Elder law involves planning for long-term care and other issues facing elderly and disabled individuals and their families. Although needs of specific clients will differ, elder law attorneys generally assist with Medicaid eligibility for long-term care, estate planning, incapacity planning, probate administration, special needs trusts, guardianships and trust administration.
Elder law generally requires a holistic approach to preserving clients’ autonomy and freedom through effective financial and estate planning. The attorney’s emphasis should be on the client’s quality of life, which means planning for and promoting adequate acute and long-term care options in the event that the client’s health begins to deteriorate. The attorney should assist the clients to establish decision-making plans (both financial and healthcare) that help prepare for incapacity. It is important to discuss with the client and the surrogate decision maker the client’s preferences for long-term care and the level of consideration that estate preservation should receive in the decision-making process.
In examining long-term care, there are three primary methods of paying for such care (nursing homes, assisted living or other care): private-pay; long-term care insurance; and need-based government benefits, i.e. Veterans Benefits and the Medicaid program. A large part of an elder law practice is dedicated to helping clients protect assets and qualify for Medicaid. Medicaid is a public program that pays for healthcare when one cannot afford care. While it can be used to pay for hospital expenses and other medical care, Medicaid is most commonly used for long-term care, including nursing home stays, assisted living and at-home care. Nearly two-thirds of all nursing home residents receive Medicaid. Each state has its own Medicaid program with its own specific rules, benefits and eligibility requirements. Determining whether a client is eligible for Medicaid can be very complex, and requires a careful understanding of a client’s personal finances and the state’s Medicaid requirements.
Medicaid was designed with low-income and impoverished Americans in mind. In Arkansas, individuals are allowed to keep $2,000 in assets, while couples may keep $3,000 in assets. In addition to asset limitations, individuals receiving Medicaid cannot have income over $2,205 (2017). If the individual is married, the spouse’s income does not typically count towards the monthly income cap, however, it will be factored into maximizing income protection for the maximum monthly maintenance needs allowance (MMMNA), which is the income necessary to maintain basic standard of living for the community spouse or non-institutionalized spouse. In Arkansas, a community spouse would be permitted to keep $3,023 as maximum amount of income, while the minimum amount would be $2,003.
According to Genworth 2016 Cost of Care Survey, the average monthly cost of nursing home care in Arkansas is $4,905 for a semi-private room and $5,862 for a private room. The average stay in a long-term care facility is 30 months. Although certain assets, such as your homestead, are excluded from “countable” assets, savings can easily be depleted rather quickly before Medicaid coverage begins paying for costs of long-term care. The purpose of Medicaid planning is to prevent this from occurring.
Keep in mind that simply transferring assets from one individual to another when Medicaid is needed does not suffice as a good planning strategy because the Medicaid guidelines will include a 5-year “look-back” period. This look-back period is the time prior to application during which one cannot have made any asset transfers. Unfortunately, because of the look-back rule, clients often have a misconception that nothing can be done to protect assets from being exhausted for long-term care costs.
An elder law attorney can help clients create a strategy that helps protect family assets and income, while still becoming eligible for Medicaid. This strategy is successful due to a combination of effective legal tools designed to bring clients within Medicaid requirements before spending their entire life savings on nursing home costs or other long-term care costs. These techniques include converting “countable assets” to non-countable, using trusts such as a Miller Trust, creating a Medicaid annuity, and other strategies.
Early planning is critical to maintaining control of the assets that have been accumulated over your lifetime and maintaining control of the decision making in the event of incapacity. The earlier planning occurs, the better! Advance planning will help clients preserve assets for comfort, but also preserve legacy for the next generation. If you or someone you love is facing long-term care issues or is in need of assistance with estate planning, please contact our law firm to schedule a consultation with one of our attorneys who is knowledgeable about elder law, asset protection planning strategies and estate planning.
Editor’s note: Vicki Vasser-Jenkins is an attorney with Wright, Lindsey & Jennings, a law firm with offices in Little Rock and Rogers. The opinions expressed are those of the author.