What Does a Medicaid Planning Attorney Do?

Health care costs can quickly deplete your savings and assets, leaving you to rely on government programs for your health care needs.

Medicaid is a needs-based program that provides health care to lower-income older people. Medicaid planning is a way to ensure you keep important assets and provide for your family while maintaining eligibility for necessary long-term care.

This article will give a basic introduction to Medicaid eligibility and planning. If you worry about affording nursing home costs and want to understand the benefits available through your state’s Medicaid program, speak with an experienced elder law attorney. 

What Is Medicaid? 

Medicaid is a needs-based government program that provides free or low-cost health care to low-income individuals. Both federal and state governments fund Medicaid. Each state opts into Medicaid and administers its own system.

One question about Medicaid that frequently comes up is how it is different from Medicare. Medicaid differs from Medicare in the following key ways: 

1. Different rules. Medicaid rules and eligibility requirements vary by state. Medicare is a federal program with the same rules in every state. 
2. Eligibility. Medicaid is needs-based and available to low-income individuals regardless of age. Medicare is a health insurance program that people pay into and only become eligible for at age 65 (or younger in cases of disability).  

Medicaid Benefits: State Variation and Federal Baselines

Each state administers its own Medicaid program. The eligibility rules, coverage, and the application process vary. Despite the variation from state to state, federal law requires every state to provide certain mandatory benefits, including: 

• Inpatient and outpatient hospital care 
• Physician care 
• Home health care services 
• Family planning services 
• Lab and X-ray services 

States may also provide optional services such as prescription drugs, physical therapy, and dental care. 

Qualifying for Medicaid

“Qualifying for medical assistance first requires that the individual have a categorical basis of eligibility,” says Minnesota elder law attorney Laura J. Zdychnec.

“There are about 10 bases. For example, someone under 65 with a Social Security disability determination is eligible. A person over 65 often qualifies regardless of whether they are disabled.” 

Federal law also requires states to cover mandatory eligibility groups, including: 

• Low-income families 
• Individuals with disabilities 
• Individuals who receive Supplemental Security Income (SSI) 

Under the 2010 Affordable Care Act, states can expand Medicaid to most individuals under the age of 65. Even though they aren’t below the poverty line or “low-income” in that sense, they can’t afford health care in practice. 

States that opt into Medicaid expansion can provide benefits to such individuals at up to 138% of the Federal Poverty Line. In a state without Medicaid expansion, they may not qualify for medical assistance. In a state with Medicaid expansion, they do qualify. Most (but not all) states have opted into Medicaid expansion. 

Who Can Benefit From Medicaid Planning?

“In 30 years of practicing elder law, I have determined that the fear of long-term care costs is universal, regardless of how much money someone has,” says Zdychnec. “Individuals will agonize and lie awake at night wondering about it.”  

There is enormous financial stress involved. “It’s well worth an hour or two of attorney time to get your questions about Medicaid planning answered up front so that you understand how the system will apply to you,” says Zdychnec.  

“Instead of letting your imagination run wild with uncertainty about high costs, speaking with a lawyer will help you feel a lot better, even if it’s bad news.” 

Do I Need To Give Away My Assets To Protect Them? 

To qualify for Medicaid, individuals must meet their state’s income or asset limits. 

For example, in Minnesota, “Many individuals over 65 who may be facing long-term care in a nursing facility won’t be eligible for medical assistance as a single person until they are reduced to $3,000 of available assets,” says Zdychnec. In most other states, the asset limit is $2,000.

“While an individual can only have $3,000 in available assets, they can have any amount in exempt assets,” she continues. For example, “say an 80-year-old person is living in a townhome and needs medical help at home. They can qualify for medical assistance while keeping their townhome (which is over $3,000) under the homestead exemption.” 

Home Equity Exemptions for Medicaid

For most people, their home is their largest investment. Medicaid applicants can get a homestead exemption for their primary residence, up to a maximum home equity limit. However, if a spouse or dependent is still living in the home, the property is generally exempt from Medicaid countable resources.

The home equity exemption varies by state. Most states use either the federal minimum ($752,000) or maximum ($1,130,000). California is the only state that does not have a home equity interest limit after eliminating the asset test for Medicaid.

State-by-State Maximum Home Equity for Medicaid Eligibility

The following table shows the maximum home equity exemption for calculating Medicaid assets:

State	Home Equity Limit
Alabama	$752,000
Alaska	$1,130,000
Arizona	$752,000
Arkansas	$752,000
California	No limit (no asset test)
Colorado	$1,130,000
Connecticut	$1,130,000
Delaware	$752,000
Florida	$752,000
Georgia	$752,000
Hawaii	$1,130,000
Idaho	$752,000
Illinois	$752,000
Indiana	$752,000
Iowa	$752,000
Kansas	$752,000
Kentucky	$752,000
Louisiana	$752,000
Maine	$1,130,000
Maryland	$752,000
Massachusetts	$1,130,000
Michigan	$752,000
Minnesota	$752,000
Mississippi	$752,000
Missouri	$752,000
Montana	$752,000
Nebraska	$752,000
Nevada	$752,000
New Hampshire	$1,130,000
New Jersey	$1,130,000
New Mexico	$752,000
New York	$1,130,000
North Carolina	$752,000
North Dakota	$752,000
Ohio	$752,000
Oklahoma	$752,000
Oregon	$752,000
Pennsylvania	$752,000
Rhode Island	$1,130,000
South Carolina	$752,000
South Dakota	$752,000
Tennessee	$752,000
Texas	$752,000
Utah	$752,000
Vermont	$752,000
Virginia	$752,000
Washington	$1,130,000
Washington, D.C.	$1,130,000
West Virginia	$752,000
Wisconsin	$1,130,000
Wyoming	$752,000

Medicaid Eligibility Rules of Married Couples 

Eligibility rules are far more complicated for married couples. 

The way it generally works is that “if one spouse (called the ‘applicant spouse’) needs long-term care assistance, while the other spouse (called the ‘community spouse’) doesn’t, then the community spouse can keep any amount in exempt assets, and up to about $162,660 in available assets,” says Zdychnec.

The protected available asset amount for a community spouse is set by federal law and increases annually on January 1. Some states differ from the federal minimum and maximum asset limits. 

“The applicant spouse, on the other hand, can keep $3,000 in available assets. And what we can do to maximize that couple’s assets for the future will vary by circumstances,” says Zdychnec. “Sometimes, for example, the couple may engage in gifting to family or others. Of course, when we do that, we have to be very mindful of the five-year look-back period.”

Medicaid Look-Back Periods

The look-back period is a period during which individuals seeking to qualify for Medicaid can’t “spend down” or give away assets below their fair market value to meet their state’s asset limits. 

“For some families or couples, they might have a particular asset or legacy property such as a lake house,” says Zdychnec. “If that’s the one thing they want to make sure that they get out to their children, we can look into whether it makes sense and whether they’re comfortable letting go of that property with the idea that they can’t apply for medical assistance for at least five years after transferring it.”  

Strategizing To Meet Medicaid Requirements

Ultimately, if you have too many assets or income to qualify for Medicaid, “You can’t just give it away,” says Zdychnec. “In fact, that’s one thing that the state and federal government don’t want you to do. There are severe consequences for that.”

Instead, it’s wise to meet with a lawyer who can help you strategize how to meet your state’s income eligibility requirements through appropriate gifting or by setting up trusts, such as a Qualified Income Trust or Medicaid Asset Protection Trust. 

Is a Lawyer Needed To Apply for Medicaid? 

It is possible to apply for Medicaid without an attorney. However, it’s wise for individuals to at least meet with an attorney to gather information and discuss their options. One reason is that Medicaid rules and requirements are highly complex and vary widely from state to state.  

“Planning can be absolutely appropriate under one state’s laws but won’t work at all in another state,” says Zdychnec. “Medicaid is a federal program, but the variations from one state to another can be a real trap for people.” 

In Georgia, for example, retirement accounts (IRAs) don’t count as available assets, except for the required annual minimum distribution for tax purposes. In Minnesota, by contrast, the full principal amount in an IRA is an available asset. “That’s just one example of how rules can differ and create problems in Medicaid planning,” Zdychnec adds. 

Medicaid Planning as Part of Your Overall Long-Term Care Strategy

Older individuals often need to consider Medicaid as part of their long-term care planning. Essentially, it comes down to the following questions:

• Will I have enough money to cover the costs of health care or nursing home care?  
• Will I have to pay out of pocket for the care I need, or will Medicaid cover my costs? 

“It’s important to get legal help — particularly for married couples. There’s a lot that an experienced elder law attorney can do to protect the married couple’s property. However, people who barrel through on their own can create nightmares that have to be sorted out later,” Zdychnec says. 

Getting Legal Advice Can Avoid More Costly Problems in the Future

Getting legal help during the Medicaid application process can help avoid more serious and expensive problems in the future.

“Can someone talk to a lawyer too early? Not really,” says Zdychnec. “Getting an advanced understanding of how the various systems will apply under certain circumstances gives, if nothing else, peace of mind.” 

A lawyer will be able to tell you plainly: “Here are the various things we could do if X, Y, or Z happens to you or a loved one in the next few years.” 

Questions for an Elder Law Attorney 

Medicaid planning is part of your overall end-of-life planning. A lawyer can help you look at your financial plan and consider the following: 

• How Medicaid fits into long-term estate planning 
• How Medicaid fits into incapacity planning and appointing a power of attorney (POA) for your financial and health care decisions 

Some elder law and Medicaid planning lawyers provide free initial consultations. These consultations allow you to get legal advice and consider if you need legal help addressing issues related to your Social Security benefits and payments. 

Once you have met with a Medicaid planning attorney and get answers to your questions, you can begin an attorney-client relationship. Look for an elder law attorney in the Super Lawyers directory for legal help with Medicaid planning and other elder law issues.