Stautz Law

Tag: Medicaid Planning

  • What is the Medicaid Estate Recovery Program?

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    Introduction: When Does MERP Matter?

    Good morning. It’s Andy Stautz at Stautz Law. Today I am back for a talk about another probate and estate planning topic. And that is Indiana’s Medicaid Estate Recovery Program, a.k.a. “MERP” M-E-R-P. 

    You need to know about this in two contexts. OK. On the one hand, you need to know about Medicaid estate recovery when you’re doing Medicaid planning. So as an elder law topic. And on the other hand, you need to know about Medicaid estate recovery when you’re doing a probate administration, whether or not the decedent (you know, the person who died) was on Medicaid.  

    Estate Recovery in Medicaid Planning

    OK, so let’s talk about let’s talk about estate recovery in the elder law-Medicaid planning context first, but just briefly. The basic idea there is, in general, right, the government pays for a person’s care while they’re on Medicaid. And after that person dies, Medicaid has the option to make claims against the estate for the value of the care they provided. OK?  

    So it’s kind of like a claw back, I guess, or sort of a recovery to try to defray some of those expenses of Medicaid. So you know the government pays the Medicaid beneficiary during life and then after death, they say, OK, well, what can . . . Can we get some of that back? There are complicated rules about what is and isn’t available to Medicaid estate recovery. And those are outside the scope of today’s talk.  

    You just need to know, you know, it’s not a blanket… They can’t take everything you own. There are exceptions for a surviving spouse who’s living in in the house or, you know, keepsakes and other, like, personal furniture stuff. So lots of rules. We’re not talking about them today, but the basic idea is [that] you plan ahead to try to account for the possibility of future estate recovery and avoid it if possible or you know, make it less. …. harsh on the survivors or heirs and beneficiaries. 

    MERP – “The Unit” – as a Known Creditor in Probate

    On the other side, and this probably comes up more often because it applies not just to people who are on Medicaid, but to everybody. The Indiana Probate Code says anybody who dies older than age 55 has, as a reasonably ascertainable creditor, Medicaid. Basically the probate code, says “You need to assume that anybody older than 55 might have been on Medicaid. And might be subject to Medicaid estate recovery.”  

    That matters because in probate you’ve got a duty to tell all the creditors that you’re administering the estate so that they can come forward with their claims if they have any.  

    So basically, in every probate estate, for someone who dies above the age of 55, you have to mail a noticee to the Medicaid Estate Recovery program. (It’s called “the Unit” in the probate code.) You’ve got to mail notice to the unit. And say, you know, if you’re coming forward with a claim, you need to do it now. (And there are time limits for that, which is again beyond the scope of this talk)  

    But that’s where it comes up. Even if the person who I wasn’t actually on Medicaid. There’s just this presumption, so every pretty much every time you’re going to be sending notice to the unit and on your list of creditors, you know you’re going to say, “Yep, we told the Unit – we told Medicaid Estate recovery”  

    Whether or not they come forward with a claim, it depends on all sorts of other things, but that presumption is there, so that’s where it comes up very often.  

    Conclusion

    So that’s it, concludes my talk. That’s just kind of what Medicaid estate recovery is. MERP, the Unit, in those two different contexts.  

    You’ve got to dig deeper based on what your situation is, but now at least you know what it is, kind of what it does, the reason for it. Hope you’ve enjoyed that talk and call me to discuss your specific case if you need help! Thanks. Bye!

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  • What is a Medicaid “Waiver”?

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    Hi folks, it’s Andy Stautz at Stautz Law. We’re back for another talk: on elder law, this time, or Medicaid law. And it’s a really basic question. So we often hear about Medicaid in the context of long term care. Because as many people know, Medicaid will pay for nursing home care for people who can’t otherwise afford it.  

    What is a Medicaid Waiver?

    Well, in addition to actual in-the-nursing-home care in Indiana, Medicaid will also pay for some people to stay out “in the community” — that is, at home, not in a traditional nursing home context. And that payment or that program is called a Medicaid waiver.  

    When you hear Medicaid waiver, we’re talking about the same type of long term care costs, the same type of medical need. It’s just being met somewhere else. You know, maybe a family member acting as a as a home health aide. There are a variety of other services that can make that possible.  

    Why is is called a Medicaid “Waiver”?

    OK why is it called a waiver Medicaid waiver?  

    You’re not waiving Medicaid, you’re on Medicaid. Well. To understand why it’s called a waiver, you need to know that the federal government, Washington DC, pays money to the states, in this case Indiana, to run their Medicaid program. And because the federal government is the one paying for it (more or less, you know, partially: there’re state contributions), but because the federal government is paying for it, they get to set the conditions of Medicaid.  

    And the usual condition is Medicaid pays for your long term care in a long term care home. But . . . the federal government waives its right to insist on those requirements. And instead, you know, contribute money to the state Medicaid program, even for people who aren’t in that setting, in that nursing home setting. So it’s a waiver of the federal government’s right to, you know, require that every Medicaid recipient be in a nursing home.  

    So that’s the short explanation. Obviously it’s a complicated topic, but all the usual Medicaid planning considerations: eligibility, look back period, all that . . . apply equally to Medicaid waiver. So in general, you should treat it the same and you know you need an experienced estate planning or elder law attorney to help guide you through that 

    I’d welcome your call if you want to talk about it more. But today was just a brief informational chat. Hope to hear from you soon. Bye now.

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  • Who Needs Medicaid Advance Planning?

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    Hi, it’s Andy Stautz with Stautz Law. Today, we’re following up on our Medicaid Advance Planning Basics talk with another… the answer to another important question, which is: who needs Medicaid planning?  

    And it’s very personal, so it’s hard to say specifically whether you in particular should be thinking about Medicaid planning. In general, everybody should think about long term care costs. Because they’re…. You know, if you need a nursing home and it costs $100,000 a year that’s probably more annual spending than your retirement plan really accounts for. So it’s expensive. You should have a plan.  

    For Medicaid advance planning, though, like we talked about, there’s a five year look back period. So you have to transfer your assets out of your estate well in advance of actually needing care. And irrevocably. And based on projections about what you’re going to need in the future. So those are big speed bumps for a lot of people. You know, if you’re not comfortable giving your property irrevocably to a trust, well then probably an asset protection trust isn’t for you.  

    If you don’t have significant assets to protect there’s no point in setting up a trust. If your health care needs are suddenly worse or you have a health problem. Well, advanced planning is probably not going to help you.  

    And if you’re doing great you probably don’t need Medicaid advanced planning.  

    So, behavioral issues aside (with you know, having a trustee you trust; being OK with irrevocability; having some idea of your future care needs) those behavioural issues aside, there’s an asset window. Where if you don’t have anything, it’s not worth paying to set up a trust and all of that. And if you’ve done really well, if you’ve got, you know, several millions of dollars in your retirement accounts or in your estate, you also don’t need Medicaid advance planning. Because hopefully at that point, you know you, you can simply absorb the long term care costs, whatever they are. If your portfolio’s big enough, then you can afford the $100,000 a year or whatever the long term care cost is going to be.  

    And then there’s. . . . an in between area where you’ve got a house and some assets that are substantial enough that you want your heirs and your beneficiaries to get them, but are low enough that you can’t afford long term care on an ongoing basis. That’s the window where it’s worth paying for the protection of Medicaid advance planning with the hope of, you know, your your life’s work going to your children or you know your other beneficiaries instead of to the nursing home.  

    So those are kind of the considerations. Again, it’s very situation dependent.  

    (You know, market returns can affect that. Sometimes you set up a Medicaid asset protection trust and then you don’t need care for 10 years and your investments have doubled. All of a sudden . . . you’re on the upper side where you can comfortably afford it.) 

    To give personal advice, we need to have a personal planning meeting. You can book that online. Or you can just give me a call and I’ll be happy to talk. And we can come up with a plan that’s gonna work for you. So thanks for watching.

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  • Medicaid Advance Planning: The Basics

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    Hi, it’s Andy Stautz with Stautz Law. Today we’re talking about the basics of Medicaid advance planning.  

    Medicaid, as you may know, is a government program that pays for long term care for people who can’t otherwise afford it. So it’s traditionally thought of as a poverty program, but for a lot of middle class people the costs of long term care are overwhelming and Medicaid can be a useful way to defray some of those costs. 

    [T]he cost of long term care in Indiana right now is over $100,000 a year. Most normal people with normal retirement savings can’t really afford that. So what do you? Do you just spend down your entire life’s retirement savings and your house and it all goes to the nursing home? Well, hopefully not. And that’s where advanced planning comes in.  

    So to qualify for Medicaid, to have Medicaid pay for the nursing home, you can’t have any assets or any income. I mean the current limit is 2,000, 3,000 if you’re married, in assets and about the same in monthly income.  

    And you can’t just give away all of your property to your kids right away, to qualify for Medicaid: Medicaid has a five year look back period and says if you look like you qualify for the asset and income limits when you’re applying for the nursing home, payments for the long term care, Medicaid’s going to look back at five years and say, OK well. Did they just pretend to be broke by giving stuff away?  

    [A]dvance planning relies on being outside of that look back window. You have to plan five years ahead and think about your future needs, and that makes it kind of kind of niche because how how often do you really know when your healthcare needs or your care needs are going to be 5 years down the line? Especially because health changes fast as you get older.  

    Ideally though, what you can do if you know or you want to prepare for the future costs of care, you can basically, transfer some assets out of your personal estate. In advance. With the hope that later when you need long term care or you want Medicaid to pay for your nursing home, you’ll qualify and you’ll have. You’ll have satisfied all of the eligibility requirements. 

    The most fundamental way to do that is to put your assets in an irrevocable trust. Medicaid Asset Protection Trust. You know, those have advantages and disadvantages. We don’t have time to get into all of it now.  

    Today was just talking about the basic concept of: you can shield some assets from Medicaid by moving them outside your estate in advance of the look back period. That’s all there is to it.  

    That way, when you need nursing home care five years down the line or more. The state will step in and pay for you instead of insisting that you come back and contribute. 

    And that can be, for the right person, that can be a great way to protect your life savings, your house and make sure your beneficiaries, your children, your heirs get what you’ve worked hard for, instead of it all going to the nursing home.  

    So if you’re interested in this technique. You know, it’s something you want professional help to get set up and a consultation to see if it’s right for your situation. I’m happy to do it, so you should book online or give me a call when we can have a planning meeting where we’ll talk about your particular situation and come up with the best plan for you. That’s all for now. Thanks and bye!

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