What is Crisis Medicaid Planning?

Crisis Medicaid Planning

I recently met with a client whose husband had to be admitted to the hospital because of a fall.  The husband had been diagnosed a couple of years earlier with early onset dementia, and unfortunately, they had not planned in advance for what might happen if the husband could no longer live at home.

After the fall, the husband could not return home, even with rehabilitation, because his dementia had gotten so bad that his wife could no longer care for him.  He was admitted to a skilled nursing facility, where he had been getting good care.  The problem was that the wife was told that she was going to need to pay for his care at the facility, at a cost of close to $8000 per month!  The wife had been paying the monthly cost to the facility out of their modest savings and monthly income.  However, the cost of his care had been putting an intense strain on her ability to keep afloat.

She was concerned that she would not be able to live on what was left, and that she would lose everything continuing to pay for her husband’s care.    Unfortunately, the nursing facility only told her how much it would cost the family keep her husband there and could not provide her any answers about how to deal with the enormous bill each month.

The facts above are a classic example of a case that requires the implementation of a crisis Medicaid plan by an experienced elder law attorney.  If a loved one, whether unmarried or married enters a nursing home for long-term care, and the assets that they have are greater than the amount permitted for Medicaid eligibility, the need for a crisis plan becomes incredibly important.

What is Medicaid?

Medicaid is the joint federal and State of Missouri program available to aging individuals who meet certain asset and income requirements that helps them pay for the costs of their long-term care.  Medicaid is different than Medicare.  Many people think that Medicare will pay for a part of their nursing home stay, but for individuals who have long-term care needs, that is not the case.  For long-term situations, the options are long-term care insurance, if the individual has a policy, paying out of pocket, or qualifying for Medicaid.  The rules for Medicaid eligibility can be complicated, and can be very difficult for those families that have modest assets or larger estates.

What is crisis Medicaid Planning?

Crisis planning is a plan that is put together with an elder law attorney, whereby prior to filing an application with Medicaid for qualification, assets of the individual who has entered the facility are transferred, gifted, or otherwise protected from Medicaid using them as a “countable resource”.  The goal is to protect as much of the client’s nest egg as possible, while still qualifying for Medicaid, and not running afoul of the “5-year lookback” period.

The 5-year lookback period says that Medicaid will look at all assets of the applicant, and/or the spouse, including any uncompensated gifts or transfers of assets that have been made within a 5-year period of the Medicaid application.  For example, if someone applies for Medicaid on September 1, 2020, Medicaid will look all the way back to September 1, 2015 for any gifts or transfers.

There are many ways to qualify, including making repairs to the family home, gifting portions of the assets to family, exercising spousal protections for certain assets or amounts of assets, using annuities to protect portions of the assets, amongst other options.  While there are ways to qualify and not spend everything that the individual has worked all their life to build, timing is essential.  The sooner that the spouse or family seeks legal advice, the better.

Crisis planning requires an in-depth analysis of many factors, and there is no single remedy.  Carefully looking at the situation from various angles with an experienced attorney can protect hundred of thousands of dollars from being spent on the nursing home.  These strategies are complicated and must be done correctly to avoid pitfalls.

Seeking out an experienced elder law attorney is essential to qualifying, and saving as much as possible, as quickly as possible.

We are here to help.  If you have questions or need guidance in your planning or planning for a loved one, please do not hesitate to contact our St. Charles office by calling us at (636) 757-3850.