Medicaid Planning FAQs

Medicaid is a healthcare program jointly funded by federal and state government The program is administered by each state. Arkansas eligibility guidelines and benefits can differ from other states. Arkansas offers various Medicaid programs, including those for children, pregnant women, and seniors or people with disabilities.

People often confuse Medicaid and Medicare, but they serve different purposes. Medicare is a federal health insurance for people over 65 and some younger people with disabilities. You are eligible for Medicare if you’ve paid into the program. Medicaid is a needs-based program meaning you must show financial need to qualify. It’s a federal program but managed by the state. Arkansas sets its own rules as to who qualifies.

Not all assets count against you. In Arkansas, some exempt assets include:

• Your primary home (with a value limit that changes yearly and with other conditions conditions)
• Household goods and furnishings
• One vehicle
• Term life insurance with no cash value
• Burial plots

Medicaid planning uses legal strategies to protect your assets and ensure you can qualify for Medicaid if it is needed for your long-term care. This planning is vital if you can’t afford long-term care costs out of pocket. By planning ahead, you can safeguard your assets and enjoy peace of mind during retirement.

As you get older, the chances of needing long-term care increase. By 65, there’s a 50% chance you’ll need long-term care at some point, and by 85, that jumps to 75%. In Arkansas, the average cost of long-term care is around $8,060 per month, adding up to over $290,000 for an average stay of three years. Neither Medicare nor regular health insurance typically covers these costs, so Medicaid can be essential if you meet the financial criteria.

You need to prove your citizenship or legal status, Arkansas residency, and you must demonstrate financial need. In Arkansas, both income and “countable assets” must be below certain limits. The rules regarding “countable” and “non-countable” assets are very complicated. Our estate planning attorneys can help you navigate these rules.

There are several reasons you should not transfer your assets to your children before death. In terms of Long-Term Care Medicaid, there is a five-year “look-back” rule regarding the uncompensated transfer of assets. This means the state will review your financial transactions for the five years before your application. Any transfers for less than market value can result in penalties and delay your eligibility.

Medicaid planning is a critical component of your estate plan if you want to ensure that you can qualify for Medicaid to cover long-term care costs while protecting your assets. By incorporating strategies such as asset protection trusts and gifting, you can preserve more of your estate for your heirs while still meeting Medicaid eligibility requirements.

A Medicaid Asset Protection Trust is an irrevocable trust designed to protect your assets from being counted towards Medicaid eligibility. By transferring assets into a Medicaid Asset Protection Trust, you can reduce your countable assets, potentially qualifying for Medicaid benefits while retaining some control over your assets. It is important to set up the trust well before you need Medicaid due to the five-year look-back period. 

The Medicaid look-back period is a timeframe during which Medicaid reviews your financial transactions to ensure you haven’t transferred assets for less than fair market value just to qualify for benefits. In Arkansas, this period is five years. Any transfers made for less than market value during this period can result in penalties and delay your eligibility for Medicaid.

Yes, with proper Medicaid planning, you can still leave an inheritance to your children. Strategies like creating a Medicaid Asset Protection Trust or gifting assets in advance of the look-back period can help protect your estate while allowing you to qualify for Medicaid.

An estate planning attorney helps with legal issues affecting seniors, including Medicaid planning. We can help you navigate the complex rules of Medicaid eligibility, develop strategies to protect your assets, and ensure that your estate plan is structured to meet your long-term care needs while preserving your legacy.