As you age, the chances that you will need long-term care grow. In fact, people 65 and older have a nearly 70% chance of needing some form of long-term care services in their lifetime. Unfortunately, long-term care is expensive. While Medicaid can cover the costs, it sets strict qualification limits, leading many to believe that they have to spend down their assets to qualify. However, with careful planning and the assistance of a Medicaid planning attorney, even those with assets or income above Medicaid’s limits may be eligible for coverage.
If you are trying to plan for your future and are worried about how you will pay for healthcare, contact Robbins Estate Law. We understand that most people are not as concerned about having less themselves as a result of spending down assets. Instead, most people are concerned they will no longer have assets to leave loved ones after their death. Thankfully, with an Austin Medicaid planning lawyer from Robbins Estate Law, you can plan how to care for yourself as you age and your loved ones after you are gone.
What Is Long-Term Care?
Generally, long-term care is defined as various services designed to help those who struggle with meeting their own basic needs. It involves helping such people with “activities of daily living” and “instrumental activities of daily living” such as:
- Housekeeping,
- Cooking meals,
- Dressing and bathing,
- Medical treatment,
- Mobility, and
- Transportation.
For Medicaid purposes, you need long-term care if you have an ongoing or chronic illness or disability that results in the need for a “Nursing Facility Level of Care.”
Each state operates its own Medicaid program, defining what a nursing facility level of care is. In Texas, you can qualify for long-term care if you get services in your home, at a community daytime program, or at a residential care facility.
How Do You Qualify for Medicaid?
To qualify for long-term care Medicaid in Texas, you must:
- Be 65 or older,
- Meet the income limit, and
- Meet the asset limit.
Income and asset limits can vary depending on whether you are married and whether your spouse also needs coverage. Specifically, Medicaid’s limits are as follows:
- If unmarried—$2,829 per month income, $2,000 assets;
- If married and only one spouse needs coverage—$2,829 per month income for the applicant, $2,000 assets for the applicant; and
- If married and both spouses need coverage—$5,658 per month combined income, $3,000 combined assets.
Most money you earn counts as income for Medicaid purposes, including salaries, pensions, and other government benefits. If only one spouse needs coverage, the other spouse’s income is generally not counted toward the limit.
Again, most of the things you own count as assets for Medicaid purposes, like:
- Cash,
- Bank accounts,
- Stocks,
- Investments, and
- Real property.
However, your homestead, meaning the home you own that you reside in, is generally exempt.
What Is Medicaid’s Look-Back Period?
Transferring assets for the purpose of obtaining Medicaid benefits is not allowed. To enforce this rule, when deciding whether a person can receive coverage, the government “looks back” at asset transfers you completed before you applied for Medicaid. This look-back period extends five years before the date you apply.
Asset transfers include things like:
- Providing gifts,
- Selling property under market value, and
- Moving assets into a trust.
If you transferred assets during the look-back period, you may be ineligible for Medicaid for a penalty period, even if you otherwise qualify. Note that if you are married, the government looks at transfers both you and your spouse make, even if only one of you is applying for coverage.
Each state calculates its own penalty period. The length of time is determined by taking the value you transferred divided by the average cost of nursing home care in your state. In Texas, that amounts to approximately $7,339 per month.
For example, assume you improperly transferred assets totaling $100,000. To determine your penalty, you divide 100,000 by 7,339, resulting in an approximately 13-and-a-half-month penalty period. Until the penalty period expires, you cannot receive Medicaid despite qualifying for it.
How Can You Plan for Medicaid?
Every individual is different, and there are many ways to plan for Medicaid. Unsurprisingly, the most important thing to keep in mind when planning is the five-year look-back period. As long as you are outside of that period, you can send gifts to loved ones, sell goods under fair market value, and establish trusts to prepare for one day needing care.
In fact, trusts are one of the best tools to protect your income and assets while still qualifying for Medicaid. You can choose your beneficiaries and maintain some ownership over your assets while avoiding having those assets count for Medicaid purposes.
What Is a Miller Trust?
There are two common Medicaid trusts—a Miller Trust or a Qualified Income Trust—that allow you to qualify for Medicaid even if you technically have an income that is too high. A Miller Trust automatically pulls money out of your income to keep it at or below the income cutoff. The excess funds benefit those you select by going into an irrevocable trust, where you generally cannot access the money anymore.
What Is a Medicaid Asset Protection Trust?
The other common Medicaid planning trust is the Medicaid Asset Protection Trust (MAPT). When you create a MAPT, you place assets adding up to more than Medicaid’s limit into an irrevocable trust. Although you cannot access those assets, you can still control some of the terms of how those funds are disbursed to your chosen beneficiaries. Because of the look-back period, you generally must create and fund your MAPT five years or more before you apply for Medicaid.
Medicaid Planning Attorney in Austin, TX
Worrying about how you will pay your medical bills if you need long-term care as you get older can leave you feeling trapped. You might wonder whether you have to choose between getting the care you need and taking care of your loved ones when you are gone. With some careful planning and the help of an Austin Medicaid planning lawyer from Robbins Estate Law, you can take care of both. Contact us today to get started.