Medicaid Eligibility Strategies

Planning Strategies to Help Gain Medicaid Eligibility

For many people, Medicaid benefits can provide crucial financial support to help cover the costs of nursing home care. Meeting the requirements to qualify for Medicaid benefits can be a complex matter, and a Certified Medicaid Planner can provide the assistance needed in these situations. At The Louisiana Medicaid Law Firm, we can help determine the best strategies to use to avoid financial losses and ensure that nursing home care will be affordable.

Addressing Assets During Medicaid Planning

All assets are initially categorized as either countable or non-countable assets for the purposes of determining Medicaid eligibility for long-term care. If a person's countable assets exceed the threshold at which a person will no longer qualify for Medicaid long-term care benefits, excess resources must be "spent down" to gain Medicaid eligibility. If a person has excess resources, they will be ineligible for Medicaid coverage until the assets are depleted to or below the threshold amount.

The Medicaid program presumes that excess resources will be spent on nursing home care and other expenses until the assets fall below the applicable resource limit. The depletion of assets to or below the protected limit is known as "spenddown." However, this is a misnomer, since there is no actual requirement to spend the resources on nursing home care. Through Medicaid planning, assets may be transferred or converted from countable assets to non-countable assets until the total amount of countable resources is less than or equal to the protected amount.

Protecting Assets and Preserving Eligibility for Medicaid

After the protected amount is determined, Medicaid planning will involve efficiently converting countable assets to protected assets to reduce the total countable assets below the protected amount, thus making a patient eligible for Medicaid long-term care benefits. This asset conversion process will satisfy Medicaid spenddown requirements in the same way as actually spending the excess assets directly on the costs of nursing home care. The only difference is that through asset repositioning, assets that would have been spent can be conserved.

By preserving assets, a person or a married couple can use their financial resources to address non-nursing home expenses. When a protected amount of resources has been determined, this does not mean that the unprotected amount will be walled-off and reserved only for long-term care bills. The proper depletion of assets below the protected amount will establish eligibility for Medicaid long-term care benefits while preserving the assets that have been depleted.

"Proper depletion" is another term that may describe purchases for fair market value. These purchases may be commercial transactions where the fair market value is paid in exchange for goods or services. If the purchase results in the ownership of non-countable assets, the resulting assets will be protected because of their classification, and a person will be protected against divestment penalties that may apply to improper asset depletion. This conversion of assets from countable to non-countable through fair market purchases is the basis of Medicaid planning strategies. For the most part, a person may engage in a series of simple maneuvers that take advantage of the basics of fair market value transactions.

Common Asset Conversion Strategies

• Purchase tangible personal property: There is no asset limit that applies to the quantity and value of personal items purchased and held by a person or couple, as long as the items purchased are not deemed to be investment grade. While this strategy has no actual limit in value, it may not be ideal for large sums of money, because consumer purchases can lose value over time.
• Homestead advantages: Because a homestead's equity is a protected resource, this asset category can be used to convert excess countable resources to non-countable resources. Options may include:
  1. Renovate the home
  2. Buy a new home
• Upgrade a vehicle: If a nursing home patient or Community Spouse's vehicle is their main source of transportation, one vehicle may be excluded from being counted as a countable asset.
• Prepay funeral/burial expenses
• Personal services contracts: Medicaid views services in which a person takes care of a patient to be gratis, and payment for these services are considered gifts that could lead to divestment penalties. To avoid this trap, a legal contract can be created between a patient and caregiver that formalizes the relationship and turns what would otherwise be considered a gift into a fair market value payment for services. Contracts can only be prospective: any services provided before the execution of the contract are considered gratis. A contract cannot go backward and authorize payment for previous services. You should consult with a Certified Medicaid Planner before using this strategy, because there are detailed rules governing these transactions.
• Annuities and promissory notes In this strategy, a lump sum may be transferred to a person or company in exchange for a promise to repay. The subsequent repayments can result in the conversion of a countable asset (cash) into an income stream. This may be done with the goal of converting a countable asset into an enhanced income for the Community Spouse. If an annuity is purchased, it must be a Medicaid-compliant annuity, so this strategy will require supervision by a Certified Medicaid Planner to ensure that the proper steps are taken. This strategy may also be combined with strategic divestment.
• Caring for disabled family: A blind or disabled child can be the recipient of unlimited assets, which may be either transferred directly or through a trust set up for the benefit of the child.
• Other complex and difficult strategies: The aforementioned are just a few of the common strategies that may be used to qualify for Medicaid benefits for long-term care. Consult with a Certified Medicaid Planner for other techniques that can be crafted to fit your specific situation.

Contact Our Louisiana Medicaid Eligibility Strategy Attorney

To learn more about how The Louisiana Medicaid Law Firm can help you take steps to preserve your eligibility for Medicaid long-term care, contact us at 504-447-6000 and set up an initial consultation.