What is Medicaid Planning?

Laurel McLaughlin

When it comes to planning for your future, Medicaid is perhaps one of the most integral parts.

For many people, it’s a whole new territory to navigate and it’s often navigated in times of stress. Medicaid takes time and effort to understand and effectively plan for.

This article will give you the basics of Medicaid and guidance on obtaining support with qualifying and applying for Medicaid.


What to know before Medicaid Planning

Before planning for Medicaid, it’s important to understand what Medicaid is and what benefits it can bring to you or your loved one. 

Medicaid is a federal and state health insurance program for people with disabilities or adults over age 65 with low incomes. It’s important to know that Medicaid eligibility and services vary from state to state.  Medicaid is often confused with Medicare, a federal health insurance program for older adults of any health status and income.

Medicaid has a wide range of eligibility requirements. Qualification for Medicaid is dependent on marital status and the type of care being sought as well as finances.

The qualifications for married couples are different from those for individuals. There are also differences for married couples where one spouse lives in the community and the other lives in a nursing facility.

To determine financial eligibility, a person’s assets, annuities, IRAs, and pensions are all taken into account at the time of application and within the look-back period (should one exist).

Medicaid Benefits: What does Medicaid cover? 

Medicaid coverage includes a range of services based on the state of residence, however, there are some services that are mandatory that they provide.

According to the medicaid.gov website, these mandatory care services include: 

  • Medical care services both inpatient and outpatient

  • Physician services

  • Lab testing & X-Ray imaging

  • Home health services

It’s important to understand that while Medicaid may cover home health services, home health refers to nursing or hospice services if a person is referred by their doctor. It does not cover respite care.

However, some states have Medicaid programs that may cover caregiver respite services, such as adult day programs, or programs that allow a caregiver to receive a stipend for providing care.


What is Medicaid Planning? 

Medicaid planning is the preparation process behind qualifying for and enrolling in Medicaid. However, Medicaid planning may also refer to planning services provided by Medicaid experts who assist in this process.

An expert in Medicaid can offer planning strategies to ensure that your loved one has the future insurance coverage they need, while also protecting the assets of other family members. This can include protecting funds for a spouse or an adult child with a disability or special needs. They may do this through an irrevocable trust.

Medicaid planning may also include asset protection and determining if a “spend down” would be beneficial. The “spend down” refers to the use of funds that leave an individual over-qualified for Medicaid. Your Medicaid planner in this case can advise if there is a look-back period.

Because the eligibility requirements are so varied and complex, it is so valuable to have an expert on your side as you navigate the application process. 


Where to find a Medicaid Planner 

Medicaid planning is generally done by an Elder Law Attorney, but may also be completed by a qualified case manager specializing in Medicaid Planning or a financial planner.

An Elder Law Attorney is an attorney who specializes in legal services regarding senior care - including Medicaid planning. They are especially beneficial if your loved one needs to review and reorganize their finances in order to plan for Medicaid.

An elder law attorney is different from an estate planning attorney, and it’s important to ensure you’re working with the correct attorney for your needs. An estate attorney focuses on documents such as wills - things needed after death while an elder law attorney focuses on documents for the living.

Many Medicaid planners offer free consultations, so take advantage of this opportunity to ensure you feel you can trust the individual you choose to support you and your loved ones. 

 

Who should take part in Medicaid Planning? 

The costs associated with care such as home care and nursing home are growing!

For many people, it is not possible to cover the high costs of long-term care services out of pocket. Unfortunately, private insurance does not generally cover home care or nursing home services and very few people have long-term care insurance policies. 

Medicaid planning is generally for individuals who have some income and assets, but not enough to privately pay for care, but too many assets to easily apply for Medicaid. In addition, Medicaid planning can protect a spouse residing at home (also known as a community spouse), if the other spouse needs a nursing home.


Remember, Medicaid Planning takes time

If you or a loved one has been diagnosed with a terminal illness such as Alzheimer’s disease, it’s important to take action and plan for Medicaid as soon as possible.

Medicaid planning should be completed when other long-term financial documents such as the power of attorney and health care proxy are put into place.

Taking time to ensure that everything is in order for your or your loved one’s future care is key to decreasing stress in the future.