Medicaid Crisis Planning - Options When an Emergency Strikes
by Don Drake, Connelly Law Offices, Ltd. 5.31.24
"In circumstances necessitating urgent long-term care, Medicaid crisis planning assumes paramount importance," said professional fiduciary and certified elder law Attorney RJ Connelly III. "The specific approaches to crisis planning may vary based on the nature of the required care. The process includes evaluating the situation's urgency, formulating a customized Medicaid Plan, identifying any factors impacting Medicaid eligibility, and providing the necessary legal remedies to protect the individual's assets."
"The process of managing Medicaid crisis planning can be challenging, especially when the well-being of a loved one is the primary concern," continued Attorney Connelly. "Engaging the services of a knowledgeable and experienced crisis planning attorney, such as Connelly Law, can significantly ease this process. And remember, as with Medicaid pre-planning, taking timely action allows for preserving a greater portion of assets."
Carlos' Illness
Carlos and Rosa, a robust married couple in their mid-fifties from Massachusetts, lived alone after their son graduated from college and landed a job in Texas. One day, after completing some chores in the yard, Carlos confided in his wife that he wasn't feeling well. He settled on the couch and drifted off to sleep, but shortly after, he called out to Rosa. He was experiencing dizziness and had collapsed, leaving him unable to communicate. Rosa acted quickly, dialing emergency services, and he was promptly taken to the nearby hospital. After a few hours, doctors determined that Carlos had suffered a massive stroke and required transfer to Boston for further treatment.
After several weeks of stability, Carlos needed long-term care and was scheduled to be discharged to a nursing home on the south coast of Massachusetts. Rosa was distressed when the nursing facility asked her to sign an admission agreement that would hold her personally responsible for her husband's care, which would potentially jeopardize their savings and home. Like many older couples, they had invested most of their assets in their property, intending to be where they spent the rest of their lives upon retirement.
Carlos, who was only in his mid-fifties, could potentially require long-term care for decades at a staggering cost of over $120,000 per year. The funds they had diligently saved and the proceeds from selling their home would be depleted in less than ten years.
"I will never forget how overwhelmed I was," Rosa shared. "I adore Carlos and would go to great lengths for him. However, as I spoke with the business office manager of the nursing home, the staggering annual cost of care hit me, I had no idea it was that expensive. It suddenly dawned on me that our dream of spending our senior years in the home we had invested so much in was not to be. What's more, the thought of being homeless was chilling. In just a few weeks, Carlos and I transitioned from envisioning a future we had diligently saved for to the brink of homelessness. I felt utterly lost and didn't know where to turn."
In search of guidance and support, she reached out to her son for much-needed clarity and assistance. A few days later, their son Jose arrived, reviewed the options, and put Rosa in touch with a certified elder law attorney who guided her in making informed choices about signing agreements, financing care without jeopardizing their assets, and accessing government benefits. This is a prime example of where Medicaid crisis planning becomes necessary.
What is Crisis Planning
"Crisis planning is vital to prevent families from encountering time constraints or financial strain when immediate long-term care placement becomes necessary due to a sudden illness or injury, such as in the case of Carlos and Rosa," said Attorney Connelly. "The initial step in crisis Medicaid planning entails a comprehensive assessment of assets and income to ascertain their impact on Medicaid eligibility. Assets typically encompass savings, investments, and specific types of property, and it is imperative to differentiate between 'countable' and exempt assets under Medicaid regulations."
Strategic management of income and assets is pivotal in crisis planning. This may involve asset transfers or repositioning of funds to protect them from being entirely depleted by care expenses. Some strategies include:
Spend Down - For some individuals, having too much income or assets prevents them from qualifying for Medicaid. However, a process called a spend down allows individuals to qualify for Medicaid if they have more medical bills than money.
Spending extra income to begin the Medicaid process and meet the eligibility requirements is important. This can be done by making necessary home repairs, paying off existing debt, covering needed services, and prepaying funeral expenses for up to $10,000 per person. Each case is unique and requires careful planning that meets the Medicaid requirements.
Gift and Loan Strategy - If an individual cannot spend down, the "gift and loan strategy" allows individuals to generate income while safeguarding assets. By utilizing this strategy, applicants can protect a portion of their assets, establish a reliable income source to cover nursing home expenses and take advantage of avenues permitted by the Deficit Reduction Act (DRA).
Promissory loans - These play a crucial role in effective long-term care planning to ensure eligibility for Medicaid. Medicaid stipulates that acquiring a promissory loan is considered an uncompensated transfer of assets unless the loan meets specific criteria. To comply with Medicaid regulations, these loans must be non-assignable, non-transferable, and non-cancellable.
Once an individual's income has been reduced to the medically needy income limit, they become eligible for Medicaid for the remainder of the month.
Choosing the Right Professional
"It is extremely important to choose the right elder law attorney for Medicaid crisis planning," stated Attorney Connelly. "Connelly Law has extensive expertise in Medicaid crisis planning regulations, uniquely positioning us to advocate for our client's needs effectively."
"Our office has a Medicaid specialist who provides tailored crisis Medicaid planning to help families obtain necessary nursing home care without jeopardizing their financial well-being," he continued. "As experts in legal matters related to elder care, we guide our clients from initial distress to eventual stability and security. Our legal strategies are carefully designed to achieve Medicaid eligibility and ensure long-term well-being for our clients and their loved ones."
"Given what can be done in Medicaid crisis planning, I cannot urge strongly enough the importance of pre-planning," said Attorney Connelly. "The best way to plan for long-term care is to do so well before the need arises. Doing so gives you the most options for preserving your assets."
A Final Note
"Crisis planning can provide invaluable assistance when facing an immediate need for Medicaid benefits," said Attorney Connelly. "However, it does come with its share of drawbacks. Due to the intricate legal work involved, this type of planning tends to be more costly than pre-planning. Additionally, it can be a more emotionally taxing process for the individual and the family, as it occurs during a period already marked by illness and challenging transitions. Moreover, because crisis planning circumvents the five-year look-back period, it may restrict the assets that can be preserved."
Please note that the information provided in this blog is not intended to and should not be construed as legal, financial, or medical advice. The content, materials, and information presented in this blog are solely for general informational purposes and may not be the most up-to-date information available regarding legal, financial, or medical matters. This blog may also contain links to other third-party websites that are included for the convenience of the reader or user. Please note that Connelly Law Offices, Ltd. does not necessarily recommend or endorse the contents of such third-party sites. If you have any particular legal matters, financial concerns, or medical issues, we strongly advise you to consult your attorney, professional fiduciary advisor, or medical provider.
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