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Medicaid & LTC Planning

Learn the basics of Medicaid qualification for individuals and couples, pitfalls to avoid, and how to use Medicaid to help sell LTC insurance. Get professional education from Bill Comfort, CSA, CLTC of Comfort Assurance Group, LLC in St. Louis, MO.

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Medicaid & LTC Planning

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  1. Medicaid & LTC Planning Bill Comfort, CSA, CLTC Comfort Assurance Group, LLC St. Louis, MO For Professional Education Only

  2. MediCAID • Basics • Qualification • Individuals and couples • Medicaid Planning • Annuities • Pitfalls • Using Medicaid to help sell LTCi For Professional Education Only

  3. Basics • Largest payer of LTC services • Joint Federal/State program • “Means tested” (Not an entitlement) • Welfare medical coverage • Benefits subject to estate recovery • “Elder Law” Attorney • Natl. Academy of Elder Law Attorneys • Certified Elder Law Attorney (CELA) For Professional Education Only

  4. Qualification • Medical • Financial • Income • Pass-through to nursing home • Capping • Assets • Countable • Non-countable • Inaccessible For Professional Education Only

  5. Assets • Non-Countable (exempt) assets: • Principal Residence (exceptions) • Furnishings • One automobile • Personal items including some jewelry • Pre-paid funeral (irrevocable) • Term life of unlimited value Note: Non-countable does NOT mean “protected,” just not considered for eligibility. For Professional Education Only

  6. The House • Non-Countable (exempt), IF: • “Community Spouse,” and/or • Child under 21, and/or • Adult child who is blind or disabled ... is living in the home. • Medicaid applicant “intends” to return • *JT owner with sibling in home for one year • *Child lived in home for 2 years & provided care Note: The house is the primary asset most states seek estate recovery from. For Professional Education Only

  7. Assets • Countable assets: • Everything else that is not explicitly non-countable. • Cash, stocks, bonds, deferred annuities, IRA, 401(k), 403(b), cash value life insurance if DB >$1500 ... • Applicant may keep $1,000 - $4,000 • Balance must be “spent down” For Professional Education Only

  8. Spousal Asset Protection • Community Spouse Resource Allowance (CSRA) • Greater of $18,552 or 1/2 of non-exempt assets up to max of $92,760 (2004) • Total, combined excess must be “spent down” • Pre-nups have NO effect • LTCi is required for 2nd (3rd?!) marriages where assets must be protected from inclusion. For Professional Education Only

  9. Income (If you can get to the principal it’s an asset NOT income) • Social Security • Pension – defined benefit • Alimony • Annuitized income For Professional Education Only

  10. Income • For individuals: • Income goes to the NH, Medicaid pays the difference. What?! • The largest Co-Pay your clients will pay • Medicaid is NOT “free” • For couples (name on the check): • Institutional Spouse’s income to the NH. • Comm. Spouse keeps own income … For Professional Education Only

  11. Spousal Income Protection • Comm. Spouse keeps own income - Unlimited • Minimum Monthly Maintenance Needs Allowance (MMMNA) • $1,515 per month minimum • Can be increased ... • $2,319 per month maximum(2004) • Depending on the state, the Institutional Spouse’s income and/or the spend-down assets can be used to meet the MMMNA For Professional Education Only

  12. Income Capping • Some states “cap” income for Medicaid eligibility. $1,692/mo (2004) • If income exceeds the cap, no benefits • “Miller” trust used to hold excess income to qualify for Medicaid. • Any remainder payable to the state. (AL, AK, AZ, AR, CO, DE, FL, ID, IA, LA, MS, NV, NJ, NM,OK, OR, SC, SD, TX, WY) For Professional Education Only

  13. “Medicaid Planning” • Misnomer / Oxymoron • No one “plans” to go on Medicaid. Medicaid planning is reactive once in a care crisis. • What works today may not/will not work in the future. • Process of taking countable assets and making them inaccessible by giving them away or placing them in a trust. For Professional Education Only

  14. “Medicaid Planning” • Give Away Assets? • If gift is made within 3 years (5 years for trusts) of applying (“look back period”) = • Penalty – period of ineligibility based on amount given away • Other unintended consequences • Taxes (Potentially HUGE costs) • Mismanagement • Financial aid jeopardy • Control For Professional Education Only

  15. “Medicaid Planning” • Annuities – Immediate • Convert countable assets into income • Must meet strict guidelines • Irrevocable • Period certain (no life option) over an impaired life expectancy • “Medicaid friendly” • Not so great for individuals • Great for the Community Spouse • States are limiting/shutting down For Professional Education Only

  16. “Medicaid Planning” • Appropriate for crisis planning - TODAY • Annuities are great tools for couples, where still allowed. • Some gifting within look-back and penalty periods can protect a portion of assets. • The future? Get back to me ... For Professional Education Only

  17. Medicaid & LTCi • Primary competitor • Idea that government will pay • Medicaid is not “free” • Run the numbers, outline a Medicaid plan for prospects using their assets • Medicaid eligibility is undergoing massive change – financial pressure • Home care “waiver” programs very limited – Primarily pays for NHs. For Professional Education Only

  18. Medicaid • Summary • Becoming more restrictive • Requires experienced legal advice • Don’t PLAN on eligibility • Don’t wait for a crisis to plan • Primarily pays for care in nursing home • It’s not “free” • Help families in crisis with info and referrals ... sell the others LTCi For Professional Education Only

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