Most clients only meet with a local elder law attorney when they (or a family member) are in crisis. Those who have the foresight to engage an elder law attorney in Medicaid pre-planning, find that they have so many better options available to them.
The most immediate problem with waiting for the period of crisis is whether or not the patient, who needs to apply for Medicaid, has the capacity to do so. If they do not, the next question becomes whether there is an enhanced power of attorney (as opposed to a standard / form POA). As I explain in the link above, not all powers of attorney are authorized to engage in Medicaid planning.
Difference between Medicaid Pre-Planning and Medicaid Crisis Planning
A Medicaid applicant must qualify both financially and medically in order to receive Medicaid benefits.
To qualify someone for Medicaid in a time of crisis, that generally means that they are physically eligible (meet disability/level of sickness requirements) but not financially eligible. To pre-plan for Medicaid is to get the person financially eligible anticipating that they will eventually become physically eligible. As we know, once someone’s health begins to deteriorate, the rest of their world becomes more difficult to manage and their options in many aspects of their life will become more stressful, restrictive and complex. The same holds true for Medicaid planning.
Medicaid Crisis Planning is More Stressful on the Family
When a single or married couples visits the elder law attorney in a time of crisis, one spouse may have a full understanding of the couple’s finances (that spouse may be the one in crisis). If the client is single, it is often the adult children’s responsibility to turn into amateur investigators to find out where all mom or dad’s assets/accounts/holdings are located – all this during a time of great stress when they really ought to be by their loved one’s side. Engaging in advanced Medicaid planning, before the crisis, makes a very tough situation a bit easier to handle.
Medicaid Pre-Planning Will Cost Less
Also, very practically speaking, pre-planning with an elder law attorney will not cost as much as crisis Medicaid planning with the same elder law attorney. Medicaid crisis planning, by its very definition, insinuates that there is a time crunch and so the elder law attorney must immediately devote extra time and resources to the crisis case and preparing for the Medicaid application, compared to the pre-planning case.
The crisis client is likely already in a nursing home, paying cash, so it is more expensive on the nursing home side as well. Because there are a lot of moving parts, getting the “plan” into place can take two months. So by not pre-planning, the nursing home resident will likely have to continue paying the cash rates (average cost is about $8,500 per month in Florida).
It is easier to shelter money in Medicaid Pre-Planning vs. Crisis Planning
If one has $100,000 that the elder law attorney needs to shelter, the growth on that $100,000 can occur penalty free when pre-planning. Whereas, if someone who needs Medicaid waits for the crisis to hit (say three years), that same $100,000 grows to $119,101(assuming 6% a year). Now, in crisis, there is an extra $19,101 that needs to be sheltered, spent down, or will be used to accrue a penalty period.
It is axiomatic - planning ahead in any aspect of life almost always produces a better outcome than procrastination. Statistically, everyone should expect to need nursing home care. If they have between $50,000 and $1,000,000 in assets, a medicaid planning attorney can provide a great benefit to them and their heirs. I hope this article has illuminated a number of ways that pre-planning for Medicaid to their advantage.