February 25, 2016

As you settle into retirement and look ahead to the future, it’s a good idea to plan for your long-term care needs. Healthcare can be a tremendous expense as you age, and planning can make the difference between spending your golden years in comfort or stressed about how to pay for long-term care costs.

For some, long-term care insurance can provide the peace of mind that you’ll be taken care of when the time comes. For others, long-term care planning means applying for Medicaid benefits. Understanding your options and what you qualify for based on your income and assets is an important — and often complex — process. 

What is Medicaid?

Medicaid is a financial assistance program designed to help cover health care costs for individuals with limited income and resources. Medicaid covers most medical expenses, although occasionally a small co-payment is required. As a joint federal and state initiative, Medicaid is administered by state and local governments, leading to variations in rules and requirements across different states.

What is Medicaid Planning?

As long-term care costs continue to rise, planning for the future is more important than ever. Medicaid planning is a legal way of protecting your assets while still ensuring you qualify for Medicaid when you need it. 

Keep in mind that Medicaid subsidizes the costs of nursing home care, but generally only after your resources have been depleted. On top of that, the income limits and criteria for Medicaid changes annually. An effective Medicaid planning strategy will help you understand the intricacies of eligibility and how to be prepared.

What Counts as Income for Medicaid Planning?

Almost all assets and income sources are taken into consideration when determining your eligibility for Medicaid. But because it is a federal program administered by state governments, the rules vary slightly from state to state. 

Income sources include the gross amount of almost any income including employment wages, alimony payments, Social Security income, IRA withdrawals, stock dividends, or pension payments. Similarly, countable resources include cash, stocks, bonds, bank accounts, and certain real estate. 

Some examples of assets that won’t count against your eligibility, referred to as non-countable resources, for Medicaid include personal belongings, a single vehicle, income producing property, and household furnishings. 

Finally, Indiana has a 5-year look-back period that applies from the day you apply for Medicaid through the preceding 5 years. Any non-exempt asset transfers you’ve made in the 5 years prior to your application will incur a transfer penalty. In 2024, for every $7,635 of non-exempt transfers within the look back period results in one month of Medicaid ineligibility. However, Indiana allows you to gift up to $1,200 per year to family members or nonprofit organizations without incurring a transfer penalty period.

The Role of a Medicaid Planning Attorney

While Medicaid planning attorneys assist with the Medicaid application process, there is far more involved with planning your overall estate and helping you protect assets for your family members.

When helping a client with Medicaid planning, an elder law attorney’s responsibilities often include:

• Advising the client on Medicaid’s eligibility requirements
• Advising how to attain eligibility in a manner most advantageous to the client by meeting his or her personal and financial objectives
• Assisting in obtaining Medicaid benefits
• Defending the client against erroneous denials or miscalculation of benefits

A Medicaid planning lawyer’s scope of representation will differ on a case-by-case basis, tailored to fit the needs of each individual client and their family members.

How Our Medicaid Planning Attorneys Can Help

The services offered by financial planners, certified professional accounts, and others certainly can be beneficial to an elderly client who is considering applying for Medicaid; however, such professionals are rarely able to advise their clients as to the unintended legal effects of their Medicaid planning strategy.

When engaged in Medicaid planning, it is essential that clients understand the legal implications of a will, trusts, durable power of attorney, guardianships, and other agreements. If the appropriate considerations are not given to a client’s estate planning documents, it could cost the client or even his or her spouse thousands of dollars. Nothing can substitute the sound legal advice and Medicaid planning assistance that an elder law attorney can provide.

Representation by an elder law attorney is also highly recommended in the event of an erroneous denial or miscalculation of benefits. In such a case, an applicant has only a small window of time in which to preserve his or her right of appeal to the administrative law judge or to a state court. Elder law attorneys, by virtue of their training and experience, have a distinct advantage when representing and defending a client on appeal and offer the best opportunity for a favorable determination.

If you would like to speak to an elder law or Medicaid planning attorney about Medicaid eligibility or how to apply for Medicaid benefits, contact Abigayle Hensley or Kyle Cray at 765-742-9066.

Disclaimer: The content of this blog is intended to be general and informational in nature. It is advertising material and is not intended to be, nor is it, legal advice to or for any particular person, case, or circumstance. Each situation is different, and you should consult an attorney if you have any questions about your situation.