Planning for someone under age 65
These individuals are disabled prior to or as the result of either an intentional or negligent act. Medicaid has paid benefits for that individual and the individual then receives settlement proceeds or a jury award that would normally make him or her ineligible to receive Medicaid benefits. Through proper planning the proceeds can be held separate from the individual’s assets, so that they remain eligible for Medicaid. The proceeds are then used to provide for the individuals needs that are not covered by Medicaid. This is referred to as a “supplemental needs trust” or a “special needs trust”. If anything is left in the trust upon the death of the individual, the proceeds first go to reimburse the state or states that have provided benefits and then any remaining balance goes to the individual’s heirs or beneficiaries. There is no requirement that there be any money inside the trust at the time of the individual’s death.
Planning for someone over the age of 65
When an individual over the age of 65 is facing the need for long-term care and needs or wants to qualify for Medicaid assistance. It is important to review their assets to see if they qualify under the asset test. For an individual, the assets are allowed to be no more than $2,000.00. But there are ways to legally reposition assets to meet this test. After qualifying under the asset test, an individual may only have $1,911.00 (2008) in monthly available income. However, through the use of a “Miller Trust” or “Qualified Income Trust” it is possible to divide excess income into “available income” and “non-available Income” thereby passing the income test as well. In many instances, the “spend down” that most people fear can be substantially reduced or totally eliminated by proper Medicaid planning. No longer is the individual facing the possibility of exhausting their assets and then applying for Medicaid.
Durable Powers of Attorney (DPOA)
The most powerful legal document is the Medicaid compliant Durable Power of Attorney. Many people already have Durable Powers of Attorney (DPOA) from their previously drawn estate plan. However, estimates range from 90% to 95% of those DPOAs will be inadequate in the Medicaid situation. You should consult with an Elder law attorney to be sure that your DPOA will allow you or your agent to carry out Medicaid planning on your behalf or your spouse’s behalf.
The second most powerful document that can be affective in Medicaid planning is a proper Medicaid planning will. It does no good to get someone qualified for Medicaid only to have them disqualified later on when the community spouse passes away unexpectedly.
The third most powerful document that can be affective in Medicaid planning is the Enhanced Life Estate Deed (aka “Lady Bird” Deed, named after Lady Bird Johnson the widow of President Lyndon Baines Johnson). This allows the homestead to bypass probate upon the death of the surviving spouse. (Remember sometimes the surviving spouse could turn out to be the Medicaid patient.) In addition to avoiding probate, the property will also bypass Florida Medicaid Recovery.
As mentioned above, there are additional legal ways and additional legal documents that can be a part of Medicaid planning. Please contact me with your Medicaid questions.