In my previous post, I discussed Medicaid as an option to help seniors cover the expense of long-term care in a nursing home or assisted-living facility. However, eligibility for Medicaid is determined based on the applicant’s available income and resources. Oklahoma has set limits such that even people of modest means may fail to qualify. Enter Medicaid planning. Working with a knowledgeable attorney, many seniors who would otherwise be ineligible can obtain Medicaid benefits to assist with the costs of long-term care while still protecting assets for their families. Medicaid planning can generally be divided into two categories: pre-planning and crisis planning. Today, I will focus on crisis planning.
As the name implies, Medicaid crisis planning occurs when someone who is already receiving long-term care can no longer afford it or the need for long-term care is imminent and the individual has no means of paying. Although the options in these cases are limited, there are steps that can be taken. If the applicant’s resources are too high, they must proceed with extreme caution. The general rule is that a person cannot give away assets to become eligible for Medicaid. Doing so can make them ineligible to receive Medicaid benefits. Yet, there are exceptions to this general rule. The main exception is transfer of the applicant’s primary residence to his or her spouse or a disabled child. Transferring the applicant’s primary residence to a spouse or disabled child reduces the applicant’s available resources for purposes of Medicaid eligibility without incurring the ineligibility penalty. Other exceptions include transfer of assets to a special needs trust, that is, a trust established solely for the benefit of a disabled individual under the age of 65, or where the applicant can show that the transfer was exclusively for a purpose other than Medicaid eligibility. Note: placing assets in a revocable living trust will trigger the ineligibility penalty.
In the event a Medicaid applicant’s income is too high, the applicant can establish a Qualified Income Trust — commonly known as a “Miller” Trust. This is an irrevocable trust in which the Medicaid applicant deposits all of his or her income each month. In turn, the trust pays the applicant’s share of nursing home costs not covered by Medicaid as well as a personal allowance for the applicant and their spouse. A “Miller” Trust is an exempt asset. Money placed into the trust is not considered income to the applicant for purposes of Medicaid eligibility.