What Every Family Should Know About Medicaid

Attorney Sarah Kons appeared on WHBY’s Fresh Take with Josh Dukelow to discuss Medicaid Planning.

What is Medicaid planning?

Sarah
Well, you know, that's actually a really big question, even though it's a very small question, when you say it, there's a lot of confusion about what Medicaid planning really is. Some people look at it as something that you're, like, using it to position assets in certain ways. Some people look at it as almost a negative thing. They take it as you're trying to hide things from certain programs. But really what Medicaid planning is very simply is that it's your attempt to try to control something that is a pretty significant program that people use. And they use it during a time in their life where they have a lot of other things going on. Because Medicaid is usually a principal to people in long term care situations, or individuals that have disabilities. It does require a financial eligibility component for most people. And so in order to gain access to it, you have to have- you have to meet certain financial requirements, which tend to be on the lower side, especially for single people. So Medicaid planning is really trying to make sure that what you have is used for the most amount of value you can get. And it doesn't mean that you're not spending what you have on care, it means that you're trying to control how that money is spent, in most cases.

Josh
So is Medicaid planning something different than Long Term Care Planning? Are those the same thing or slightly different?

Sarah
Long term planning also includes other programs outside of Medicaid. So Medicaid is a program that you're using to pay for long-term care. There's often a lot of confusion, I know you're probably going to ask me this. But there's also a lot of confusion between what is the difference between Medicaid and Medicare, we're going to call these surprises usually, either the first or the follow up. Medicaid and Medicare, I really wish they would have called them something completely different, because I think that's half of the confusion. So Medicare is the health insurance that everybody is essentially entitled to at 55. Right. And when you usually go on it either around the time that you have started using social security its supposed to be or was originally intended. Back when social security was started to be sort of a health insurance that takes care of people as they age, and Medicare. So Medicare is a form of health insurance. Medicaid is the program that pays for things that are related to long-term care. So if you have a disability, and you are seeking assistance for that, it can be for people that are younger, if they have a disability that they've pursued eligibility for it, but it's mostly for people that are going into nursing homes because they've had an overall decline in their health as they have aged. So they're both related to health, and they're both related to paying for things regarding the home. But that's also part of the confusion. Yeah, so you go to the hospital because you have a heart attack, that's probably Medicare. If you have dementia, and you're transitioning into memory care, that's probably going to be Medicaid.

Josh
So okay, so Medicare is like, many people will have health insurance through their employer, or maybe they bought in, or they bought a health insurance policy from the exchange through the Affordable Care Act. That is Medicare is health insurance, covering some of those basic things. Many of us have familiarity with health insurance, that's Medicare, Medicaid covers other potential health related expenses, like long term care and other things, if you're eligible. 

And the eligibility for Medicaid is things like having disabilities or having low income, is that accurate?

Sarah
That is accurate. They're actually one of the things that people argue about the most is, you know, Medicare is a government funded taxpayer funded program that people are able to access after they reach a certain age. There's no financial eligibility requirement regarding it, so that can be part of the frustration between the two programs. As long as you meet the other criteria. There doesn't tend to be a financial requirement, there is the premium part that you pay. So for Medicare Part D and that comes off of your Social Security, usually automatically, some people are entitled to assistance with that, they'll get reimbursements, or they'll have a lower amount that they are charged. But for the most part, Medicare is very cost friendly. A lot of people get gap coverage because Medicare doesn't cover everything. So they get additional policies to help with that. And all the things that Medicare doesn't cover. So there's still things like- you go to the doctor, and you have to pay something when you're there. And now you're using copays. So there is the additional insurance that you can purchase. It kind of fills in the gaps of what Medicare has. Medicaid is kind of like that as well, where it pays for a lot of things. But it doesn't pay for everything. And that's where long-term care insurance can come into play. Or if you, you can also use long-term care insurance, but you're not spending down as significantly in order to become eligible for Medicaid right away. But there aren't as many policies that fill in the gaps of Medicaid. And because a single person especially has to spend down so significantly in assets, I mean, they have, there are certain things you can keep, but in general, when it comes to cash or under 2000. So it's just, if it doesn’t pay for everything, where's- what are you going to use to pay for the things that keep you comfortable.

Josh
Right, you spent down to become eligible for Medicaid, but then the benefits don't cover everything you need, but then you don't have the money to cover the things, it doesn't pay for the things it doesn't cover. So it might leave you in a pinch. So obviously here, people would like to think that it'd be better to have a government program that could fund some of their health care expenses that perhaps they can't afford, or would rather not have to pay for. So maybe that's why people think they would want to get into and take advantage of Medicaid. 

Are there downsides to Medicaid? Are there reasons a family may not want to use Medicaid?

Sarah
They're usually related to personal choices and preferences. So not all facilities accept Medicaid. And if you're at a facility that doesn’t, you have to move. A facility- if you're eligible for Medicaid facility has to allow you to access it, they're not allowed to change things about how you're receiving, or what kind of care you're receiving, they can change things related to your place in the facility, or what kind of room you're in, like Medicaid only pays for a semi private room, if one is available. So a lot of people don't want a roommate when they are, you know, 95 and in a long term care facility. So, you know, that's one of the very common things that people want to make sure they have funds for, that they can continue to pay for the upcharge of staying in a private room. So it's definitely something that people can take advantage of. And there are a lot of upsides to it. But it's very, there's a lot of things that are determined that are not within your people. And so that's, that's really the downside of Medicaid and the amount that you're spending to down doesn't leave a lot of assets for you to control your situation.

Josh
Right, so that's when we hear-

Sarah
It depends.

Josh
Yeah, when we hear in your advertising, you talk about maintaining control of your health care. This is part of being able to maintain the options to have the choices you'd want to have at that time in your life, and not be constrained by what is offered or covered by the government run program like Medicaid. 

Josh
Going real deep on Medicaid planning strategies with Sarah Kons from Hooper Law Office, getting your health and finances under control is a major priority and part of estate planning. How does Medicaid planning fit into that? Sarah is with us on the Settlers bank phone line. So we’re talking about Medicaid, Medicare and some of the advantages and disadvantages of the program. 

So what exactly are Medicaid planning strategies?

Sarah
Well the first one is if you intend to just self-pay, you want to make sure that you have enough to do so. So you have to keep up with what the average cost of care is, or your geographic area or where you're likely to receive care. And sometimes people don't consider the fact that especially for people that have moved like down south but their family lives still in Wisconsin or kids or siblings if something happens to them health wise are more likely to be moved back to Wisconsin so that their family can help them monitor and manage their care if the person themselves is going to participate. So if you're going to self pay, you want to make sure that you consider where you're going to receive care or where it's likely that you are. The second one is definitely insurance. Not everybody is eligible for insurance, not everybody can afford it. It's just- it's not always a product that is right for the person. But you have to find that out by actually getting a quote from an insurance advisor or somebody that specifically does long term care. You want to know what it is for you. Because Long Term Care Insurance is usually specifically based on your health history. And so the cost of it, what options are available to you, is a very personal process. But you want to make sure that you understand what exactly is out there for you, if anything, so then you can make a decision about it, even if it's a decision to set it aside. That this is not the right fit for you. At least you've made an informed decision about it so that you can't regret it later. And then the third option is if you haven't done anything in preparation for it, and it becomes a concern, especially later in life, when you're not going to be eligible, maybe for insurance, or it's not going to be an affordable option for you. For estate planning comes into play, you can use estate-planning techniques to try to protect assets, you can do it in advance of needing care. If you do it in advance, then you're doing it usually five years prior to needing care. There's another significant program that we talk about a lot with you, Josh, and that's related to veterans and spouses of veterans that are looking to do about three years before needing care. When you do it in advance, you can select the assets and things that are important to you that you want to protect. So if it's your home, or if it's, you know, a cabin that's been in your family or farmland, it's been in your family or, you know, whatever it might be, that collecting was important to you, or the amount that you feel like you need to protect in order to make sure that a husband and wife is going to be you have equal access to good care, because it's like, for example, one person has significant retirement accounts, in their name, you know, retirement accounts are not things you can own with your spouse. So that's going to make a significant imbalance between the two if either needs access because of what's going to happen. So you can use it to offset that inbound, you can also use it to just make sure that you have access to your money or at least your family does, if you are going to need a significant amount of care. You know, a lot of clients that I talked to say that their worst-case scenario is their kids trying to cover costs for them later. Because they are- they want a sort of quality of care for their parents, and they're not going to accept less. So this thing provides resources that can be used to make sure that your care is exactly what you want, and what your family is also going to be able to, you know, feel like they're doing a good job for you. Exactly.

Josh
So in this, I want to recap here the three paths that you laid out for us because the first one is basically saying I am going to have enough money to fund my own long term care needs, with my own cash. Basically, you're putting money away planning for what that expenses are going to be, you're going to cover it yourself, Self-insured, basically. Second, if you're going to, you're going to buy a policy from an insurance company that promises a benefit that will pay for your long term care needs. But those policies might be too expensive, you might not be eligible. So there's the self-insured route, there's the actual insurance route, then the third route is basically you're going to take Medicaid up on its program for funding your long-term care. 

And you want to put your assets in the right places to make sure you're eligible for Medicaid, but also left with enough assets to be able to pass it along to your family. Is that sort of the shorthand?

Sarah 
Yeah, it is. I mean, it's not necessarily making sure that there are things that can happen, that can be a priority, and some people look at that as a priority, and then it becomes part of your plans. But usually, the primary reason is making sure that you are taken care of in the way that you want to be and that your spouse is taken care of as well and the way that they want to be. So it's more about controlling your care than it is about passing things on. But it can be especially if you have things that have been in the family for a long time

Josh
But the strategic approach that you can help bring to this, you as a Medicaid planning attorney. Is that fair to say that you're a Medicaid planning attorney in addition to an estate planning attorney?

Sarah
Yes, it’s an elder law attorney, and that sort of encompasses all the programs.

Josh
Got it. Okay, so you are someone who can help with this. The idea being, you want to put your assets in the right places, so you can both be eligible and have the money in place to care for yourself at the standard you expect.

Sarah
Exactly. And you can do that prospectively and it gives you control over what you're protecting. We can also do it for somebody that doesn't have five years, they have three years, and they want to make sure that they're, they're preserving something, so that they can continue to have some sort of, you know, say and how they're receiving care and what they're receiving. So they can, again, be using their money to pay for the things that they want. Usually in situations like that, where even if it's the person who's already receiving care, we can usually protect some of what they have. But at that point, it's not necessarily about what's most important, its usually more about what makes financial sense in terms of what we're protecting, and how much we can protect and things like that. So it gives you less selection ability. But you can still protect usually about half of what a person has if they're receiving care, or they're about to receive care. So that can make a big difference. You want to spend money on care. And I think that's a big misunderstanding, that is all about trying to make sure that you don't spend anything on care, you want to spend money on care, because that allows you to gain access to the care options, as many as you want. And that can be the world of difference between what types of care you're receiving, where you're receiving it. And I've had situations where spouses are split up because they both need to access a program that there just aren't enough reverse spots in the same facility. And that can be a really difficult transition, that you want to make sure that you're, you know, you're being strategic about it. That is something that's just happening to you.

Josh
Yeah, and this is it. You're exactly right. There's perceptions out there, and perhaps in some cases, misunderstandings about where you do want to spend money versus where you're trying to avoid spending money. As you said, that is such an important point, Sarah, you do want to have the money to spend on care because that gives you the options to get the care you want at the standard you expect. Once you surrender that power, yes, you might be having the government pay for it. But now you'll lose a lot of that control and a lot of the choices that you may want to make. So some really interesting aspects of Medicaid planning, which can intersect with estate planning. As always the only estate planning attorneys I would recommend you work with or Sarah and Peter and their colleagues at Hooper law office. The elder law attorneys know it best. I did the estate planning process with them and obviously got a nice jumpstart on my planning. And it's great because they make it so easy. You get a lot of peace of mind and when it comes to things like long-term care, there are so many questions, how it intersects with Medicaid, how you protect your assets and how you make sure you get the care you want. Talk to the folks at Hooper Law Office, give them a call 920-250-9959 or find them at Hooperlawoffice.com. Sarah Kons with Hooper law office. Thanks as always, great to talk to you.

Sarah
Thank you, Josh. We really appreciate the ability to give good information to people so they can make this decision

Josh
Exactly what we look forward to and you guys do a great job. Thanks so much.

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