is important since the funds used are federal and limited to those in need. Committing Medicaid fraud is a felony in most states. Punishment may vary based on the facts of the offense and the state where the defendant is charged and convicted. Penalties for Medicaid fraud and abuse may include
- Jail or prison time
- Civil penalties
If you have questions about applying for Medicaid benefits and avoiding pitfalls that may cause you to become ineligible for coverage or land you in legal trouble, contact a professional in your area.