15 Jan
The costs of long-term care in Texas can be overwhelming, with average monthly bills in the thousands. Families are also often surprised to learn that Medicare doesn’t cover long-term custodial care. As a result, a lifetime of savings and assets can be quickly depleted without proper planning and the help of an experienced Medicaid and estate planning attorney.
Texas Medicaid planning focuses on qualifying for Medicaid while protecting assets for a spouse or family member. Understanding how Medicaid works, what it covers, and the planning tools you have at your disposal makes a difference to your financial outcome.
What is Texas Medicaid?
Understanding the resources available to you and the financial decisions you can make requires an understanding of Texas Medicaid. It’s a joint federal and state program that delivers low-cost or free health coverage to eligible low-income Texans. It’s managed by the Texas Health and Human Services Commission and covers doctor’s visits, hospital stays, and long-term care.
Medicaid differs from Medicare in that it covers ongoing nursing home and some in-home care services, whereas Medicare covers only short-term rehabilitation and limited skilled nursing.
What Does Medicaid for Long-Term Care Cover?
Before learning about asset protection, what is a qualified income trust, and similar, it’s helpful to know what Medicaid for long-term care covers, so you can plan for any shortfall.
In nursing home care, Medicaid will pay for:
- Room and board
- Nursing care
- Daily living assistance (including bathing, dressing, and eating)
- Medications as part of a care plan
When Medicaid for long-term care is approved, nearly the full cost of a nursing home is covered. However, most of the recipient’s monthly income must be paid to the facility, excluding a small amount as a personal needs allowance.
Will Medicaid Take Your Home?
Many families start seeking legal advice when they believe that using Medicaid for their family member to enter a nursing home means having to part with their home. In most cases, Medicaid won’t take your home because it’s an exempt asset under Texas Medicaid rules.
The primary residence is an exempt, non-countable asset if the applicant intends to return home or if a spouse still lives in the property. However, that doesn’t mean their home is fully protected. Without asset protection planning, Texas may seek repayment through the Medicaid Estate Recovery Program upon the Medicaid recipient’s death.
As a result, they can place a claim against their home and other assets remaining in an estate. While there are exceptions, and you can implement a hardship waiver, heirs may still be forced to sell the home.
Asset Protection Strategies for Texas Medicaid
Learning that your family home may need to be sold to cover the costs of your loved one’s nursing home care can be heartbreaking. However, it may not come to that. Enlist the services of a trusted Medicaid and estate planning attorney and learn about the asset protection strategies you have at your disposal.
Protecting Your Assets for a Spouse
Medicaid planning isn’t about hiding assets from the state to stop them from being taken. It’s about using the rules legally and correctly to protect a family and their assets. This is especially true if one spouse is receiving nursing care and the other remains at home.
In this case, the spouse who remains at home may keep the home and retain a minimum monthly income. They also retain a portion of their assets, known as a community spouse resource allowance.
Medicaid Look-Back Period
If you’re trying to protect your family’s assets while ensuring Medicaid eligibility, it’s crucial to be aware of the Medicaid look-back period. Any gifts or transfers made for less than fair market value during the five-year period prior may result in delayed Medicaid eligibility or a penalty period.
Converting Assets and Exempt Assets
Some of your assets may not be exempt initially, but that doesn’t mean they can’t be. With the help of a trusted legal professional, you can reposition assets into exempt forms, such as home improvements, debt payments, and burial and funeral arrangements. By converting assets, you can reduce your countable assets while simultaneously improving your quality of life.
Trust Planning
To protect your assets from future Medicaid claims, talk to your attorney about irrevocable trusts. Several strategies can be implemented well before care is needed to avoid penalties.
Enhanced Life Estate Deeds (Ladybird Deeds)
An enhanced life estate deed, also known as a ladybird deed, allows you to transfer your real estate to a beneficiary or beneficiaries upon death while retaining full control and the rights to sell, mortgage, or live in the property, without probate.
A ladybird deed is an effective strategy for avoiding court-involved probate and Medicaid estate recovery. To establish your ladybird deed and designate a beneficiary, consult a trusted legal team, such as Livens & Reed Attorneys At Law in Dallas-Fort Worth, Texas.
Transfer on Death Deeds (TODDs)
A transfer on death deed (TODD) is a legal document that allows property owners to transfer their property to a beneficiary upon death, thereby avoiding probate. This process reduces costs and delays. While the property owner is alive, they retain full control of their property, allowing them to sell, mortgage, or revoke the deed at any time.
A transfer in death deed is similar to an enhanced life estate deed in that they both allow the transfer of real estate outside of probate. However, TODDs are statutory and typically more widely accepted by title companies, while Lady Bird deeds offer greater flexibility and superior Medicaid-planning benefits.
What Is a Qualified Income Trust (QIT)?
When you aren’t sure whether you’ll be eligible for Medicaid, but don’t have the means to cover your care, it’s crucial to learn about a Qualified Income Trust (QIT). This special bank account can be the difference between Medicaid approval and denial – especially as you can be denied for being even $1 over the income cap.
What is a qualified income trust, you ask? Also known as a Miller Trust, it’s a special bank account set up for Medicaid purposes. Any income above the Medicaid income cap can be placed in this account, allowing the Medicare recipient to qualify despite the excess.
The funds in this trust or bank account are used to pay nursing home expenses, health insurance premiums, and personal needs. However, there are a few crucial QIT rules to be aware of, which your attorney can share more information about:
- Your Qualified Income Trust must be set up before Medicaid approval
- The QIT must be administered correctly every month
- Any funds left over in the trust at death must be paid to the state
Why Should You Worry About Medicaid Planning Early?
Planning for nursing home care for yourself or a family member in advance can seem unnecessary. After all, you may never need to worry about it! However, it’s always a good idea to plan for the ‘maybes.’ Waiting until a crisis occurs limits your options and increases your stress.
Early Medicaid planning with the assistance of a trusted Medicaid and estate planning lawyer enables you to protect your family home, preserve savings for your spouse or children, avoid costly mistakes and delays, and even allow for faster Medicaid approval.
Start Texas Medicaid Planning with Livens & Reed in DFW
You deserve peace of mind knowing that your hard-earned assets will remain with your family, not the state. Whether you’re planning for your own future or are assisting a family member with their Medicaid journey, the experienced Medicaid attorneys at Livens & Reed Attorneys at Law in Dallas-Fort Worth are here to help. We look forward to guiding you through the legal process for access to the support and services you deserve.
