medicaid estate planning -- older woman smiling at the camera

2022-02-03

The Importance of Medicaid in Estate Planning

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Chances are, you will need assistance paying for medical care as you get older. Maybe you develop a condition where you can no longer work, leaving you without insurance. Or perhaps you require care in a nursing home. Medical care is expensive, and if you do not have a plan in place to help pay the costs, you may find yourself in trouble. Medicaid estate planning is an option for Phelps LaClair clients who want to make sure they are set to cover any medical expenses that occur when they get older. 

What is Medicaid? 

There is often some confusion between Medicaid and Medicare, so here’s a quick definition of each program:

  • Medicare is a federal program offering health coverage to anyone over the age of 65 or anyone under 65 with a disability. Anyone within those two groups is eligible for Medicare regardless of their current income. 
  • Medicaid is a combined federal and state program providing health coverage only for specific groups of people, including those with low incomes, pregnant women, senior citizens, and people with disabilities. 

In Arizona, the Arizona Health Care Cost Containment System (AHCCCS) runs the Medicaid program. Under the AHCCS, the Arizona Long Term Care System (ALTCS) provides health insurance coverage for adults over the age of 65 who require long-term facility care. 

How can Medicaid estate planning help me?  

The cost of nursing home care is not cheap, and the costs are only projected to increase. In 2021, the average monthly cost for semi-private nursing home care in Arizona was $6,494. For private care, the monthly amount jumped to $7,908 on average. 

Medicaid funding provided through ALTCS helps pay for much of the cost associated with nursing home care. However, becoming qualified to receive those funds can be tricky. There are a number of specific qualifications an Arizona resident would need to meet, including specific maximum levels for income and assets. 

For example, in 2022, an adult in need of long-term care may not have an individual monthly household income of more than $2,523 or assets totaling more than $2,000. While your house and car do not count towards the asset maximum, many other things do. Determining income also becomes more complicated if you’re married and your spouse is still working and living at home. 

An elder law attorney well-versed in Medicaid estate planning can help you navigate through the different qualifications and scenarios. They can ensure that you receive the health care assistance you need, without having to give up everything you’ve worked for throughout your life. For example, they can help you set up a Medicaid Asset Protection Trust (MAPT), an irrevocable trust where you can place your assets so they do not count towards the maximum income level set by Medicaid. 

Do I need to worry about Medicaid estate recovery?  

We’re frequently asked by our clients if Medicaid estate recovery is a concern. The estate recovery program is also handled by ALTCS in Arizona. This program allows the federal government to recover some of the costs it paid for your care at a nursing home after you pass away. 

To recover these funds, the Medicaid estate recovery program may try to retrieve funds from your estate by seizing assets such as your house. However, the government cannot just come in and steal your home—there are certain stipulations where Medicaid estate recovery can not seize your home. These exceptions include: 

  • A surviving spouse 
  • A child who has lived in the home for at least two years and was a caregiver
  • A child under the age of 21 living in the home
  • Causing undue hardship on the beneficiaries of the estate

An MAPT can help shield your assets from Medicaid estate recovery. A Medicaid planning lawyer can ensure the trust protects your holdings so that your spouse and other benefactors do not have to worry about additional hardships. 

Medicaid Estate Planning in Scottsdale, Arizona

There’s already enough to worry about as we age—why not put a solid plan in place to help lessen future burdens? Phelps LaClair has been providing elder care law and Medicaid planning for Maricopa County residents for over 40 years. Contact us today at 480-892-2488 to discuss how Medicaid estate planning can help protect your assets and secure your health care. 

Photo by Anthony Metcalfe on Unsplash

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