Medicaid Planning
Limited Opportunity: Home Care Medicaid
On April 2, 2020, New York enacted severe cuts in Medicaid eligibility and access to home care services in its 2020-21 budget (S. 7506–B).
Why Solution 3 Is Most Practical
Qualifying for Medicaid is the most practical solution for most middle class people for several reasons:
- The person needing long-term care cannot pay out-of-pocket:
- They do not have sufficed savings.
- The savings will last for a short period of time.
- The person can pay but they would prefer not to:
- The person prefers to leave the life savings to children or other loved ones than spend them to pay for long term care and end up with the same result: Penniless and on Medicaid.
- The person’s children have an expectation of inheriting something. Joel C. Dobris explains:1
Simply put, the engine that drives the divestment of assets to qualify for Medicaid is the children. They feel entitled to an inheritance that, if denied, they regard as a breach of the social compact, as they read it.
. . .
It seems fair to say the same fund of savings is being called to do several jobs–cushion the nursing home blow, support the community spouse if there is one, and provide an inheritance. There is an obvious conflict, and people are coming up short. So people want as much as assurance as possible that, if someone must go into a nursing home, it is not going to bankrupt the family.
- The person needing long-term care cannot afford to pay for long-term care insurance or does not qualify for it due to pre-existing or other health conditions.
Unfortunately, Medicare does not cover long-term care expenses in a meaningful way. Paying for long-term care is a middle class problem because poor people have Medicaid and wealthy people have sufficient money to pay for everything. So, middle class people have to qualify for Medicaid to have their long-term care expenses covered. The typical middle-class person prefers to pass have a loved one benefit from life savings, rather than spend it on a few months of health-care.
There are policy arguments against helping seniors qualify for Medicaid while preserving some of their assets. The arguments are valid, but Medicaid planning is a necessity that is imposed by the health-care system in the United States. Other health-care needs are covered by Medicare, and qualification is simply based on the person’s age. It doesn’t require people to be poor to receive medical care. But Medicare has a gap for long-term care coverage. It shouldn’t. Our government should not discriminate against seniors with health problems that require long-term care. Our government fails our most vulnerable population at exactly the time when they need the most help.
How MAPT Helps with Solution 3
A Medicaid Asset Protection Trust (“MAPT”) is an irrevocable trust that seniors can use to protect their assets and qualify for Medicaid. A MAPT accomplishes its goals by removing assets from the reach of Medicaid.
The name of a MAPT suggests its two main goals: (1) Helping the grantor to qualify for Medicaid, while (2) protecting and preserving some of the grantor’s assets for the grantor’s beneficiaries. Assets that the grantor transfers to a MAPT do not count as a resource for purposes of Medicaid. Further, Medicaid does not have a right of recovery over these assets after the grantor dies.
Many people’s net worth is tied up in their home. A MAPT can help to protect the home.
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Joel C. Dobris, Medicaid Asset Planning by the Elderly: A Policy View of Expectations, Entitlement and Inheritance, Real Property, Probate and Trust Journal Vol. 24, No. 1 (Spring 1989), pp. 1-32 at p. 8 (footnotes omitted). ↩