“Question Answered”

“Question Answered,” by Stephen A. Moses

 

Quote:

“Q: Is income more difficult to hide than assets for estate/medicaid planning purposes?

“A: There’s no need to ‘hide’ income. Medicaid subtracts personal health and LTC expenditures from income before applying the “low income” standard. Most people who apply for Medicaid LTC have very high personal health and LTC expenditures. So the vast majority of Americans qualify based on income without any special planning. The rule of thumb is that anyone with income below the cost of a nursing home qualifies based on income.

“Medicaid planning is done mostly for assets, but here again it’s not necessary except for higher net worth people. Most middle class individuals qualify because their larger assets are exempt, such as home equity, personal belongings, a car, etc. People with excess countable assets easily convert them to exempt assets by purchasing household goods, prepaid burial plans, a car, etc. or by paying down a mortgage. They don’t need an attorney for that. Medicaid eligibility workers routinely explain how to convert assets to meet Medicaid limits.

“The belief that Medicaid planning is relatively uncommon is correct. But that is because the vast majority of people don’t need sophisticated planning to qualify for Medicaid LTC benefits. That’s why curtailing divestment (to ensure exempt wealth is preserved while on assistance) and estate recoveries (to capture wealth at death to reimburse Medicaid) are so important. As it operates now and has done all along, Medicaid is free inheritance insurance for heirs.”

 

LTC Comment, Stephen A. Moses, President, Center for Long-Term Care Reform:

An LTCI actuary asked me that question this morning. I thought LTC Clippings subscribers might like to see my answer. So this is it. The link goes to our monograph Medicaid and Long-Term Care for a full explanation of all the related issues.