Nursing home costs have become a major issue for Alaska’s elderly and disabled. The present cost of a nursing home bed, as this is written, is around $15,000 a month in Anchorage, and often more in other parts of Alaska. By the time you read this, it may be even higher. Costs for an assisted living home, or for in-home care to stay in your own home, are a lot less but are still a lot higher than they are in most states.
Few people can afford to pay that kind of cost for very long. Medicare, which most elderly and some disabled people qualify for, will only pay for a few months, at most, in a nursing home. After that you either have to pay yourself, or apply for Medicaid to pay the nursing home bill. There are a lot of differences between Medicare and Medicaid, but the biggest is that while Medicare does not care how much you make or what assets you have, Medicaid very much does care.
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There are several things that you need in order to qualify for Medicaid. You must be elderly or disabled; you cannot have too much income; and neither you or your spouse can have too many assets. In addition, you may be disqualified if, during the past five years, you have given away assets. Kenneth Kirk does not generally deal with disability qualification, but he is skilled in income and asset qualification.
Income qualification often involves a Medicaid Qualifying Income Trust, also called a “Miller Trust”. This is a special kind of trust which funnels the client’s income into a bank account, and then pays the allowable amount for the client’s living expenses. A Miller Trust cannot have any assets, other than the small amount in the bank account. Exactly how the Miller Trust pays out, depends on what kind of care the client is receiving (for instance, the formula works differently for someone in a nursing home, as opposed to an assisted living home or in-home nursing care).
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Asset strategies are not as simple. For those under age 65, a Special Needs Trust (sometimes called a Supplemental Needs Trust) can be very helpful. With a Special Needs Trust, the disabled person’s assets are placed into a particular type of trust. The trust can be used to pay for “extras” for that person, but not for basic necessities. The assumption is that the benefits that person receives, will pay for their necessities. The Special Needs Trust can pay for things like electronic gadgets, vacations, spa or beauty treatments, expenses for special occasions, and other things to make the person’s life a little bit less spartan than it would be if he or she had to live on only a small amount of benefits each month.
The law does not allow for anyone 65 or older to establish a Special Needs Trust, so other strategies must be implemented for older clients. The elder may be able to pass along some of the assets to his or her heirs, holding back enough to get through the five-year look back period. This can also be accomplished through an irrevocable trust. If there is a spouse, some assets can be allocated to that spouse. If there is a need for more income to provide for the spouse, a Medicaid-qualifying annuity can convert countable assets into uncounted income. And there are many other ways to qualify, such as paying off a mortgage or other debts, prepaying funeral and burial or cremation costs, and otherwise moving assets into exempt categories. In some circumstances, family members can be paid for their time helping to care for the elder person, and in a few situations it may be possible to transfer a home to a family member if they are disabled or have been caring for the elder parent.
If you are concerned about Medicaid qualification, even if you do not need it yet, and you live in Alaska, you should consider a free consultation with Kenneth Kirk. He can talk to you about the options you might have, and whether it would make sense, in your situation, to do some advance planning so that, if you ever do need Medicaid, you will have been able to pass as much of your estate on to your loved ones as possible. Contact us for more information.
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