Public Benefits Planning FAQ
How do I pay for long-term care?
People pay for long term care expenses, such as nursing home, adult care home, or assisted living expenses, by using either their own funds (private pay), long term care insurance, or by applying for assistance provided by the Medicaid system (in Arizona, known as the Arizona Long Term Care System or ALTCS).
How do I qualify for the Arizona Long Term Care System?
There are three tests to qualify for the Arizona Long Term Care System (ALTCS):
1) You must be medically eligible (based on an assessment by ALTCS known as the pre-admission screen or PAS, meaning you cannot do a sufficient number of activities of daily living (ADLs)),
2) Your income must be below a certain monthly level ($2,523 per month for 2022), and
3) Your countable assets or resources must be below a certain amount.
What if my income exceeds the monthly maximum?
In many situations we may prepare an income cap trust (Miller trust) to correct the fact that your income exceeds the previously stated maximum. There are also two different ways of counting the income of a married applicant for ALTCS. Additionally, by reducing countable resources to meet the resources test, you may reduce your income sufficiently to qualify for the income test.
Doesn’t Medicare cover my long-term-care expenses?
For most people, Medicare does not cover long term care expenses except for a very limited period of time (up to 100 days), and for skilled rehabilitative care only. And even in that situation, it does not pay the entire amount for that period. Most people instead have to look to the Medicaid program (ALTCS in Arizona) for assistance to cover long term care expenses.
What are countable resources?
Most assets or resources are countable toward the $2,000 limit for an unmarried applicant and the higher amount for a married couple (usually a maximum of about $100,000 for a married couple, though that amount changes yearly). The major excluded asset is a residence, but even that is now limited to no more than $500,000 of equity in the home.
Can I give away my assets to qualify?
Giving away assets to family members or others can be very risky, especially under law changes that went into effect in 2006 that change the way gifts (also called transfers) penalize an ALTCS applicant. In addition to having to disclose any gifts during the previous three to five years prior to the application for ALTCS benefits, the changes to the law can cause a later start date to any penalty period and therefore a later date for which an applicant is again eligible for the program benefits after having made a gift or transfer.
What about continuing care retirement communities (CCRCs)?
The law has changed in how investments in CCRCs are counted for ALTCS eligibility and as to whether a CCRC can require a spend down of your assets before you may apply for ALTCS benefits. It is important to consult an experienced elder law attorney for this issue and for all other long term care issues.
Can the state take my house or other assets after my death?
There are provisions in the law known as estate recovery that allow that State of Arizona to place a lien on your house and to make a claim against your assets at your death. An important part of planning for long term care expenses is to examine the applicability of estate recovery to the ALTCS applicant. Although the provisions for recovery are broad, not all death transfers are subject to estate recovery and proper planning can minimize the impact of estate recovery.
Should I update my estate plan, too?
It is very important to make sure that the applicant, his or her spouse, and other family members coordinate their estate plans (wills, trusts, powers of attorney, etc.) to be sure those plans continue to make sense in light of the needs of the person receiving or going to receive benefits from ALTCS.
What about special needs trusts?
It is critically important to consider a special needs trust any time a spouse, child, family member, or other beneficiary is receiving or may in the future receive means tested public benefits such as ALTCS or SSI (Supplemental Security Income). Standard support trusts that provide for support, maintenance, health, or education are not special needs trusts and do not work properly.