Medicaid planning is the process of arranging a person’s finances to align them with the Medicaid rules.
The principal goal of Medicaid planning is to get the maximum amount of benefits available under the law for the lowest cost possible.
To achieve Medicaid planning objectives, techniques are used to achieve Medicaid planning similar to how a CPA uses available deductions and credits to get your tax bill lower. Nobody should have to pay more to the tax man than the government actually requires, and nobody should have to pay more for long-term care than the government actually requires.
But like with the tax code, the Medicaid rules are voluminous complicated, and often difficult to understand. Unlike Medicare where you automatically become eligible when you turn 65, Medicaid requires you to be asset and income eligible requirements. The process of meeting the requirements is known as the “Medicaid spend down.”
There are a lot of ways to accomplish the spend down, but the most expensive is paying full price for the nursing home until you go broke. Most people would prefer to avoid that scenario, yet because of the complicated nature of the rules they feel they have no other choice.
You do have a choice.
Our Medicaid planning team can give you all of the proven techniques developed according to Medicaid rules to help you shift your available resources from what must be spent down to what can be protected.
There are two different styles of planning depending on your circumstances:
- Single Patient – An unmarried patient has the most restrict Medicaid spend-down limits. Most states require the patient to spend down available resources to the paltry sum of $2,000. Some states, like Ohio, go even lower than that. Because there is no community spouse available to shift resources to, a single patient is left with fewer options.
- Married Patient – A married patient is given a little more latitude if there is a healthy spouse living in the community. The healthy spouse is referred to as the “community spouse” and Medicaid provides for a resource limit based upon all assets owned by both spouses. The maximum Community Spouse Resource Allowance is the total the community spouse can keep and still qualify the institutional spouse for Medicaid. For 2012, the maximum CSRA is $113,640. But that doesn’t mean that’s how much you can keep. Each state uses a special formula — usually letting you only keep half of the total available assets as part of the CSRA. They use the value of assets on the date the spouse enters the nursing home as the “snapshot date” to determine the total amount of assets that must be spent down.
Often, assets can be converted to income instead of directly spent on the cost of care. That’s where the use of Medicaid compliant annuities and certain protective trusts come into play.