How To Hide Money To Qualify For Medicaid

How To Protect Money From Medicaid

According to the U.S. Department of Health and Human services, roughly 70% of people age 65 and above will need some form of long-term care. Unfortunately, for many families long-term care is prohibitively expensive which is why they apply for Medicaid to help pay for the costs. In fact, Medicaid is the largest payer in the U.S. for long-term care. But Medicaid has certain rules, that if not properly planned for, can put your home and life savings at risk.

how to protect money from medicaid

As a result, one of the most common questions families have when Medicaid Planning with an Elder Law Attorney is how to protect money from Medicaid. In this article, we will discuss how to protect money from Medicaid using proven methods to legal methods. You should note that Medicaid law is very complicated and changes all the time. Before you attempt to implement any Medicaid Planning strategies, you should always consult an Elder Law Attorney first.

How To Pay For Long-Term Care

Before we get into how to protect money from Medicaid, let's first discuss the different ways to pay for long term care. The options to pay for long term care are limited. Generally, they include paying out of pocket, long-term care insurance, VA benefits if you are a qualified veteran, or Medicaid. Paying out of pocket is usually the least appealing option. In Michigan, the average yearly cost of a nursing home is $108,000. That comes out to between $8,000-$9,000 per year. This can quickly drain a family's savings or force them to sell their family home just to pay for care – a scenario that is less than ideal. Long-term care insurance needs to be planned for well in advance and VA benefits are only available to qualified veterans. As a result, most families turn to Medicaid to pay for long-term care. Medicaid is very useful and an experienced Elder Law Attorney can help your apply and protect money from Medicaid so that you can pay for long-term care without losing your life savings and home in the process.

How To Protect Money From Medicaid With
Medicaid Estate Planning

Many seniors who need long term care want to preserve their money and property so that they can pass it to their family as inheritance. While long-term care is very expensive, it is possible to preserve an inheritance for your family by doing proper Medicaid Estate Planning to pay for care and still protect money from Medicaid.

Medicaid is a "means-tested" program. This means that applicants need to have limited assets and low income to qualify. Unfortunately, families who don't know about Medicaid Estate Planning oftentimes either spend their own money and drain their savings until they are under the limits or attempt to hide money in ways that violates Medicaid's rules which disqualifies them from Medicaid when they finally apply.

While improperly hiding money from Medicaid can disqualify a candidate from receiving long-term care benefits, an Elder Law Attorney can help you create a Medicaid Plan to help you qualify for Medicaid while allowing you to legally protect money from Medicaid.

To better understand how to protect money from Medicaid, let's first cover some Medicaid related terms that you should be familiar with.

Asset and Income Limits

To qualify for Medicaid, an applicant needs to meet strict financial requirements, including assets and income limits. The asset and income limits refer to the value of assets or amount of income that the law allows a person to have and still qualify for Medicaid. However, the limit requirements vary between states. As a result, the amount of money an applicant needs to protect from Medicaid depends on where they live. Additionally, the law exempts certain assets and income from the asset and income limits. For instance, in most cases an applicant's primary home is not subject to asset limits, while cash flow from Medicaid compliant annuities is not subject to income limits.

Asset Spend Down

Even though the law limits the amount of income and assets a Medicaid applicant can have, having "excess" assets or income is not necessarily an automatic Medicaid disqualification. Even with the "excess" income, an applicant can still qualify for Medicaid by spending down surplus cash. However, to avoid Medicaid ineligibility, an applicant needs to follow some set spend-down rules, which vary from state to state. As a result, an applicant needs to be strategic when implementing spend down strategies to protect money from Medicaid.

Look-back Period

The look-back period is one of the Medicaid rules that anyone who is trying to understand how to protect money from Medicaid needs to understand. As we mentioned previously, there is a limit to the amount of assets and income an applicant can have to be eligible. Some applicants decide to give away or sell assets below fair market value in order to meet the limit requirements.

However, Medicaid sets a time frame, or look-back period, to review any asset sales or gifts that were made prior to filing the application. Most states, including Michigan, have a 60-month look-back period. This means that any applicant who has gifted or sold their assets within 60 months of their Medicaid application date will be ineligible for Medicaid for a specific period of time known as the penalty period.

These are just a few of the rules that add to the complexity of Medicaid. But don't worry – there are proven Medicaid Planning strategies that can be implemented by an Elder Law Attorney to protect money from Medicaid.

How To Protect Money From Medicaid
With A Medicaid Asset Protection Trust (MAPT)

Medicaid Asset Protection Trusts are set up to protect money from Medicaid. MAPTs protect money from Medicaid by converting countable assets into non-countable assets. This type of trust essentially allows someone to qualify for Medicaid who otherwise would have been over Medicaid's limits. MAPTs can also serve other purposes, including protecting a Medicaid recipient's home from the Medicaid's Estate Recovery Program (MERP) and protecting other assets for children or other beneficiaries.

When a Medicaid Asset Protection Trust is created properly, the assets transferred into it technically no longer belong to you. The fact that assets or money put in trust no longer belongs to the trust-maker means they don't count toward the asset limits and Medicaid cannot claim them as a reimbursement after the Medicaid recipient's death. Essentially, asset protection trusts allow applicants to protect money from Medicaid in a legal manner.

As an applicant, you need to be aware that transfers to asset protection trusts are subject to Medicaid "look-back" rules. Accordingly, you need a skilled Elder Law Attorney to help you do Medicaid Planning in advance to successfully use this strategy to protect money from Medicaid.

Using Income Trusts To Protect Money From Medicaid

The law requires applicants to meet strict income limits to qualify for Medicaid. Excess income makes some individuals ineligible for Medicaid. However, in some states an applicant can avoid income limits-related ineligibility by establishing Income Trusts known as Qualified Income Trusts (QIT). A Qualified Income Trust, also known as a Miller Trust, is an irrevocable trust where an applicant can transfer their excess income. While some states allow Medicaid applicants to spend down their income to eligible limits, others prohibit applicants from spending down their excess money for Medicaid purposes. In states with such prohibitions, individuals usually put their excess money in QIT to protect money from Medicaid while still qualifying for benefits.

How To Protect Money From Medicaid
With Medicaid Compliant Annuities and Promissory Notes

It is common for an older adult to require emergency Medicaid benefits while still earning income or holding assets substantially over the required limits. In a lot of cases where an applicant needs Medicaid benefits in an emergency, it is also common that the applicant could have recently sold or transferred their assets. In both cases, transferring or spending the excess income for Medicaid purposes will trigger look-back period penalties which means the applicant is ineligible for Medicaid for a specific period. As a result, Medicaid compliant annuities are usually used in Medicaid Crisis planning situations to help the applicant pay for long-term care during the penalty period without completely draining all of their assets that they would like to leave behind for their family as an inheritance. Establishing a Medicaid compliant annuity or promissory note is not a straightforward strategy for protecting one's assets and an applicant should use an experienced Elder Law Attorney to implement it successfully.

How To Protect Money From Medicaid
With A Caregiver Agreement

A caregiver agreement is a personal care agreement where a trusted family member or friend of the Medicaid applicant offers to take care of them for an income. This type of arrangement is applicable primarily where an older adult requires caregiving services that are outside the scope of a nursing home facility and not covered by Medicaid. One of the major benefits is that the applicant receives the services in their home and from a person they know and trust instead of being entered into a facility.

The applicant protects money from Medicaid by agreeing to pay for the caregiving services in advance. As a result, the advance payments reduce the applicant's non-exempt or countable assets. However, for Medicaid to accept the caregiver agreement, it needs to have certain characteristics, including:

The contract must define the exact services the caregiver will provide and the hours they will work.
They must maintain a daily log of hours worked and invoices of the services rendered.
Following the patient's death, any unearned funds must be paid to Medicaid but not in excess of what Medicaid paid for his/her care.
The parties must calculate the lump sum payment using legitimate market rates for the services and a reasonable life expectancy.

How To Legally "Hide" Money From Medicaid
With Spousal Transfers

While Medicaid prohibits outright transfers to children, other family members and trusts, it permits transfer between spouses without triggering a look-back period penalty. The spousal transfer strategy transfers those assets under the spouse who needs care to the name of the well or healthy spouse, also known as the community spouse. This Medicaid planning strategy reduces the countable assets of the Medicaid applicant spouse. In effect, the applicant spouse manages to hide money from Medicaid while maintaining eligibility.

Contact An Elder Law Attorney
To Protect Money From Medicaid

Protecting money from Medicaid is very complicated and you should seek the help of an Elder Law Attorney when implementing the strategies discussed in this article. Besides the need to understand your state's laws, you need to understand concepts such as the spend-down rules and look-back period. Additionally, you need to know strategies fit your specific circumstances. In some instances, you may not even need to hide the money from Medicaid, or it may not be the right time to do so. Using the services of a professional Michigan Elder Law Attorney, will be invaluable when creating a strategy to pay for nursing home care and protect money from Medicaid.

Protect Your Home And Life Savings From Nursing Home Costs While Getting The Benefits
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Because every Medicaid Planning situation is different, we offer a free initial consultation with an Elder Law Attorney to help you determine if Medicaid Planning is right for you.

The initial consultation gives you the opportunity to help you understand your current Medicaid eligibility. It also gives us a better understanding of how we can help you plan to protect your home and life savings from nursing home costs while getting you the benefits you need to pay for care.

To book your free consultation, call us now at (248) 613-0007 and tell our friendly receptionist that you would like to book a consultation for Medicaid Planning. She will book you for the time that works best for your schedule.

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