Table of Contents
To determine one's Medicaid eligibility or to find a Medicaid planner, please use the free service provided by the American Council on Aging. To better understand the services Medicaid Planners provide and when it is appropriate or necessary to use their services, please continue reading.
Medicaid eligibility is very complex; the rules change frequently, they differ in each state, they differ by program within each state, the application is time consuming and the review process lengthy. The consequences of being denied by Medicaid are severe and can negatively impact the comfort, happiness and even the health of the individual applying and their entire family.
Medicaid Planners help clients structure their financial resources and prepare documentation to ensure the best possibility of being accepted into the Medicaid program. They create trusts, manage asset transfers and convert countable assets into exempt assets to ensure eligibility and preserve a family's resources. They can also protect a family home from Medicaid recovery. In addition, they manage finances to ensure a healthy spouse has adequate income and resources to continue living independently during and after the time when their partner is receiving care assistance.
Many families wonder if it is really necessary to hire a Medicaid planner. There are two ways to answer this question. First, there are public employees that offer free assistance, so hiring a Medicaid Planner is not always necessary. However, not everyone is qualified to receive free assistance.
For those not qualified for free assistance, it is not absolutely necessary that they retain the services of a Medicaid Planning professional; however, in many situations it is prudent, cost-effective and strongly advised. The decision should be based on each families’ specific situation.
As an example, in many states, one Medicaid eligibility factor is the value of one’s countable assets; the limit is approximately $2,000 for a single applicant. It is not necessary to hire a planner if the applicant has less than $2,000 in countable assets. In addition, free application assistance would be available.
If the applicant has countable assets of between from $2,000 - $12,500 (or $25,000 if married), one can probably avoid retaining paid Medicaid planning help by engaging in self-planning. There is a simple option called an irrevocable funeral trust. This is essentially pre-paying a funeral and all the associated expenses. The family simply allocates the amount of money by which they are over the Medicaid limit to the irrevocable funeral trust and Medicaid no longer considers that money a "countable asset" and they are no longer over the Medicaid limit. Learn more about this option. If the applicant has countable assets over $12,500 or $25,000 if married, then it is probably prudent to retain a Medicaid planner as the planning techniques become considerably more complicated.
Having countable assets over the limit, is just one reason a family may elect to hire a Medicaid planner. Being over the income limit is another common reason. Similar to the irrevocable funeral trust strategy described above, there are approaches that can be taken when the applicant has income in excess of the limit, but is still unable to afford their cost of care.
Here, we examine the question of whether to work with a Medicaid planner in four different situations that are common among families with aging loved ones.
When Only One Spouse Requires Care
The cost of caring for one spouse can very quickly exceed a couple’s total resources including the value of their home. To protect the healthy spouse financially and allow him or her to remain living at home, a separation of resources is necessary and unfortunately complicated. Given the critical nature of acceptance into Medicaid, the use of a Planner is advised.
When Both Spouses Require Care
The long term care costs for two individuals can bankrupt most American families very quickly. Without one spouse able to care for the other, the financial and caregiving burdens created by a Medicaid denial and placed on the adult children are substantial. They can be overwhelming when the adult children have children of their own. Given the critical nature of acceptance into Medicaid and the lack of healthy spouse to engage in planning, the use of a Medicaid Planner is recommended.
A Healthy Couple doing Long Term Planning
For healthy families wishing to preserve some of their assets for their children and grand-children, working with a Planner is helpful but not critical. Without an immediate need for care, families are more likely to be able to plan themselves without professional guidance. It is worth noting that a mistake in planning can impact eligibility for as long as 5 years. If one is not confident in their family's ability to manage some complex legal and financial techniques, using a Planner is advised.
A Single Person with no Assets or Income (regardless of their health)
In this scenario, because of the severe financial hardship experienced by the individual, they should be able to gain acceptance into Medicaid without assistance provided there are no procedural errors. One might consider getting assistance from a social services agency with the Medicaid document preparation, but hiring a Planning Professional is not necessary.
Most Medicaid Planners start the process with a free consultation in which they will discuss the health status and financial resources of the individual who is applying or will someday apply for Medicaid. They establish the likelihood of success as well as the positive impact they can have on preserving a client’s assets. They use this information to determine whether or not to accept the prospective client and to provide a cost estimate for their services.
Once engaged with a client, several weeks are typically required for the collection of information and formal analysis of the family’s assets. A plan is built, discussed, modified as needed. Putting the plan into action can take longer. Depending on the strategy, it can take several weeks or months, even up to 6 months in some cases. In situations where there is an immediate need for Medicaid care, the Medicaid application documentation can be prepared concurrent with the execution of the plan. In some cases, Medicaid coverage can even be made retroactive.
A category of professionals called Life Resource Planners or sometimes Eldercare Resource Planners offer an alternative to traditional Medicaid planning. These advisors take a larger, holistic view of how to help families plan for paying for aging care. While Medicaid Planners are very focused on the task of helping families qualify for Medicaid, Life Resource Planners also look to see what other options exist and are available. As with Medicaid Planning professionals, their fees must be paid for out-of-pocket, however, those fees are substantially lower. Eldercare Resource Planners typically charge 50% - 75% less than Medicaid Planners. Learn more.