Medicaid Frequently Asked Questions

Do I have to “spend down” the money on medical care?

No. This is perhaps one of the most often given pieces of false information. You are allowed to spend your money on reasonable personal items, home improvements, a new car, buy a house, purchase irrevocable final arrangements, and small life insurance policies.

What are the limits on purchasing personal items for Medicaid spend down?

Keep it reasonable. There is a case on the books from the east coast on purchasing a $75,000 diamond ring. That purchase was ruled as an unreasonable and perhaps fraudulent purchase of jewelry. This doesn’t mean that you can’t purchase jewelry, but keep it in the “reasonable” range. This doesn’t necessarily mean you have to buy costume jewelry.

A middle of the road funeral in this area of Arkansas will run about $9,000 pre-paid, for everything including the service, liner, opening and closing, flowers, escort, etc.

What is the limit on how much cash I can have to qualify for Medicaid?

As of August of 2015, the upper limit appears to be $119,220. But, Arkansas is a keep one-half state. For example, if Mr. and Mrs. Medicaid have $120,000, the spouse at home gets to keep $60,000 and the spouse in the home gets to keep $2,000. Then they would have to spend down $58,000.

How much cash can the spouse in the institution have to qualify for Medicaid?

This one has been firm for many years. The spouse in the institution can have $2,000. This number is the original figure and has never been adjusted for inflation.

How far back does Medicaid examine my finances?

5 years. Any gifts made in that 5 years will count against you in what is called a penalty period.

How do I know how long the penalty period is?

In Arkansas, divide the total amount of the gifts by $5,168 (as of August of 2015). That gives you months and days of the penalty period.

In Arkansas, can I get rid of the Medicaid penalty period by leaving the institution?

No. The regulation is clear that leaving and coming back does not stop the penalty period.

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How to Choose an Estate Planning Attorney

This is often stated in different ways, such as

• How to find a lawyer for a will
• How to find a lawyer for wills and estates
• How to find an estate attorney
• How to select an estate planning attorney

Here are some tips:

1. Find an attorney that practices in estate planning.  They keep up with all of the changes in the laws that can affect your estate plan.
2. Preferably, find one that is versed in elder law and Medicaid as well.  There are certain things done in an estate plan that may affect your eligibility for Medicaid if you should ever need it.
3. Find somebody you are comfortable with.  Shop around for an attorney if you need to.  But, be honest with the attorney and tell him you are shopping up front.
4. Find somebody whose fee you are comfortable with.  Fees may vary somewhat within the local attorney community.  But you can expect to pay slightly higher fees to a lawyer that practices in the area or who also adds in elder law to their portfolio.
5. All attorneys are expected to have a minimum level of competence.  But, when I took the Bar exam, estate planning was not a tested subject.  The related subject of Real Estate (Real Property) Law was tested, but not elder law or estate planning law.

Choosing an attorney is based on a trust relationship.  If you don’t feel that you can trust an attorney, then feel free to find another one.  Everything that is done is based on that level of trust and confidence in the lawyer and the lawyer’s abilities.

 

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Advantages of a Trust in Estate Planning

Trusts, both revocable and irrevocable, have many advantages in estate planning, but they also have some downfalls.

Advantages:

1. Trusts make funds and property available almost immediately to family members
2. A revocable or irrevocable trust can pay off your final expenses
3. They can pay off your creditors
4. They can create “sub-trusts” to hold money for specific purposes
5. A trust can delay the distribution of money until children reach a more mature age
6. Trusts help keep your family business private by keeping your estate out of the public process of probate
7. Special kinds of trusts (Irrevocable Life Insurance Trust – ILIT) can keep you under estate tax limits if you carry a lot of insurance

Disadvantages:

1. For Medicaid, if your home is in a revocable trust, or in a irrevocable trust for less than 5 years, the house becomes an asset that Medicaid will count against your $2,000 limit
   • The trustee actually owns title to the home
   • Even if the trustee is you, it is not considered your property, but trust property
2. With an irrevocable trust, you cannot get the property out in case of emergency.  With specially setup trusts(Intentionally Defective Grantor Trust – IDGT), you can swap property in and out, but cannot reduce the monetary value of the trust.

I hope this helped you out.  If you have any questions or want an appointment to discuss this more, contact the DeWitt Law Firm.

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