Nursing Home Planning

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Nursing Home Planning

Medicaid (Nursing Home) Planning
Craig Riffel does all of the Medicaid (nursing home) planning for the Firm. Over the past several years, Craig has qualified many clients for Medicaid and saved them thousands of dollars in nursing home and un-reimbursed medical and prescription medication costs. The net worth of Craig's Medicaid clients has ranged from $25,000 to $2.5 million. There are three things you should know about Craig's Medicaid planning before reading further:
A.
Craig's initial consultation about a potential client's Medicaid case is absolutely free of charge. There is no obligation to simply talk to Craig about your case.


B.
The Firm will provide the client with a no-risk written guarantee. Craig will get the client qualified for Medicaid benefits or the client does not owe the Firm or Craig anything.


C.
The total cost for Craig to qualify a client for Medicaid benefits is approximately equal to two months nursing home costs; and in some cases, it is even less.



Medicaid is a Federal insurance program administered by the states designed to assist persons with long-term care expenses such as nursing home costs and related medical expenses. Medicaid pays for nursing home costs, medical expenses not reimbursed by either Medicare or other insurance, and prescription drug costs. Each person contributes to Medicaid through Social Security and self-employment taxes.

Prior to 1989, Medicaid was a welfare program. Congress recognized that most middle class Americans could not afford long-term care expenses. As a result, in 1989, Congress passed the Medicare Catastrophic Coverage Act of 1988. This Act greatly overhauled and changed Medicaid. Today, Medicaid is not a welfare program but a Federal insurance program being used by many middle class Americans to pay long-term care expenses. Medicaid planning is the process a client pursues in getting qualified for Medicaid. Medicaid planning largely resembles other types of planning such as tax planning.

As most of us know, nursing home and medical costs continue climbing to staggering amounts. The nursing home rates at most nursing homes in Western Oklahoma and Western Kansas average approximately $3,000 to $3,500 per month while un-reimbursed, medical and prescription medication costs for nursing home residents average approximately $500 to $1,000 per month. As a result, long-term care can easily cost from $40,000 to $60,000 per year per resident.

About 1 out of every 2 people will enter the nursing home at some point during their lives. On average, a non-Alzheimer's patient will stay in the nursing home a little more than 3 years while an Alzheimer's patient will be in the nursing home almost 11 years. As a result, nursing home and medical costs are a very major concern to most clients.

A client basically has three options to pay for nursing home and medical costs. First, the client may self-pay for the care. Although this may be the simplest to do, it is extremely expensive and can eventually bankrupt the client. Second, the client can obtain some type of long-term care insurance. Only about 5% of those entering a nursing home have any type of long-term care insurance because it is very expensive and most people either cannot afford it or most cannot medically qualify. The client's third and final option is to do some Medicaid planning to qualify for benefits. Once a client qualifies for benefits, Medicaid will pay for all nursing home costs, and all un-reimbursed medical and prescription medication costs.

Craig will be happy to answer any questions you have about Medicaid planning absolutely free of charge. Simply e-mail your question(s) to Craig at craig@westoklaw.com or call him at (580) 234-8447. If you prefer, Craig will be happy to meet with you in an initial consultation free of charge.

The following are some commonly asked questions about Medicaid planning. For more information about each, please click on the appropriate question.


1.
Is Medicaid considered welfare?

2.
Who pays for long-term care costs?

3.
What is Medicaid planning?

4.
Is Medicaid planning legal?

5.
Are long-term care costs a real threat to clients?

6.
Why do we do Medicaid planning?

7.
Is Medicaid planning only beneficial if the client is entering the nursing home?

8.
Don't clients have to do their planning at least 3 years before applying for Medicaid?

9.
Can anything be done if the client is already in the nursing home?

10.
Aren't clients with trusts qualified for Medicaid benefits?

11.
Can't each person gift $11,000 per year?

12.
Does Medicaid planning need to be considered when doing estate planning?

13.
If a client has to spenddown assets to qualify for Medicaid, does the client have to spend those assets on nursing home costs, medical expenses or prescription drug costs?

14.
Can clients and their advisors rely upon DHS advice?

15.
Why didn't my client's attorney discuss Medicaid planning with them?

16.
Can just about everyone benefit from Medicaid planning?

17.
Does Craig charge for an initial consultation?

18.
Does Craig ever travel to surrounding towns if we want to schedule a meeting?



1. Is Medicaid considered welfare?
No. Prior to 1989, Medicaid was a welfare program. In the late 1980s, Congress recognized that most middle class Americans could not afford long-term expenses. As a result, in 1989, Congress passed the Medicare Catastrophic Coverage Act of 1988. This Act greatly overhauled and changed Medicaid. Today, Medicaid is not a welfare program but a Federal insurance program being used by many middle class Americans to pay long-term care expenses. Medicaid planning largely resembles other types of planning such as tax planning.

2. Who pays for long-term care costs?
According to the Centers for Medicare and Medicaid Services, long-term care costs are paid by the following:
Medicaid
43.8%

Out-of-pocket
24.6%

Medicare
13.7%

Long-term care insurance
10.3%

Other
7.5%



3. What is Medicaid planning?
Medicaid planning is commonly referred to as nursing home planning. The planning qualifies the client for Medicaid benefits which pay nursing home costs, medical costs and prescription drug costs. Medicare and Medicaid are two Federal programs that pay for health care expenses. Although these two programs are commonly confused by the similarities in their names, the programs themselves are very different. Medicare is a Federal insurance program administered by the Federal government to help pay medical expenses for persons over age 65 and some disabled persons under age 65. Unlike Medicare, Medicaid is a Federal insurance program administered by the states designed to assist persons with long-term care expenses such as nursing home costs and related medical expenses.

4. Is Medicaid planning legal?
Yes. Congress attempted to criminalize Medicaid planning in 1996. The Department of Justice later ruled the law to be unconstitutional and refused to enforce it. In 1998, a Federal District Court enjoined the Department from enforcing the new law. As a result, Medicaid planning is still legal and very viable for most clients. Medicaid planning is a generally accepted practice as evidenced by the fact that many caseworkers at the Oklahoma Department of Human Services, the Agency responsible for determining Medicaid eligibility, have referred clients to Craig for Medicaid planning.

5. Are long-term care costs a real threat to clients?
According to the Centers for Medicare and Medicaid Services, 44.30% of non-Alzheimer's and non-dementia patients enter the nursing home while 52.90% of Alzheimer's and dementia patients enter the nursing home. Non-Alzheimer's and non-dementia patients stay an average of 3.25 years in the nursing home. Alzheimer's and dementia patients stay an average of 10.90 years in the nursing home. Only 4.90% of those entering the nursing home have any type of long-term care insurance. Most people are unable to obtain long-term care insurance because it is either very expensive or they cannot medically qualify. The nursing home rates at most nursing homes in Northwest Oklahoma average approximately $3,000 to $3,500 per month while un-reimbursed prescription medications for nursing home residents average approximately $500 to $1,000 per month. As a result, long-term care can easily cost from $40,000 to $60,000 per year per resident.

6. Why do we do Medicaid planning?
We do Medicaid planning for several reasons. First, in some cases we help protect the spouse living at home from the financial hardships and insecurity created by their spouse entering the nursing home. Second, Medicaid only pays for necessities. Planning can increase the quality of life for the nursing home resident. Third, in many families the parents are in business (i.e. farming, etc.) with their children. Planning helps protect the business assets from being lost to nursing home costs; and consequently, helps protect the children involved in the business from financial hardships. Fourth, many families have worked hard, paid into the system supporting Medicaid, and at the same time have been able to save a little for their families. Planning helps these hard working, tax paying people pass on the fruits of their labor to their children and grandchildren. Finally, most people want to die with dignity. Having some protected finances can assist families in paying for special care for their loved ones.

7. Is Medicaid planning only beneficial if the client is entering the nursing home?
No. The Medicaid system in Oklahoma has a program known as the Advantage Waiver. This program allows clients to remain at home, receive in-home services and have their in-home services covered by Medicaid. The client must still meet the medical and financial eligibility requirements as if the person was entering the nursing home. In addition, the in-home services necessary for the client to live safely at home cannot cost any more than it would for the person to live in a nursing home.

8. Don't clients have to do their planning at least 3 years before applying for Medicaid?
No. Most people have heard about the 3-year look-back rule which provides that DHS will review all transactions 3 years prior to the date the Medicaid application is filed. This rule does not mean clients must do their planning 3 years before entering the nursing home or 3 years before applying for Medicaid. In fact, most cases I have handled involve clients who are entering the nursing home within a few days or a few weeks of our initial office conference. Most Medicaid planning is usually done within this 3-year period and very rarely depends upon assets being transferred 3 years prior to the client entering the nursing home. Clients are still eligible for benefits and generally qualify for benefits even if they:
(1)
Have gifted property 3 years before entering the nursing home or 3 years before applying for Medicaid;


(2)
Still own property and have failed to give it away 3 years before entering the nursing home, or 3 years before applying for Medicaid; or


(1)
Have failed to do any Medicaid planning at least 3 years prior to entering the nursing home, or 3 years prior to applying for Medicaid.



Through proper planning, clients can protect a substantial amount of assets even on the eve of entering the nursing home or applying for benefits.

9. Can anything be done if the client is already in the nursing home?
Yes, in most cases. Most people have heard that you must do Medicaid planning before the client enters the nursing home, which is not entirely true. It is best to do Medicaid planning before the client enters the nursing home because the client can save the most amount of money if the planning is done before entry into the nursing home. However, the client can still save substantially amounts of money even if the client has already entered the nursing home and currently pays for care. Medicaid planning after entry into the nursing home will enable a client to prospectively qualify for benefits upon completion of the planning. In other words, once the planning is complete, Medicaid will start paying for the client's care even the client was initially self-paying for care.

10. Aren't clients with trusts qualified for Medicaid benefits?
No. Most trusts do not help the clients in qualifying for benefits. Under the rules, both revocable and irrevocable trusts are considered available resources to the client just as if the client owned the assets themselves. As a result, DHS will require the assets of the trust be spent before the client can become qualified for benefits. There are some trusts which are used to qualify clients for benefits. However, they are very different from the typical revocable or irrevocable trust, are very unique, and apply only in very limited circumstances.

11. Can't each person gift $11,000 per year?
Each person can gift as much property as he or she wants to give. However, the $11,000 rule is a tax rule which says each person can give another person a total sum of $11,000 of property each year without any of those gifts counting as taxable gifts. To the extent the total sum of the gifts in a particular year exceeds $11,000 to a person other than a spouse, the excess amount is taxable. This rule does not having any bearing or relationship to Medicaid eligibility.

12. Does Medicaid planning need to be considered when doing estate planning?
Yes. Although not always, Medicaid planning is usually more expensive than traditional estate planning. Most clients will do the traditional estate planning earlier in life to protect against the threat of an unexpected death and wait until later in life to consider Medicaid planning. Although it is best to do Medicaid planning as earlier as possible, clients usually consider Medicaid planning when there is an illness or real possibility of needing long-term care. The earlier a client does Medicaid planning is usually better because it will give the person more flexibility in their Medicaid plan. However, in most cases I am hired when the need for long-term care is on the immediate horizon. I review the client's existing estate plan and modify it to qualify for Medicaid.
At some point in the estate planning process, all clients should consider Medicaid planning. Clients spend thousands of dollars to reduce or avoid the costs of probate, estate taxes and costs of estate administration. For most clients, it doesn't make much sense for them to spend thousands of dollars to avoid paying these expenses only to have their entire estates consumed by escalating nursing home costs and medical costs. Medicaid planning does not replace the client's other estate planning but compliments it by protecting the client and client's family from these costs.

13. If a client has to spenddown assets to qualify for Medicaid, does the client have to spend those assets on nursing home costs, medical expenses or prescription drug costs?
No. If necessary, Congress specifically allows clients to "spenddown" their assets in ways other than paying nursing home, medical or prescription drug costs. For example, clients may purchase exempt assets or pay debts. Although DHS caseworkers commonly tell clients they must spend assets to pay nursing home, medical or prescription drug costs, it is not true.

14. Can clients and their advisors rely upon DHS advice?
Unfortunately, no. Most DHS employees are good people with good intentions. They work hard at their jobs which involve administering many different programs including the Medicaid program which is one of the most complex and confusing set of rules and regulations most professionals will ever face. The rules and regulations are always changing, often without notice, and they do not receive adequate training. As a result, they frequently misquote rules and regulations, and give erroneous advice to clients and advisors. Relying on advice from a DHS employee can result in some very unexpected and serious consequences to the client.

15. Why didn't my client's attorney discuss Medicaid planning with them?
Medicaid planning is a highly specialized and very difficult area of the law. The Medicaid rules are a confusing combination of Federal and Oklahoma law. The Oklahoma Health Care Authority administers the program although the Oklahoma Department of Human Services determines eligibility. To further complicate things, the Secretary of Health and Human Services has the authority to waive provisions of the Medicaid statutes resulting in Oklahoma rules which conflict with the Federal statutes and rules which are different from other states. In addition, many Federal and Oklahoma rules are not even documented. That is right. As hard as it is to believe, there are many Federal and Oklahoma rules which are not codified anywhere.
An attorney practicing in this area learns the rules through the experience of handling cases. As a result, there are a very limited number of attorneys in Oklahoma who practice in this area on a regular basis and most of them are located in Oklahoma City or Tulsa. Most attorneys in Oklahoma simply do not know and are not familiar with the Medicaid rules.

16. Can just about everyone benefit from Medicaid planning?
Yes. In most cases, the majority of the client's assets can be protected with the client immediately qualifying for benefits. Married clients and single clients can both benefit. Both clients with significant amounts of wealth and clients with modest amounts of wealth can benefit. Even in very small cases, substantial amounts of assets can be protected. Medicaid planning is beneficial to clients who are already in the nursing home as well as those who have not yet entered the nursing home. Medicaid planning after entering the nursing home will enable a client to prospectively qualify for benefits upon completion of the planning. In other words, once the planning is complete, Medicaid will start paying for the client's care even the client was initially self-paying for care.

17. Does Craig charge for an initial consultation?
No. Craig will meet with the referring professional and client for a 1 hour initial consultation, free of charge. Whether the referring professional charges for his or her time spent in the meeting is for the referring professional to decide. If Craig cannot help the client or if the client chooses not to do any Medicaid planning, neither the client nor referring professional owes the Firm anything. If the client chooses to do Medicaid planning, the Firm will bill the client directly according to its standard fee schedule.

18. Does Craig ever travel to surrounding towns if we want to schedule a meeting?
Yes. The Firm has offices is in Enid, Fairview and Woodward, Oklahoma. Craig also has a contract to provide these services for the law offices of Morris & Powell, L.L.P in Ponca City. In addition, the Firm has video conferencing capabilities enabling Craig to video conference with most professionals in the rural communities. If you are interested in scheduling a meeting or a video conference, at no cost to you, please call Craig at (580) 234-8447 or e-mail him at craig@westoklaw.com.

Copyright © 2003-2008 Mitchel, Gaston, Riffel & Riffel, P.L.L.C. All rights reserved.