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Park Ridge IL Medicaid and Estate Planning Legal Blog

Wednesday, February 15, 2012

What is Medicaid Planning?

Mary recently visited the office attorney because she was confused. Her husband had been admitted to a nursing home, and Mary had been approached by the home’s caseworker. The caseworker asked for Mary’s financial information, and inquired how she intended to pay for her husband's care, which would total more than $8,000.00 per month. She asked if Mary was going to apply for Medicaid, and that question was the source of Mary’s confusion. Her attorney explained to Mary that Medicaid is a government program to help pay for nursing home costs, but to qualify, Mary had to meet certain income and asset restrictions.

Mary was even more confused. She told the attorney she was already on Medicare and that she didn't know why she had to do anything else. She asked, “Why isn't Medicare paying?” Mary’s attorney explained that Medicare is health insurance for individuals over 65 or those who have been disabled for two years. Medicaid, on the other hand, is a social program to pay for people with few assets or low income to ensure they have proper health care, including nursing home care. Mary didn't know what to do. She didn’t think she had the money to pay for her husband’s care, but her attorney had mentioned that she wasn’t currently eligible for Medicaid benefits because she had too much money to qualify. He went on to explain how Medicaid planning works by sharing with Mary the information that follows.

There are two elements associated with Medicaid planning: the legal strategies needed to qualify for benefits, and the actual application process.

The first step of the planning is to make a series of legal and financial decisions that will result in Mary's assets and income qualifying for Medicaid. There are several legal strategies to choose from, including the use of certain types of trusts.

For many clients the process seems overly complicated. Fortunately, it is possible to calculate and explain what assets are at risk and what assets would be immediately protected. It is also possible to determine when a person needing nursing care will qualify for Medicaid, and how to ensure that Medicaid begins paying as soon as legally possible, to minimize the loss of assets to the spouse who still lives at home. This stage of income and asset adjustments will usually result in a period of ineligibility for Medicaid benefits.

The second step of the planning is the formal qualification and application process. After all ineligibility periods created during the planning process have expired, there is a specific qualification and application process to receive benefits. The MPN attorney can be retained separately to assist in the filing of the application for Medicaid benefits with the local Medicaid department so that the nursing home resident can begin to receive the benefits.

It’s important to understand that Medicaid planning to get the nursing home resident eligible for Medicaid in the future is separate from and different than actually applying for the benefits from the local Medicaid Department. In fact, the second step will not be necessary if the person under care returns home, or if he or she does not survive the ineligibility period created under the plan. Like most financial and estate planning, Medicaid planning is always better if done in advance. However, even if tragedy strikes unexpectedly, it’s good to know that there are still options available to keep from depleting your assets.






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