Medicaid Crisis Plans for Long Term Care Costs

Medicaid Crisis Plans for Long Term Care Costs
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In general, estate planning is a practice that requires forward thinking. However, sometimes estate planning must occur amid a crisis.

The situation to the estate planning or elder law attorney is known as “crisis planning.” It almost always involves two things happening simultaneously: the immediate need for additional healthcare and 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 to allow another person to act on their behalf? The documents include a financial power of attorney and healthcare power of attorney.

Powers of Attorney need to be checked to 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 to provide 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 The actual evidence of income will show taxes withdrawn or other deductions taken from income, such as health insurance.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, deeds, and titles for property. Proof of other assets must also be included, including insurance policies, burial plot deeds, and other assets.

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 must 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 breaks down what will be counted against the applicant.

The remaining amount 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 total 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 or elder law attorney and providing documentation as quickly as possible, health care needs can be met without the healthy spouse being impoverished.

Reference: The News-Enterprise (July 23, 2022) “Crisis planning for couples focuses on asset protection.”