Medicaid Pennsylvania Archives - Page 4 of 4 - Senior Planning Services Resources

In order for an individual to be eligible for Medicaid, there are financial standards that need to be met. Many Medicaid applicants will have to spend some of their assets in order to meet Medicaid’s financial threshold. There are a few excludable resources that are exempt from the Medicaid Spend down. These assets can be kept by the Medicaid applicant and will not impede Medicaid eligibility. An individual’s personal possessions, a prepaid irrevocable funeral trust and a special needs trust for a disabled child, are just a few excludable resources when applying for Medicaid.

Today we will discuss utilizing a special needs trust with the excess “spend-down” money. When a Medicaid applicant has a disabled child a special needs trust allows the transference of assets from a parent to the child without jeopardizing the child’s government benefits.

Special needs trusts are also referred to as “supplemental care trust” these trusts supplement the disabled child’s supplemental security insurance (SSI) and Medicaid benefits. The money in a special need trust may only be used for specific items or services. The trust is meant to supplement, and not pay for basics such as food and shelter. Some things that may be purchased through a special needs trust include:

Home modifications to assist the disabled,
Medical treatments and equipment not already covered by government assistance programs.
Education and recreation equipment
Computers
Musical instruments
Sports equipment
Travel expenses
Prepaid funeral

When a parent creates a special needs trust for a disabled child, He/ She chooses a trustee. A trustee is an individual or institution who manages the assets in the trust. The trustee’s responsibility is to follow the terms and guidelines outlined in the trust as well as transferring the funds from the trust to the beneficiary or disabled child. A trustee can be a family member, attorney, bank or anyone that one chooses to assign as a trustee.

The trust is an excludable resource for government benefits for both the parent applying for adult Medicaid and the disabled child receiving SSI and Medicaid benefits. The trust restricts the beneficiary (or Disabled child) and parent access to the assets in the trust. Only the trustee would have accessibility to the funds and therefore it’s considered an unattainable asset for both the parent and disabled child. It is for this reason that it will not impede Medicaid eligibility for either.

One should consult with a competent elder care attorney for advise on if and when such planning strategies are advisable.

If a hiker was setting out to cross Arizona’s Sonoran Desert, he would begin by planning weeks or even months in advance. He would be certain to pack all necessities such as water, clothing, a trail map, sun hats and anything that may be needed along the way. He will take the time to educate himself on the plants, snakes and scorpions that are found in the Sonoran desert.

As an avid hiker, I often reference hiking metaphorically as an analogy easily understood. I find that it helps folks mentally prepare for the Medicaid application mindset. When asked by prospective applicants “at what point should I start thinking about Medicaid for myself or my loved one?” I reference the Sonoran desert. Certainly, the time to think about the process is well in advance. Otherwise, if you wait too long, you are like the poor desert hiker who hasn’t prepared. Certainly, this is not an enviable position to be in. Alan Lakein once said ” Failing to plan is planning to fail.”

In order to help folks prepare for the Medicaid journey I would like shed light on some guideline that can positively impact prospective Medicaid applicants.

Medicaid guidelines dictate that an applicant may not gift money within the five years prior to Medicaid eligibility, generally referred to as the five year ”look-back” period. However, many mix up the Gift Tax Exclusion Act with the Medicaid gifting laws and believe that gifting $13,000 annually is permitted for Medicaid purposes. For the IRS it is permitted, but for Medicaid purposes it is not. Should Medicaid identify any transfers or gifts in the applicants reviewed financial history, Medicaid will impose a penalty. A penalty period is a defined period of time in which Medicaid will not pay for care. The penalty period is calculated based upon the amount of funds that were gifted or transferred divided by the penalty divisor. The divisor is a figure derived from the average cost of care at a nursing home.

Most of us generally don’t know whether we will be needing Medicaid for ourselves or our loved ones over the next five years. Therefore, planning in advance is crucial in order to preserves ones assets. There are numerous asset preservation opportunities that Medicaid guidelines afford applicants. There are spousal rules that protect the community spouse. There are rules that protect disabled children. There are possible methods of preserving the home in certain instances. There are options that require forethought and planning in order to successfully achieve the desired goals.

When I am given the opportunity to speak to the senior population, the above is something that I always stress to prospective applicants. Understanding the rules and the possible scenarios that may arise ranks as the most critical aspects of a successful Medicaid outcome. Prospective applicants need to be ahead of their needs or risk finding themselves In the Sonoran desert without their sunscreen.

Categories

Category: Medicaid Pennsylvania

Medicaid Spend Down and Special Needs Trust

Medicaid Planning – “Failing to plan is planning to fail”