Medicaid Planning
With regard to Medicaid Planning, there’s an unfortunate breakdown in our Medicare system when it comes to coverage for nursing home care. Medicaid helps fix the inadequacies of Medicare. Risk factors like Alzheimer’s and Parkinson’s make it critical to plan now, before placement if at all possible.
Now or Later?
The idea of planning for something that you don’t even want to think about it sometimes almost incomprehensible. No one lists nursing home planning as a priority. Unfortunately this is where life can take a decided turn toward reality. Sometimes we have advanced warning of the pending need, and other times it just surprises us. There are typically three different types of clients that we see in our office, the planner client, the uh-oh client and then the one that we call the writing on the wall client.
The Planner
Everyone knows of this type of person, you may even be that person, the person that knows what they’re going to have for breakfast next month. The planner has a plan for everything. A plan for this person is a little bit of freedom, one less thing to worry about. Unfortunately, this is not the sweet spot of the human condition. Most of us procrastinate and put off till tomorrow what we could have done today. Still, for the planner, having a plan for life eventualities represents peace of mind and one less thing to worry about. The cornerstone of that plan is a good, complete, durable power of attorney.
Durable Power of Attorney
When it comes to planning ahead, the most thing is having in place a good durable power of attorney. When I say good here I mean a document that has all of the required powers that will be necessary for your backup person to be able to step in your shoes and do those things that are required in order to obtain Medicaid benefits. Many power of attorney documents, especially those produce by non-lawyers, do not contain the language that will be required to qualify for Medicaid benefits.
The BIG Five Powers
- Five powers that need to be in every power of attorney but are most commonly missing:
- The power to create a trust, including both revocable and irrevocable trusts.
- The power to fully manage individual retirement accounts (IRAs).
- The power to make gifts, especially to the named power of attorney.
- The power to convey the home and all the principle’s interest.
- The provision specifying the backup to the named power of attorney.
The Uh-Oh client
On the other end of this planning spectrum, is what I refer to as the uh-oh client. This is typically the client who has not done any prior planning or has been surprised by some sort of sudden need for placement in a nursing home or assisted living facility. The term comes from the situation where the person receives the nursing home bill, sees the amount that is being charged on a per month basis and then says to himself uh-oh. While this may be the most common client that I see, some planning opportunities can be lost by waiting to the lase minute. This brings up to the third type of client…
The writing on the wall client
There is a bible story from the book of Daniel that talks about writing on the wall, literally a warning from God, and that is a good idea to head that warning. Many of my clients may have a similar heads-up regarding future care needs and the need for Medicaid. When such advanced warnings exist, it is a VERY good idea to begin the process of establishing eligibility and taking action to address the many issues that are present. Failure to take action usually results in a less than optimal outcome.
Failure to plan is a plan to fail
One of the most common reasons for lack of planning in the world of public benefits and specifically Medicaid is the commonly held misconception that if you have not taken any action at least 5 years in advance then you are out of luck and cannot do anything but pay privately for the nursing home care. This is just wrong. The 5 year rule only relates to the making of gifts/transfers of assets prior to application of benefits. It is never too late to solve the problem, to take control of the situation and put into place a plan of action to obtain benefits to help pay the cost of long term care. It is only too late if you do not take action.
Here are some resourceful links: