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In Need of Assisted Living? How to Protect Assets through the Medicaid Half-and-Half Plan

Assisted Living Protect Assets Medicaid.
Assisted Living Protect Assets Medicaid. Protect assets and obtain Medicaid before starting facility wait period.

Hoosiers are fortunate to have a Medicaid program that covers alternatives to nursing home care as not all state Medicaid programs include such alternatives. Under Indiana’s Aged and Disabled Medicaid Waiver, applicants can obtain a variety of alternatives to nursing home care, including coverage for adult day care, home care, adult family care, and assisted living. Fortunately, the program availability of these Medicaid waiver services has kept up with demand in recent years. However, provider availability has become an issue, particularly with assisted living facilities.

Due to a limited supply of Medicaid covered rooms within an assisted living facility, it has become common place for most facilities to place “prerequisites” on obtaining a Medicaid room within their facility. Most often this involves a requirement to private pay for a room over a certain period of time prior to a Medicaid room being offered to the resident. While the individual cannot use Medicaid benefits for a room during this period, the “waiting period” can be a valuable time to start the Medicaid planning process so that full Medicaid benefits are available once a Medicaid room becomes available.

A common Medicaid misconception is that an applicant must be completely destitute to qualify for benefits. While the applicant must meet financial eligibility criteria to qualify, complete impoverishment is not required. However, a legal plan is required to protect assets. For most single individuals, the legal planning will involve transferring assets through what our firm has termed the Medicaid Half and Half Plan. Here’s how it works:

Audrey has $150,000 in assets, $2,000 per month in monthly income, and a $5,500 per month assisted living bill. Audrey wants to protect a portion of her assets; so, she transfers $96,000 to a trust for her family. Medicaid assesses a 15 month penalty for the $96,000 transfer. She uses her remaining $54,000 to meet her monthly shortfall of $3,500 for 15 months. On month 16 she qualifies for Medicaid assistance AND has protected $96,000.

Note that Audrey could have spent all her assets on her care and would have been completely destitute in 42 months. By planning, she protected a good portion of her assets. She also satisfied the assisted living facility’s requirement to private pay over a period of time while she served the Medicaid transfer penalty (a period of non-coverage). Thus, after 15 months, she has:

• Protected $96,000
• Served her Medicaid transfer of assets penalty and become fully qualified for Medicaid
• AND satisfied the assisted living facility’s private pay requirement.

Audrey started her Medicaid eligibility plan when she moved into the assisted living facility. If she had waited to plan until a Medicaid room is available, she would protect fewer assets since she would have privately paid her shortfall during the facility’s waiting period and privately paid during the Medicaid transfer penalty period under the Half and Half Plan. See our website for a graphic illustration of Audrey’s plan.

Instituting the Medicaid eligibility plan as soon as an individual moves into an assisted living facility can save the individual a significant portion of her assets. She can “kill two birds with one stone” by serving the Medicaid penalty for transferring protected assets while concurrently satisfying her assisted living facility’s private pay period requirement. If you or your loved one are in need of assisted living care and would like to review your asset protection options, please do not hesitate to contact us at 317-622-8181 or www.stinsonelderlaw.com.

See our website for more information on the Medicaid Half and Half Plan.