Disclaimer: With Medicaid, VA, and insurance regulations frequently changing, past blog posts may not be presently accurate or relevant. Please contact our office for information on current planning strategies, tips, and how-to's.
During my 15+ years in the financial services industry, I have received many calls from clients or referrals who are experiencing a problem but have failed to plan ahead for it. The calls typically sound something like this: “I have been concerned about this specific issue for a while, but I haven’t had a chance to take care of it. Now that the problem has gotten worse, what can I do?”
For instance, the issue might be related to moving money out of the market while it’s up, but now it has gone down. Or the individual may be looking to get life insurance but now found out they have a serious medical condition. No matter the issue, I’m sure you’ve had at least a call or two like this in your career. And it can be frustrating to encounter situations like this where there is little or nothing that can be done to produce a decent outcome for the client.
The Long-Term Care Conversation
Unfortunately, I have had these types of calls many times regarding long-term care. If you offer Long-Term Care Insurance or are familiar with the long-term care planning process, you probably know that once an individual requires care, their planning options become very limited. Many of the strategies you might recommend are no longer viable. Instead, the client may resort to spending down their assets on care costs until they qualify for Medicaid, which is not ideal for preserving their savings. They may also choose to receive care at home from their spouse, children, or other loved ones. While this option may provide some benefit to the client, it can cause additional issues or other hardships, especially if the individual is not receiving the care they need.
Addressing Medicaid Misconceptions
Fortunately, there are better options out there. Before we dig into them, let’s address some misconceptions about Medicaid. Many individuals believe Medicaid recipients who require long-term care will receive low-quality care. On the contrary, Medicaid has implemented care quality standards for individuals who receive Medicaid benefits. Perhaps this assumption is related to the fact that Medicaid only covers a semi-private room, which some may equate with lower-quality care. In reality, Medicaid recipients are receiving the same level of care as residents who are privately paying for their care.
Another misconception many individuals believe is that Medicaid is only for those who are currently destitute and have no assets. While it’s true that Medicaid has strict eligibility requirements applicants must meet, Medicaid also allows the opportunity for individuals to restructure their financial situation in order to achieve eligibility. Many people do not realize that Medicaid pays for 60% of nursing home care costs in the U.S., making it the largest payer of long-term care costs. In 2019, Medicaid paid out $627 billion. Of that amount, 20% of it was for long-term care services, representing just over $125 billion.
Now that we’ve addressed these misconceptions, let’s move on to the options available for seniors who currently own assets exceeding Medicaid’s eligibility requirements. Even those who have a significant amount of assets are able to qualify for and be covered by Medicaid.
How to Accelerate Eligibility for Medicaid Benefits
Individuals or couples with excess countable assets can utilize a product called a Medicaid Compliant Annuity (MCA) to accelerate their eligibility for Medicaid. An MCA is a single premium immediate annuity that provides income to the contract owner and contains zero cash value. It must meet specific requirements in order to be compliant, including naming the state Medicaid agency as primary beneficiary in most cases. MCA strategies differ depending on the individual’s marital status. For single individuals, a proper plan design can protect about 50-60% of their current assets. For married couples, the protected amount is typically much higher, around 90-100%. All planning techniques and strategies are designed to fit within Medicaid’s guidelines.
Contact The Krause Agency to Learn More
Here at The Krause Agency, we specialize in helping advisors throughout the Medicaid planning process by offering exclusive training and educational resources. Our team of Benefits Planners is well-versed in Medicaid’s rules and strategies for using MCAs, and they can provide custom quotes and case analysis. When dealing with Medicaid, especially MCAs, we always recommend working with an elder law attorney since they can provide legal advice as well as the necessary documentation. They also have a strong understanding of the Medicaid rules and application process.
Whether you want to learn more about MCAs or you have questions about a specific case, don’t hesitate to reach out to us by calling 800-255-1932 or sending us a message online.