What Is Medicaid Planning?

By David J. Zumpano

Mary recently went into the office of an estate planning attorney who also practices in Medicaid. Her husband recently went into a nursing home and she was approached by the social worker who inquired of her financial information and how she intended to pay for her husband’s care.
It was over $8,000 per month.

The caseworker asked if Mary was going to apply for Medicaid. Mary was very confused. The attorney explained to Mary that Medicaid is a government program to help pay for nursing home costs, but to qualify, Mary had to meet certain income and asset restrictions.

Mary was confused even more. She told the attorney she was already on Medicare and that she didn’t know why she had to do anything, why wasn’t Medicare paying. Again, the attorney explained that Medicare is health insurance for individuals over 65 or who have been disabled for two years. Medicaid, on the other hand, is a social program to pay for people with little assets or income to ensure they have proper health care, including nursing home care. Mary didn’t know what to do. She didn’t think she had the money to pay for her husband’s care, but the attorney explained she wasn’t currently eligible for Medicaid benefits because she had too much money to qualify.

The attorney explained there were two different elements associated with her Medicaid planning. First, the planning itself, which centers around making legal and financial decisions to get Mary’s assets and income to the acceptable limits to qualify for Medicaid. He further explained several legal strategies, including the use of certain types of trusts, that Mary would be able to retain control of her assets but give up some rights to them and able to be able to qualify for Medicaid. Mary again was beginning to get confused. It all sounded so complicated.  of her assets were at risk and how much would be protected immediately. He was also able to explain when Mary’s husband would qualify for Medicaid and how he would ensure Medicaid paid as soon as provided under the law to minimize the loss of Mary’s assets.

Finally, the attorney explained the second requirement to receive Medicaid benefits, the qualification process. A separate qualification process for benefits is required after all ineligibility periods created during the planning process have expired. The attorney explained, if necessary, he could be retained separately to assist in the filing of the application for Medicaid benefits with the local Medicaid department to have Mary’s husband actually begin to receive the benefit. Mary was finally able to distinguish that Medicaid planning to get her husband eligible for Medicaid in the future was different than applying for the benefits from the local Medicaid department. The attorney clarified that this second step may not be necessary if her husband came home from the nursing home or if he did not survive the ineligibility period created under the plan. Mary was relieved to know she had begun a plan to ensure for her husband’s care and protect their lifetime of earnings. Mary also learned that Medicaid planning is always better if you plan in advance, but, even if you wait until tragedy strikes, there are still options.

David J. Zumpano is an attorney and a certified public accountant (CPA). He operates Estate Planning Law Center. He can be reached at 315-793-3622.

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