Under the Federal Medicaid and ALTCS spend down regulations, if you require long term care assistance (which is extremely expensive) and if you cannot afford to pay for this assistance, you are entitled to governmental assistance to help pay for these costs. 

However, under the Medicaid and ALTCS program, you will be required to spend down or liquidate almost all of your estate assets before receiving any Federal financial assistance for long term care costs. This could easily wipe out most of your estate assets during your lifetime. Then the question becomes, “What is your spouse going to live on and how is your spouse going to support herself/himself if most if your assets are required to be spent down/liquidated?” 

If the huge costs associated with long-term care insurance is not an option, and personal income and financial resources are not sufficient to pay for your assisted care or long-term care expenses, your spouse and/or children will most likely suffer significant financial hardship. There is a reasonable solution.  

ARIZONA LONG TERM CARE SYSTEM/ALTCS 

In Arizona, we operate under a modified form of Medicaid administered by the Arizona Health Care Cost Containment System, [AHCCCS], and its subsection, Arizona Long Term Care System, [ALTCS]. It is a needs-based program that pays for individuals in their home, in adult care facilities or nursing homes. The applicant must meet certain medical and financial criteria and be a citizen of the United States or resident legal alien. There are different rules for single people and married people. The timing of the application for assistance with long-term under ALTCS is important. Some planning procedures cannot be initiated after application or after the individual has been in the nursing home for an extended period of time. 

If you don’t have long-term care insurance or you don’t have the financial cushion to pay for the cost when a long-term need arises, the remaining option is ALTCS. If you meet the eligibility requirements, ALTCS will guaranty a nursing home bed or will supply in-home respite care. It will pay room and board, medications, and whatever is considered medically necessary. This is not a free lunch. If you have any assets, ALTCS will require you to liquidate (“spend-down”) these estate assets to pay for a certain amount of your long-term care costs before ALTCS will provided financial assistance. This process is known as the “spend-down” statute and is explained herein.

One estate and asset protection planning technique is to establish and transfer assets into an asset protection “Medicaid Trust”. Under this asset protection Medicaid Trust, you shall retain the income as the “grantor,” while protecting the principal of the assets (the assets held in this Trust) for your spouse, children or other beneficiaries from the Federal and State Medicaid Spend Down statutes. When properly drafted, this Medicaid Trust will provide asset protection, as well as qualify you for the financial benefits under Medicaid, if and when needed. In addition, this Trust will avoid probate. Upon your passing, the assets remain in trust for the benefit of your spouse and then pass automatically to your family members as you direct without probate. 

THIS ASSET PROTECTION MEDICAID TRUST PROTECTS YOUR ESTATE ASSETS FROM THE REQUIRED MEDICAID SPEND DOWN SHOULD YOU REQUIRE LONG TERM CARE AND GUARANTEES THAT THESE ASSETS WILL STILL BE AVAILABLE FOR YOUR SPOUSE AND FAMILY MEMBERS UPON YOUR PASSING. Without considering this Asset Protection Medicaid Trust, there may not be any assets remaining in your estate for your spouse and family members as a result of the Federal and State ALTCS/Medicaid Spend Down Laws. 

A properly drafted asset protection Medicaid Trust gives the Trustee the discretion to distribute the income to you or your spouse as the Grantor-Lifetime Beneficiary, with the remainder of the estate assets distributable to specific beneficiaries, as you direct. This type of Trust will provide the asset protection you desire while also qualifying you and your spouse for Medicaid benefits. Your assets in the Trust will not be considered as available to the State and Federal Government to pau for your cost of long-term care. This will avoid the State ALTCS and Federal Medicaid spend down (liquidation) statues and preserve your estate assets for your spouse and family members. 

Do not confuse a “revocable living trust” with this asset protection Medicaid Trust. While a revocable trust may have several benefits and uses, it is important to note that a revocable trust does not offer asset protection. A revocable living Trust is typically only implemented for asset management and probate-avoidance reasons. The Medicaid Trust offers asset protection from all creditors including Federal and State Medicaid spend down regulations, thereby providing you asset protection and preserving your estate assets for your loved ones in the future. 

We have prepared and are ready to make available to you upon your request various articles and legal memoranda supporting the asset protection program in order to protect your estate assets from the government “spend down” (liquidation) statutes under the Federal Medicaid and Arizona Long Term Care Statutes (“ALTCS”) should you have a medical crisis and/or require long term care needs in the future. 

We strongly recommend that you follow up on this issue and contact our office at (520) 797-1400, at no charge, to obtain a copy of these materials and learn more about this important problem and the solution available to you.  

This Memorandum is based on current law and is for informational purposes only. It is important that you discuss all legal options and consequences with a qualified elder law professional prior to any action. Should you wish to discuss with us in more detail your situation and understand your options to protect your estate assets, please call (520) 797-1400 for a free consultation. For additional supporting Memoranda, please call at your convenience.