Medicaid will pay for long term care costs. To the estate planning attorney, the situation is known as “crisis planning.” It almost always involves two things happening at once: the immediate need for additional healthcare and for a family’s assets to be protected. The end goal of crisis planning is to protect assets for both spouses, while ensuring that the sick spouse receives the care they need, as explained in the article “Crisis planning for couples focuses on asset protection” from The News-Enterprise.
What is Medicaid Crisis Planning?
Crisis planning for married couples requires a three-step process. First, does the spouse in crisis have the documents in place to allow another person to act on their behalf? This includes a financial power of attorney and a healthcare power of attorney.
Powers of Attorney need to be checked to ensure that they include specific powers needed to take action on the person’s behalf. These documents are “state specific,” meaning each state has laws determining what the POA must contain and how it must be prepared. Crisis planning requires a POA providing a broad set of powers, so agents can access and change documents like deeds, bank and investment accounts.
Once the documents and POAs are in hand, the next step is to get a detailed breakdown of the couple’s financial position and the cost of care. This becomes easier if the couple is organized and has information readily available for each income stream and asset.
What Information Will the Agent Need?
The agent must find several different types of financial documents. Proof of income for each income stream is needed. The actual proof of income will show taxes withdrawn or other deductions taken from income, such as health insurance.
The agent will also need access to several months of statements for each account, including bank statements, investment accounts, retirement accounts and deeds and titles for property. Proof of other assets, including insurance policies, burial plot deeds and other assets must also be included.
Some types of income and assets are countable, and some are non-countable. However, the non-countable income and assets may need to be considered, so the estate planning attorney will need to have all the information.
Medicaid Resource Assessment Request
Step three is to determine eligibility for programs and make the necessary applications. This will depend on the type of care needed. However, a typical crisis case is for nursing home care, which almost always means Medicaid eligibility. All income and assets are reported to Medicaid through a Resource Assessment request. The Medicaid office creates a breakdown of what will be counted against the applicant.
The remaining amount is what must be “spent down” for a person to be eligible for Medicaid coverage.
The most common way to do this is through a Medicaid Annuity. This annuity takes the spend down amount and returns the full amount as income to the spouse at home, effectively preserving the couple’s assets.
Crisis planning is stressful but does not have to be hopeless. By working with an experienced estate planning attorney and providing documentation as quickly as possible, health care needs can be met without the well spouse being impoverished.
To discuss how Medicaid will pay for long term care costs, book a call with the Law Firm of Benjamin D. Eckman with offices in the Wayne, Union and Hackensack.
Reference: The News-Enterprise (July 23, 2022) “Crisis planning for couples focuses on asset protection”
