What Does a Medicaid Planning Attorney Do?
In many cases, it’s wise to speak with a lawyer about Medicaid planning
on January 23, 2023
“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 Minnesota elder law attorney Laura J. Zdychnec. “Individuals will agonize and lay awake at night wondering about it.”
Given the 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.”
This article will give a basic introduction to Medicaid eligibility and planning. If you are worried about affording long-term healthcare or nursing home costs and want to understand the benefits available to you through your state’s Medicaid program, it’s wise to speak with an experienced elder law attorney as soon as possible.
What Is Medicaid?
Medicaid is a needs-based 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. According to Medicaid.gov, “Medicaid is the single largest source of health coverage in the United States.”
One question about Medicaid that frequently comes up is how it is different from Medicare. Medicaid differs from Medicare in the following key ways:
- Different rules. Medicaid rules and eligibility requirements differ in each state, while Medicare is a federal program with the same rules in every state.
- Eligibility. Medicaid is needs-based and available to low-income individuals regardless of age, while Medicare is a health insurance program that people pay into and only become eligible for at age 65 (or younger in cases of disability).
Since each state administers its own Medicaid program, eligibility rules, the scope of coverage, and application processes 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
In addition to these mandatory benefits, states may also provide optional services such as prescription drugs, physical therapy, and dental care.
Qualifying for “medical assistance first requires that the individual have a categorical basis of eligibility,” says Zdychnec. “There are about 10 bases. For example, someone under the age of 65 with a disability determination under social security is eligible. A person over 65 often qualifies regardless of whether they are disabled.”
Federal law also requires states to cover certain “mandatory eligibility groups,” including:
- low-income families
- individuals with disabilities
- individuals who receive Social Security Income (SSI)
Under the 2010 Affordable Care Act, states can expand Medicaid to most individuals under the age of 65.
Say someone has an income that is above the Federal Poverty Line. Even though they aren’t below the poverty line or “low-income” in that sense, they can’t afford health care as a practical matter.
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 have qualified for medical assistance. In a state with Medicaid expansion, they do qualify. Most (but not all) states have opted into Medicaid expansion.
Do I Need To Give Away My Assets To Protect Them?
In order to qualify for Medicaid, individuals must fall under 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.
“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 obviously over $3,000) under the homestead exemption.”
Medicaid Eligibility Rules of Married Couples
Eligibility rules are far more complicated for married couples, says Zdychnec.
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 $148,000 in available assets.”
Zdychnec says the protected available asset amount for a community spouse is set by federal law and increases annually on January 1.
“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.” The look-back period is a time during which individuals who are trying to qualify for Medicaid can’t “spend down” or give away assets below the fair market value in order 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.”
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?
While it is possible to apply for Medicaid without the help of an attorney, it’s often wise for individuals to at least meet with an attorney to discuss their options.
One reason is that the rules and requirements for Medicaid are highly complex and can 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 considered an available asset. “That’s just one example of how rules can differ and create problems in Medicaid planning,” Zdychnec adds.
Older individuals often need to consider Medicaid as part of their overall long-term planning strategy.
Essentially, the question comes down to the following:
- 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, but people who barrel through on their own can create nightmares that have to be sorted out later,” Zdychnec says.
In other words, getting legal help upfront can avoid even more significant and expensive problems. “Can someone talk to a lawyer too early? Not really,” says Zdychnec. “Getting an advance 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.”
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
Questions for an Elder Law Attorney
Some elder law and Medicaid planning lawyers provide free initial consultations. Alternatively, consultation fees may be counted toward future legal services. In some cases, the consultation is the legal service.
These consultations allow you to get legal advice and consider if you need legal help addressing issues related to your social security benefits and payment.
To get the most out of a consultation, ask informed questions such as:
- What are your attorney’s fees and billing options?
- Do I qualify for Medicaid benefits?
- What are my state’s asset and income limits for Medicaid?
- What is involved in the Medicaid planning process?
- What are the steps in the Medicaid application process?
- Will Medicaid cover my nursing home costs?
- How can I prepare for the costs of long-term care?
- Can Medicaid take my home? What are my exempt assets?
Once you have met with a lawyer and gotten your questions answered, you can begin an attorney-client relationship.
Look for an elder law attorney in the Super Lawyers directory for legal help with elder abuse issues.