Well, the How? is easy: you hire me. The When? is the point at which you need long-term care, as you can’t apply for Medicaid before that point. In Arkansas, we do have Medicaid for home-based care, plus some limited Medicaid for assisted living, and then, of course, all states have Medicaid for nursing home care.
Let’s say your mom falls and breaks her hip; due to complications, she has to be moved into a nursing home for rehab and long-term care. That’s when you apply for care. Or perhaps, she’s able to return home but will need some regular assistance—she could apply for home Medicaid assistance at that time.
We will handle the Medicaid application for you. Medicaid is a government program; it’s riddled with rules and regulations in red tape. It’s not recommended to treat your Medicaid application like a DIY project because what you don’t know will hurt you and will affect your ability to get Medicaid for a loved one. I make my living by helping people get through the system. I can’t tell you how many times people haven’t been able to get on Medicaid without some professional assistance because the red tape is not friendly and the government agencies are not sympathetic. While it’s technically optional to get a lawyer to help, it’s certainly advisable in most circumstances.
What Are the Qualifying Factors for Medicaid?
There is a multitude of factors. But I’ll try to put the qualifying criteria as simply as possible. In most circumstances, you can have no more than $2,000 in countable resources, excluding a home, a car, and personal belongings. You need to require assistance in two activities of daily living, or a protective environment due to dementia. As you can see, the criteria include something medical along with financial. In Arkansas, as long as you don’t have more than about $6,000 in monthly income, you can also still qualify in most cases. There’s really not an income limit per se, depending on what you’re spending for care, but there is a resource limit, which excludes the house and so forth.
Now, there is an exception for married couples. If you have one family member who’s living at home, say the wife, and the husband is in a nursing home, the husband can transfer his assets to his spouse in order to reduce his countable resources to $2,000, while the wife can have more than $2,000. This is getting a bit more complicated, but just know that there are ways to get a married spouse on Medicaid and still preserve as much as 100% of the family assets. A lot of people don’t realize that. Again, that’s where Medicaid has a lot of rules and exceptions, and if you know the rules, you can take advantage of them. If you don’t know the rules, most family members would just pay the nursing home until they’re broke. We show people there are better ways to do this than to go broke paying the nursing home.
Now, let’s look at a single person who doesn’t have the luxury of transferring assets to a well spouse. Even a single person can make gifts to family members even after admission to a nursing home so they don’t have to spend 100% of their money. Typically, the rule of thumb is you can give about half of your resources to family instead of paying them to the nursing home. You still have to get them down to $2,000, but part of the way to getting them there is by making gifts of their resources to family members. “Spend down” has become our catch phrase that we tell people when explaining the benefits of “gifting” to get them down to $2,000. You can benefit your children by giving money to them, and that’s allowed under Medicaid if you know how to do that process. So, again, this is not a DIY scenario; you need an attorney to help you meet the qualifications while preserving assets and not having to spend 100% of your resources.
What Trusts Are Useful When It Comes to Medicaid Planning?
I can tell you that revocable living trusts are not useful at all. They provide no planning for Medicaid. Most people come to me and say, “Oh, I’ve got a trust,” and I say, “Great! Let’s take a look at it.” With nine out of ten clients, I have to inform them that their trust is worthless for asset protection and Medicaid. They were probably sold that trust by a previous lawyer who told them it would help them avoid probate, but it doesn’t do any good for long-term care or Medicaid planning, meaning we have to start over.
The only trusts that are useful for Medicaid are those designed under the Medicaid rules to be irrevocable so that the person applying for Medicaid does not have direct access to the principal in the trust. In my practice, I call them a Medicaid asset protection trust is the way to go. Now, we have all kinds of bells and whistles in those trusts that give some flexibility to the recipient and the recipient’s family about how to manage that money so that they’re not necessarily locked up without any decision-making of those assets.