What is Medicaid?
Medicaid is a word that generates many responses, perhaps because it is a collection of programs intended to address a multitude of different circumstances. Medicaid is also a term that is accompanied by misconceptions, misunderstanding and general confusion, perhaps because it is a complex tangle of federal rules and regulations which are then subject to interpretation and implementation by each state in its own fashion.
However, when continued home care for your spouse or other loved one is no longer reasonably possible or a health crisis requires immediate long term care then, while overwhelmed by the circumstance and terrified by the financial consequence of anticipated future monthly expenses, Medicaid becomes an invaluable resource. Currently the monthly cost for care at a skilled nursing facility in Volusia County ranges from $8,000 to $10,000. After Medicaid approval, the Applicant’s monthly cost for care is equivalent to the Applicant’s gross monthly income from all sources less the allowed retention of $105.00. The monetary motivation is evident.
Contrary to popular misunderstanding…
The Medicaid program pertaining to long term care is not a poverty program. Although the Applicant’s Countable Assets must be less than $2,000 at time of eligibility, the Applicant may, among other things, own a house, a car (a second vehicle if more than 7 years old) and have a retirement account (like an IRA, etc.) of any amount if over 70½ years of age. And the Applicant’s spouse can have all that plus other Countable Assets of nearly $124,000. For a married couple compliance with Medicaid rules can preserve the financial independence of the non-Applicant spouse. For a single person the rules, at the very least, permit something other than a legacy of unpaid bills and funeral expenses.
Anyone requiring long term care, regardless of their current assets, will ultimately meet the financial criteria for Medicaid eligibility as a result of one of two courses of action. Because Medicaid options are not known or because individuals are lost in their crisis, the most common and popular choice is to do nothing other than pay care costs from all funds available, then liquidate other assets and perhaps secure a second mortgage or equity loan to continue payments until all assets have been devoured and no funds remain. However, a second course of action is available. The other choice is to do something; to plan and take permissible actions to preserve and protect assets as allowed by the rules.
A Complex Labyrinth…
Medicaid is all about rules, rules within rules, exceptions to rules and rules that sometimes seem to contradict other rules and at all times contradict our notion of common sense. It is not important to know all the rules and it is not important if you like the rules, find them fair or unfair, just or unjust, reasonable or unreasonable. But, it is important to abide by the rules. It’s always good to know the rules that will be helpful and what you can do. And it’s also important to know the rules that will hurt you (cause ineligibility) and what you must not do.
The process of obtaining Medicaid eligibility should not begin with the filing of an application. In fact, that is the most common and most dangerous mistake. Rule #1, never submit an application for Medicaid unless and until you know that all requirements have been met. A premature application, an application that does not meet all Medicaid criteria, will be denied and will unnecessarily delay eligibility, and the reduced payment amount, for several months.
…Needs a guide
The process of obtaining Medicaid eligibility should begin with engaging a guide, an attorney familiar with and accustomed to navigating the terrain. Understanding Medicaid is never a reasonable goal, but you need a proper introduction at the outset. The next step and often the most tedious and time consuming step is the collection of information relating to both Applicant and spouse, if any. The information includes personal information and identification, confirmation of all income sources, disclosure of all assets, and disclosure of any and all transfers (disposition of assets, including gifts, within the preceding 5 year “LookBack Period”). Once all information has been collected then all items can be examined, discussed and a course of action considered. Rule #2, do not take any action unless it is part of a comprehensive plan for Medicaid eligibility and until you fully understand all consequences of the action. Examination will identify Countable Assets and distinguish those which are not. Once all actions have been agreed upon, and then taken, you ultimately arrive at the snapshot moment. “Hold it right there, that’s perfect!” Now, and only now, it is time to prepare and file the Application.
It has been our privilege to assist many families in the midst of crisis and successfully guide them through the Medicaid maze to eligibility. My first goal of many goals is to gain trust, restore peace in the midst of chaos and then introduce a simple series of steps needed. Securing Medicaid eligibility is another goal, but it is not the only other goal. Securing eligibility must be followed by understandable instructions regarding the actions necessary to maintain eligibility in the months to follow. Yet another goal is to consider and address “end of the day” issues. Upon the Applicant’s death, Medicaid will recover reimbursement from the Applicant’s probate estate unless appropriate planning steps have been take. That’s another goal. Likewise, if a married Applicant’s spouse predeceases the Applicant with the usual “all to my surviving spouse” estate plan then, in the absence of a better plan, eligibility will be lost. Yet another goal. Comprehensive Medicaid planning must incorporate and accomplish all of these goals by addressing each piece of the puzzle.
Is there a Durable Power of Attorney?
Medicaid planning is all about the details. The first detail is a careful evaluation of any existing Durable Power of Attorney. A current, comprehensive, medicaid sensitive Durable Power of Attorney is the most important, foundational tool, needed to protect and preserve assets in the event of future disability. Powers of Attorney are not created equal. If in the future the intended Applicant is unable to make decisions or sign documents, the instructions and authorities found in his or her Durable Power of Attorney will determine the extent of actions which the designated Agent may take on his or her behalf. If you already have a Durable Power of Attorney, I urge that you have it reviewed and evaluated today. Do it now, because later is too often too late.