WE CAN ASSIST WITH YOUR QUALIFICATION FOR MEDICAID
MEDICAID MYTHS #1
Nursing homes typically tell you that you need to have under $2,000 in total assets to qualify for nursing home Medicaid.
This is NOT TRUE!
MEDICAID MYTH #2
Don’t make the mistake of thinking you’re too rich for Medicaid coverage. You don’t have to spend all of your money to qualify.
Find Out More!
MEDICAID MYTH #3
Short-term plans can easily become a long-term reality. It is NOT too late to qualify for nursing home Medicaid.
12 Medicaid Mistakes to Avoid
Medicaid is the public benefits program that is funded from both federal and state dollars. Each state’s Medicaid programs are similar, but their rules are different across the state lines. This is one reason it is important to speak to a local elder law attorney who knows the Michigan Medicaid laws. Call the attorneys at Axis Estate Planning if have questions about benefits for yourself or a loved one in Troy and its surrounding cities.
The reality of long-term care becomes more and more realistic as you, your spouse or elderly loved ones age. The price of long-term care at a nursing home, assisted or independent living facility, or care in your own home can escalate quickly, leaving many Michigan families in a bad financial situation. Michigan Medicaid may provide long-term care benefits that can be helpful, but the eligibility rules and application process are complex and difficult to navigate without knowledgeable attorneys. With a legal consultation from the Elder Law Attorneys from Axis Estate Planning, you can learn about program options and how to get the Michigan Medicaid help you need.
The reality of long-term care becomes more and more realistic as you, your spouse or elderly loved ones age. The price of long-term care at a nursing home, assisted or independent living facility, or care in your own home can escalate quickly, leaving many Michigan families in a bad financial situation. Michigan Medicaid may provide long-term care benefits that can be helpful, but the eligibility rules and application process are complex and difficult to navigate without an Elder Law Attorney experienced in Michigan Medicaid. With a legal consultation from the attorneys from Axis Estate Planning, you can learn about program options and how to get the help you need.
Throughout Michigan, Medicaid applicants must match strict medical and financial qualifications to receive Medicaid benefits. The Elder Law Attorneys at Axis Estate Planning can show you options and prepare for the application process with a personalized consultation.
If you are searching for legal representation or have questions about Medicaid planning, contact Axis Estate Planning at (248) 251-1001 or reach out to us on our contact form.
FAQs About Planning For Medicaid Eligibility
Nursing homes have become very expensive as of late. A stay in a nursing home has become so expensive that many Americans wouldn’t be able to pay out of pocket for it. So, they turn to either Medicare or Medicaid. Medicare is a bit more difficult to qualify for when it comes to nursing home care coverage, so the route that makes sense is qualifying for Medicaid. However, there are still qualifications you have to meet for this Medicaid coverage. We at Axis Estate Planning want to help you qualify for Medicaid by starting your planning today. Take a look through these frequently asked questions about Medicaid qualifications to get an idea of what you need to plan for.
Medicaid is generally the easier one for most people to be eligible for. It’s based on your income and assets, so if you plan ahead you can move around money and assets to meet the requirements for nursing home coverage.
Medicare is more strict about when they cover nursing home costs, and it only covers a maximum amount of 100 days in a nursing home. There are some specific qualifications related to your care and the money you spend on it. To begin, the patient must be over 65 and have been in the hospital for at least 3 days. After that, the patient must be admitted to a Skilled Nursing Facility, where Medicare will cover the first 20 days of care. Then, you can get the remaining 80 days of care covered once you’ve paid your copayment, assuming that these three requirements are also met:
- You are admitted to the Skilled Nursing Facility within 30 days of your hospitalization.
- You are receiving skilled care, not only custodial care, for the same reason you went to the hospital.
- A doctor must order this as necessary care.
To be eligible for Medicaid coverage, you need to have countable assets lower in total than $2,000. These countable assets include both income and property, but there are exceptions. In terms of income, anything money you receive from pensions, employment, alimony, Social Security Income, Social Security Disability, stock dividends, or IRA withdrawals are counted. In terms of assets, any real estate that you don’t permanently live in, investments, credit union, IRAs, stocks, cash, bonds, checking and saving accounts are counted in your total assets. Anything that is not listed there will not count in your Medicaid eligibility.
All of the patients income needs to go toward the nursing home, with less than $60 allowed to be kept for a monthly allowance.
Yes, in Michigan there is a 5 year look back period that applies to Medicaid eligibility. This means that for all non-exempt assets (such as real estate you don’t permanently live in) must be sold at a fair price at least 5 years before your Medicaid application. Giving money or assets away, selling for less than fair market value, or transferring assets to others within this 5-year period will result in an ineligibility period.
In Michigan, if you transfer or sell assets below their fair market value during the 5-year look back period, then you’ll have to wait out a 12-month ineligibility period before your coverage starts. The 12-month ineligibility period begins when all of the following happen:
- You are admitted to a nursing home.
- Your Medicaid application has been filed.
- And you have passed the Medicaid Needs Assessment.
Most of the requirements stay the same to qualify for Medicaid to cover your home health care. You still must have less than $2,000 in countable assets for individuals and less than $3,000 in countable assets for couples. In order to qualify for home health care under Medicaid, you must be unable to independently complete activities of daily living (ADLs) and instrumental activities of daily living (IADLs). These include things like dressing, bathing, grooming, cooking meals, shopping, and more. Medicaid will cover 28 hours of home health care a week in most cases, with more coverage offered in certain situations. You can live in your own home or the home of a loved one and receive this care.
You can choose to have a caregiver provide your home health care services if you write up a caregiver agreement. You’ll have to pay payroll taxes on what you pay the caregiver, and they will have to pay income taxes. If valid in these ways, then the payment doesn’t count as an uncompensated transfer of assets and won’t affect Medicaid eligibility. If your caregiver is a family member, you will need an independent estimate from a home health care company to ensure the pay is fair.
There are three kinds of trusts that affect Medicaid eligibility in different ways. The first, a revocable living trust, means that your assets and income are considered available according to the needs assessment. This means that a creditor who takes on a beneficiary role (which could be Medicaid) has full access to any benefits of the trust.
The irrevocable living trust limits the benefits to a creditor like Medicaid, usually down to income only. This means Medicaid has access to the income but not the underlying principal of the trust, as long as the trust was created at least 5 years before your Medicaid application.
The final kind of trust, the testamentary trust, works a bit differently. As opposed to the living trust, the testamentary trust is funded when the first spouse passes away. The only benefits of these trusts that are considered by Medicaid are those to be paid to the surviving spouse. This kind of trust is not subject to the 5-year lookback period since the trust is only funded upon death.
There are a couple of ways to protect personal real estate property if both spouses enter a nursing home. One is through an irrevocable living Medicaid asset protection trust (MAPT). This retitles your real estate to the trust, where upon your death the title is passed onto to a trust creator who is not a trustee, such as a family member you wish the property to pass on to. The other option is similar, the life estate arrangement. In this process, you create a deed that retains life use of the property for you while also designating as remaindermen whoever you wish the property to pass on to once both spouses die.
There are plenty of benefits, including that either one will avoid probate on the real estate property. According to the IRC section 2036, the recipients of the real estate will receive a step up in basis. This would not happen if the property were just gifted outright. Also, if the transferor has tax exemptions available to the elderly or veteran, they will be able to retain those exemptions on this property. The transferor can keep limited power of appointment (LPOA), which grants the power to change who the ultimate property recipient is within the family. There is no need to file a transfer tax return, since with an LPOA it counts as an incomplete gift.
The MAPT has the advantage over life estates for a few reasons. The MAPT protects the spouses as life tenants, so they can never be denied right to occupancy while alive. Without the MAPT, there are plenty of circumstances that can affect the spouses right to occupancy, such as a lien on the property, beneficiaries going through bankruptcy or divorce, and more.
If the real estate property is sold before the life tenant’s death, then your children still get the net proceeds they are due. Medicaid will look to the net proceeds left over after your children get theirs as beneficiaries.
If you rent out the property while the life tenant is institutionalized, the rental income earned is paid to the nursing home which so that you stay eligible for Medicaid.
You can also name assets besides property in your MAPT. This can include things like investments, which will transfer to your beneficiaries without needing to follow the carryover basis rules that would apply if you were to gift them outright.
Without the spousal refusal, a spouse is required to support their institutionalized spouse. If you file a spousal refusal though, you can avoid this financial responsibility. This would also mean that if institutionalized spouse was individually eligible for Medicaid, they will be come immediately eligible.
You can file a Reconsideration Application if you are denied Medicaid. If that’s also denied, you can file for a fair hearing on the basis of undue hardship. This kind of hearing could help to argue for the need to retain more assets that generally allowed if you spouse needs them to meet the income allowance.
It’s always best to plan it out in advance, but there is one last minute effort to get Medicaid coverage for individuals who have too much in assets to qualify standardly. You could use a qualifying promissory note (QPN), and it has to meet four requirements:
- There is a reasonable interest rate.
- Equal payments are made throughout the loan.
- There is a reasonable repayment period based on the age of the person entering the nursing home.
- The promissory note must declare that it will not be cancelled if the lender passes, but instead will continue to go to the estate of the decedent.
You can purchase a traditional LTCI, or a hybrid life insurance/annuity policy with LTCI.
LTCI will give a certain benefit for the period you pay for. If the policy doesn’t cover your full nursing home costs, then the costs you pay for will have a required contribution of asset and income according to Medicaid rules.
There are a few tax advantages that come with an LTCI. You can deduct your annual premiums since they count as medical expenses. Also, if you’re self-employed and have an LTCI, you can deduct the premiums. If your LTCI is paid to you or your spouse through an employer, then it is not subject to FICA. If a life insurance policy ends up paying out a living accelerated benefit due to terminal illness, the benefit is not subject to taxation as long as death is expected within 2 years.
You should look at the following features when considering the cost of the policy:
- How long benefits are payable
- Maximum total benefits
- Daily nursing home benefit
- Waiver of premium feature
- Coverage for Alzheimer’s
- Initial waiting period before benefits eligibility
- Portion of daily benefits that can be used for home healthcare