The Attorney’s Role in Proactive Medicaid Planning and Long-Term Care Insurance
When a client has the foresight and wisdom to start considering their long-term care needs while still healthy, their attorney needs to be ready with the proper tools. Generally, this means helping the client make some very important decisions about their future care.
- Who will provide their care? Will it be a family member, a professional geriatric service, a registered nurse, or someone else?
- Where will that care be provided? Will they receive care in their home, at a family member’s house, at a facility that can provide increasing levels of care as the client’s needs change, or in a nursing home?
- How will the desired care be paid for? To afford the preferred care, retirement accounts may need to be liquidated, insurance policies triggered, or a Medicaid application submitted.
All of these decisions are available because the client is taking proactive steps now, rather than waiting until the moment they need care. If clients wait until a crisis to put a plan together, these options may no longer be on the table.
Read More: Is Long-Term Care Insurance a Viable Asset Protection Tool?
Proactive Medicaid Planning with an Irrevocable Trust
The attorney’s role is to create a plan that aligns with the client’s wishes using the tools at their disposal. If the client wants to preserve assets for the next generation or for charitable purposes, while also improving the chances of qualifying for Medicaid in the future, the attorney may recommend using a specially designed irrevocable trust. These trusts are specifically written to comply with both federal and state Medicaid rules. Assets are transferred to the trustee, and the Grantor no longer has ownership or control—meaning the trust assets are not counted for Medicaid qualification. These trusts are also structured to preserve important tax benefits that would be lost if the client simply gifted away their assets. In some states, they are also an important tool to prevent Medicaid from recovering assets after the client has passed away.
Read More: The Importance of Medicaid Planning and the Attorney’s Role
Planning Ahead with Long-Term Care Insurance
Often, clients have not calculated the true cost of long-term care and have not saved enough to pay out of pocket for the care they desire. That’s where insurance products can be a key funding source. Traditional long-term care insurance works similarly to automobile insurance; when an accident occurs, insurance helps pay for the damage. Likewise, a traditional long-term care policy can help pay for home care, assisted living, or nursing home care.
Hybrid long-term care policies combine the benefits of life insurance with long-term care coverage. If the client does not use the long-term care coverage before passing away, the death benefit is paid to the named beneficiaries.
These two tools, along with traditional estate planning, form the backbone of a solid, proactive Medicaid plan.
Jim is responsible for creating, curating, and promoting high-quality content related to the estate planning and elder law industry. He also plays a primary role in designing and maintaining a robust education and content calendar for Attorney Access.
