Care Perspectives From Senior Solutions

Medicaid Planning Basics: How to Plan Ahead

Posted by Chris Sides

Apr 3, 2012 8:00:00 AM

medicaid planning basics getting aheadMedicare and Medicaid are sometimes confused; it’s important to understand that these programs are not the same. While Medicare serves all retirees over the age of 65 who paid into the Social Security system for a specified time period, Medicaid is the health program for individuals and families with low incomes and negligible resources. It is means-tested and jointly funded and administered by the states and federal government. Medicaid is the largest U.S. funding source for medical and health-related services for those with limited income.

If you qualify for Medicaid coverage, your benefits include some types of long-term care, home health care services for qualified individuals, and both inpatient and outpatient hospital services. That “if you qualify for Medicaid coverage” phrase is critically important.  Medicaid planning is a strategy used to satisfy financial eligibility requirements. It is basically a legal way to restructure assets and income so that an individual or family can qualify for Medicaid long-term care assistance.

How It Works

Every individual or family’s circumstances are assessed on a case-by-case basis. Though each state varies somewhat in case treatment, there are several common factors taken into consideration:

  • Marital status
  • Home ownership
  • Pension benefits or social security income
  • Assets such as real estate, stocks and bonds, mineral interests, annuities and IRAs
  • Appropriately drafted legal documents such as a will, power of attorney, living wills, trusts or other similar estate and disability planning 
  • Mental competency, i.e. the ability to change documents and handle asset 
  • Family support 
  • Urgency of required care

Based on the above factors, here are some of the legal methods to restructure your existing assets so you qualify for Medicaid assistance. However, do not attempt to do anything without the input and guidance of an experienced attorney who understands Medicaid rules and regulations:

  • Convert assets that Medicaid considers countable to those it considers exempt or 
  • Convert an asset into an income 
  • Transfer assets to other persons in or outside of the 
  • Exercise provisions which allow a client to expand the amount of protected assets beyond statutory limits. This is called resource expansion.

New Eligibility Rules

Determining eligibility can be complicated and again, points to the importance of using an experienced Medicaid attorney. The federal government’s Affordable Care Act of 2010 filled in gaps in coverage for the poorest Americans by creating a minimum Medicaid income eligibility level across the country. Beginning in January 2014, individuals under 65 years of age with income below 133 percent of the federal poverty level (currently determined at $14,500 for an individual and $29,700 for a family of four) will be Medicaid-eligible.
The new law also changes how health care for people on Medicaid is paid for. Since this can vary by state, it is important to check out your state’s Medicaid administrator. In Tennessee,the agency is known as TennCare. InGeorgia, the Georgia Department of Community Health (DCH) is responsible for Medicaid coverage.

Getting Qualified = Getting Advice

Most people initially think that giving away their assets will quickly qualify them, but this in fact can delay benefits. Also, you must keep impeccable records documenting any transfers made and why they were made. If you think you’re eligible, here’s the first step to take: talk to a qualified expert in the field. Help is available so you do not have to spend everything to become Medicaid-eligible.
Tell us about your Medicaid planning experiences: what advice would you offer?

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Topics: public resources, finances, medicaid planning

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