Medicaid Annuity Update - Arizona

In a recent Arizona case involving a husband and wife, wherein the wife was confined to an Arizona nursing home, and where the nursing home costs were averaging $5,300.00 per month, the community spouse was concerned that their life savings would be insufficient to maintain the nursing home and provide him with a reasonable standard of living.

Long-Term Care
One of the facts of aging is that some of us will eventually be unable to take care of ourselves and will need some form of assistance, either with home health care, an adult care home or a nursing home. Aside from the personal aspects of being debilitated, which can be devastating, there is the equally devastating financial cost. In Arizona, the cost of a nursing home is $4000-6000 per month. At that rate, it would not take long to deplete the resources of most families. Those fortunate enough to have unlimited resources can provide for this care. Those who have little or nothing can turn to government programs for aid. But where does that leave those who have worked hard over the years to save a modest nest egg for their retirement? They have too much to qualify for aid, and what they do have will be exhausted in a very short period of time paying for Long-Term Care. If you find yourself in this dilemma, take comfort in knowing that there are solutions. Arizona, through Medicaid, has developed a program for Long-Term Care known as ALTCS (Arizona Long-Term Care System-ALTCS-in Arizona). As with all Medicaid programs, recipients must meet eligibility requirements to qualify for benefits.

Since there are legal ways to protect some of your assets and save thousands of dollars for your loved ones, the first thing to keep in mind is that delay is your worst enemy and that it's never too late to do something. Thus, planning is essential.

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In reviewing this guide, please remember that Medicaid is not Medicare. Medicare is a federal medical insurance program available to people over 65 who qualify, for which premiums are paid and which does not cover long-term nursing home care.

Medicaid for long-term nursing home care, on the other hand, is a federal/state needs-based public assistance program which is available only after income and resource tests have been met.

Medicaid Program
Medicaid (in Arizona we operate under a special form of Medicaid called the Arizona Health Care Cost Containment System, (AHCCCS), and its subsection, Arizona

Long-Term Care System, (ALTCS), is a needs-based program that pays for individuals in 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 care under ALTCS is also 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.

Evaluated Assets
There is no doubt that the eligibility requirements relating to financial matters get the most attention from clients and elder law attorneys. In order to be eligible for the Medicaid Program, a person must be financially needy according to the asset and income limits set by the AHCCCS. In Arizona, the applicant cannot have countable assets in excess of $ 2,000.00. If married, the spouse cannot have countable assets in excess of $ 95,100.00. Under current law, an experienced asset protection estate planning attorney can assist in legally rearranging the assets to make a single or married person eligible for Medicaid (ALTCS). Family home, vehicle, nominal insurance, Medicaid annuity, and burial arrangements, as well as several other items, are not countable assets. The state will try to be reimbursed for the funds they spent for nursing home care if there is a home involved but only if the nursing home spouse is the last to die. Countable assets include, but are not limited to: cash, savings and checking accounts, real estate (other than your home), more than one vehicle, boats, recreational vehicles, stocks, bonds, mutual funds, credit union share and draft accounts, Keogh plans, nursing home trust funds, prepaid funeral contracts which can be canceled, trusts - depending on the terms of the trusts, mortgages, promissory notes, cash value life insurance, securities, and un-cashed checks.

Only the assets of a person and those of the spouse living with the person are evaluated in determining eligibility for Medicaid. Special rules apply for evaluating a couple's assets when one person is entering or residing in a long-term care facility, and the other spouse remains in the community.

Excluded Assets / Exempt Assets / Non-Countable Assets
In Arizona certain assets are not counted towards the Medicaid asset limit. These assets are called "excluded assets", "exempt assets", or "non-countable assets". These assets include:

What is a Medicaid Annuity?
One popular and successful asset-limitation strategy is the purchase of an immediate payment, single premium annuity. An annuity purchase is a transfer for value and, therefore, is not subject to the Medicaid transfer penalties. A Medicaid Annuity is a means to convert an excess countable resource (not allowed to have) into an income stream (allowed to have - unlimited). In the eyes of the Arizona Medicaid Program, a Medicaid Annuity is nothing more than an immediate annuity, with Medicaid qualifying language.