This is Part One of an extensive article on Medicaid family planning. In trying to address the problems of families losing everything they worked their whole lives for just to qualify for Medicaid, Mr. Marsocci is conducting workshops to show people that they don’t have to go broke to qualify for Medicaid. For more information on these events, please go to www.MedicaidWorkshops.com.

I have started to see a growing need for long term care planning among my clients and especially among their parents. There also appears to be a shortage of professionals to help shelter family assets in the right way and still qualify for Medicaid assistance. Many families are going broke in order to qualify a family member for Medicaid because that is what they are advised to do in a “Medicaid Spend Down.” In looking at this problem, I have found there are legal and financial planning solutions that can shelter some, or even most, of the family’s assets. While there are some powerful techniques that work whether someone is a few years or a few weeks away from needing nursing home care, more time means more assets that can be sheltered. But the first step is finding out what can be done.

In seeking out the best way to help my own clients and their families, I have found that a team approach to Medicaid planning is essential. No single professional can have knowledge of the Medicaid regulations in all 50 states, AND know how to create the appropriate legal documents, AND know how to provide asset allocation and financial solutions, AND have the time to meet and help families. In addition, the North Carolina State Bar prohibits attorneys from working on the finances of their legal clients, and I would be limited as an attorney to only helping clients in North Carolina.

In researching Medicaid solutions, I have discovered that the best way I can help the greatest number of clients is by applying my knowledge in asset allocation and financial solutions while working with a colleague and top estate planning attorney in Charlotte, Sabrina Winters, to provide the legal documents and techniques. Finally, we are also coordinating efforts with an independent company lead by one of the top Medicaid attorneys in the country (who has an attorney on staff whose sole job is to research the Medicaid law changes in all 50 states each month) to ensure the best strategic financial plans are created. While I will still be working as an attorney for estate planning clients, being able to help people with Medicaid asset allocations and finances means those clients cannot also be legal estate planning clients of mine.

The Problem

John Smith comes into my office and sits down at the conference table because his daughter Jane Doe insisted he meet with me. She even had to drive him to make sure we did meet. Jane had already told me her mother Mary Smith was in the hospital, and it was looking like she would need nursing home care after that. In fact, Jane told me she had talked with the doctors, and it was possible that her mother would not leave the nursing home. And her father John insisted that he knew he would have to sell everything to pay for her care before Medicaid would take over, leaving himself broke. “There’s nothing that can be done about it, so there’s no sense in meeting with Mr. Marsocci.” That was where he was wrong. There are things that can be done. And after sitting with him for a few minutes we ran a report and found we could help him save the family hundreds of thousands of dollars he was ready to give away to the nursing home.

Unfortunately, people get sick and need nursing home care. The biggest problem is how that care can be paid for without bankrupting the family. Medicaid is actually a federal “insurance” program administered by the states, and Medicaid insurance premiums are paid to the government through everyone’s payroll and self-employment taxes. But collecting on that insurance is one of the most difficult, confusing, and frustrating processes imaginable. And this is because in order to benefit from the insurance your assets have to be arranged in a particular way which makes most people wrongly assume that they have to be broke in order to qualify for Medicaid.

But can you really blame people for thinking that? The Supreme Court of the United States called the Medicaid laws and regulations “an aggravated assault on the English language, resistant to attempts to understand it.” The U.S. Court of Appeals for the 4th Circuit said “The Medicaid Act is one completely impenetrable texts within human experience” and “dense reading of the most tortuous kind.” And the regulations change all of the time. But there are a few myths that do persevere, but may not be 100% true or even true at all:

  • Myth: You have to give away everything in order to get Medicaid. Not true. There are ways to arrange assets so they are under control of a family member, including a spouse for some, so that among you and your family much can be preserved.
  • Myth: I have to give up my house to qualify for Medicaid. Also not true at all. While it is true that Medicaid can place a lien on your home after you pass on, there may be ways to avoid this and pass on your house to your loved ones.
  • Myth: All I have to do is give all of my assets to my children and I will qualify for Medicaid. Definitely not true, unless it is done according to very specific rules and with an adequate amount of time. Some people make this huge mistake and find themselves embroiled in red tape trying to even qualify for Medicaid at the same time they absolutely need to be in the nursing home.

There are ways to avoid a complete Medicaid Spend Down of your assets, but only if you have the right professionals helping you work within the Medicaid system. If you need more information, then please attend one of our workshops or call us to set up a time to review your family’s situation. You can reach us at 919-374-0694 or through our website at www.MedicaidWorkshops.com. Workshops are scheduled for April 12 at 4 pm and 7 pm at The Team Nimbus Center, 3201 Computer Drive, Raleigh, NC 27609, but seating is limited so RSVP to 919-374-0694. The next installment will be focused on different types of asset in the Medicaid qualification process.