Medicaid Planning

The Cost of Long Term Care

The impact that long term care costs can have on you and your family should not be ignored. Here are the facts:

  • The average monthly cost of a nursing care facility in Michigan is $8,084
  • Roughly 1 out of 4 Americans ages 55-79 is severely disabled
  • Forty percent of persons 65 or older will spend some time in a nursing home
  • Many seniors do not have or are unable to qualify for long term care insurance
  • Long term care policies may only provide partial coverage and/or coverage for a limited number of years

Not surprisingly one the biggest fears of the elderly is that they or their spouse will have to enter a nursing home and their entire life savings will be consumed as a result. However, with this unfortunate result can be avoided.

Our firm encourages our clients to consider long term insurance and can assist them in acquiring such coverage. In addition, with our Elder Transitions Plan™, we help our clients stay at home safely, stave off entry into a nursing home, and receive the care they need. In order to avoid losing everything, our firm is also able to help you find the means to pay for such care, including qualification for Medicare, Medicaid and Veteran’s benefits.

Medicaid Planning

The average cost of a nursing care facility in Michigan is $8,084/month.

Medicare vs. Medicaid

Just because you may be entitled to Medicare benefits does not mean you are entitled to Medicaid benefits. TheMedicare program pays for hospital and physician costs for seniors and the disabled. The Medicaid program covers long term care costs, subject to certain income and asset eligibility requirements.

Michigan offers a number of Medicaid (and/or Medicare) funded programs that provide assistance with the costs of nursing home care, as well as in-home care assistance. Knowing the eligibility requirements for each program before applying is essential to getting the assistance you may need.

The Unpleasant Truth

To be eligible for Medicaid benefits a person or married couple may only own certain assets, subject to certain limitations, including the following assets:

  • a homestead
  • personal property and furnishings
  • a motor vehicle
  • a pre-paid funeral and/or burial contracts

Most other assets are considered "countable," including non-homestead real estate, IRAs and other retirement accounts, bank accounts, etc. Without proper planning, those "countable" assets must be "spent down" to pay for long term care before qualifying for Medicaid.

The need to "spend down" cannot be avoided simply by giving assets away to a spouse or loved one. Indeed, in Michigan, with a few exceptions, making gifts to non-spouses can actually cause Medicaid disqualification if the gifts are made within five years of applying for Medicaid. The length of disqualification (called a “divestment penalty”) depends upon the value of the gift, when it was made, and to whom it was made.

The Good News

There are ways, however, to qualify for Medicaid coverage, without having to first "spend down" all of your assets. These include, but are not limited to, the following:

  • an asset conversion plan
  • a "controlled" gifting plan, which our firm calls its Gift Plus Planning™ program;
  • use of "actuarially sound," Medicaid compliant annuities
  • use of specialized trusts, such as Medicaid Exception A or B trusts, a Solely for the Benefit trust, an Irrevocable Divestment Trust, and other types of trusts
  • Maximizing "spousal" asset and income allowances, including the "Community Spouse Resource Allowance" (up to $119,220) with use of a living trust

Proper Planning Required

To take advantage of these "spend down" avoidance methods, a proper estate plan must be in place before a person becomes incapacitated. At a minimum, the estate plan should include a Will, a Financial Power of Attorney with essential "Long-term Care Planning" powers, and a Medical Power of Attorney. For a married couple, the plan should usually include a Living Trust.

Without a proper estate plan, preserving your assets from "spend down" is much more difficult, and sometimes impossible. If you already have an estate plan, you should have it reviewed to make sure it addresses Medicaid and long term care issues, and takes advantage of any changes in the law.

Once approved for Medicaid, proper estate planning is necessary to prevent your assets from passing through probate in order to avoid a claim against your probate estate by the state to recoup the cost of the Medicaid benefits paid on your behalf or, perhaps, on that of your spouse. This requires a coordinated plan, which may include the use of certain types of trusts, certain jointly titled assets, special real estate deeds, beneficiary designations, etc.

Request a Free Consultation with Our Medicaid and Long Term Care Planning Professionals

We welcome you to learn more by clicking on our Frequently Asked Questions, below, or to contact Estate Planning & Elder Law Services for a consultation about your own situation and concerns. Please complete our online form or call (888) PLAN-050. With offices in Northville and Brighton, we have been serving Southeast Michigan for over 20 years, including Livingston, Washtenaw, Oakland and Wayne Counties.

Frequently Asked Questions About Medicaid Planning and Long Term Care in Michigan

Q: Does Medicare cover the costs of long-term care?

Q: Do I have to spend my life savings before I can qualify for Medicaid?

Q: Is it too late to protect my assets from Medicaid "spend down" once I become incapacitated or have applied for Medicaid?

Q: Will the State tell me how I can protect my assets and still qualify for Medicaid?