The Generations Legal Group Podcast

Unlocking the Secrets of Medicaid Planning and Asset Protection with Todd Whatley

• Todd Whatley

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Todd Whatley, Certified Elder Law Attorney with Generations Legal Group explains how Medicaid really is an option for almost everyone seeking to pay for long term care.  This episode addresses the crucial topic of Medicaid planning and the misconceptions surrounding it. We discuss how proper planning can protect assets for long-term care, with a focus on understanding the rules of Medicaid to benefit families facing aging challenges.

• Understanding Medicaid and its application for long-term care 
• Dispelling myths about wealth and Medicaid eligibility 
• The importance of early planning for future care needs 
• Strategies for married couples to protect assets 
• Exempt assets that do not affect Medicaid eligibility 
• The potential of irrevocable trusts in asset protection 
• Real-life examples illustrating planning outcomes 
• Emphasizing the role of expert guidance in navigating Medicaid rules 
• The risks of waiting to plan and financial implications if delayed

Information to help you answer all of your questions about aging.

Speaker 1:

Welcome to Answers on Aging, the podcast dedicated to helping you navigate the complexities of growing older. Your host is Todd Whatley, a certified elder law attorney with a passion for empowering the aging community and their families, From finances and legal matters to health, long-term care and beyond. We've got you covered, Because every question you have we aim to answer. Dive into today's episode and let's uncover the truth about aging together.

Speaker 2:

That's right. This is the Answers on Aging podcast. I am Todd Whatley with Generations Legal Group and I'm so glad that everyone is downloading and listening to our podcast, and if you subscribe to this on your favorite podcast platform, you can be alerted every time we do something new. And I plan on being much more consistent this year, trying to do a podcast per week, and so there's going to be a lot of good information coming out of here for you and for you to share with folks.

Speaker 2:

Okay, today I want to talk about one of the most misunderstood and, honestly, one of the most passionate things that we do in our office, and that is Medicaid planning and how it can protect your assets. I love this because very few attorneys out there do this well and I've been doing this for 25 years. I learned how to do this pretty much by myself back 25 years ago. Okay, that sounds kind of scary, but back 25 years ago, there was basically one attorney in the state who did this and he did not share very well and he thought he could do it all by himself and he did not help me do it. So I learned how to do this by basically doing it. I messed up quite a few times, figured this out the hard way by the school of hard knocks, and so I love what I do now and it's it's the one thing that I I I think I do quite well, and it's just one of the things that people don't totally understand. There's so many misconceptions out there about it and I want to deal with that and I just want to quickly introduce you to this, each of the topics that I've talked about today, each of the techniques. I could do a whole podcast on, and probably will, but today I just want to introduce you to this and how it works and just some of the ins and outs.

Speaker 2:

Okay, so, basically, what is Medicaid planning? It is arranging your assets, doing things completely under the law, what the law says we can do to help protect your assets, both for a single person and for a married person. Okay, and Medicaid is crucial. It's a benefit out there and when, when I talk about Medicaid on this podcast, I am talking about long-term care Medicaid. There there is Medicaid for pregnant mothers and and, uh, people that are just down and out on their luck and, you know, need some help. Yeah, that's, that's a great program, but I am talking about long-term care Medicaid. Long-term care Medicaid is helping pay for primarily nursing homes. Okay, that's where it primarily comes in. That's the biggest benefit, because nursing homes today, at the beginning of 2025, in Northwest Arkansas, you know, begin at about $7,500 per month and go all the way up to $10,000 per month, and a lot of families can't afford that for very long and the Medicaid rules are there to help us qualify for that, and so Medicaid is the crucial support for long-term care.

Speaker 2:

I want to dispel this notion. There's a lot of times when we're doing a meeting and the clients don't even bring up Medicaid but I'm like, hey, let's talk about Medicaid as a way to pay for your care. They're like, oh, no, no, no, no, no, I don't want to go on Medicaid. We have some money. I want to pay for the good nursing home. I don't want to go into a quote Medicaid, nursing home and I just kind of smile because in northwest Arkansas, every nursing home takes Medicaid. Ok, everyone takes Medicaid. They have to to get people in the door. And then people say, well, ok, fine, but I don't want to be in a Medicaid bed where they segregate me off and treat me different and everybody knows I'm on Medicaid and they look at me differently and treat me differently. And I smile Again.

Speaker 2:

I say, if they do that, that is a violation of federal law and please let me know, because I would love to address that with them. And the real answer I mean the the practical answer is they don't know, nor do they care. And when I say they, it's the people treating you, the, the nurses, the cnas, the dietitians, the person giving you meds. They don't know who's paying your bill and it should not matter. They don't care. You're a resident there and they are going to care for you. Just as you know, just like everyone else. The private pay person who's writing a check for $9,000 every month is going to be treated the same as the person who just gives up their income Okay, as the person who just gives up their income Okay.

Speaker 2:

So don't think that perception is out there that you're going to get lesser care. The state's going to tell you where to go, you know where to live, when to move no, none of that is true. You get to decide. In. Every nursing home takes Medicaid. Now, that is not the case in all States. Like very close to us, oklahoma, not every nursing home takes Medicaid. Now, that is not the case in all states Very close to us Oklahoma not every nursing home takes Medicaid over there. I think Medicaid pays very poorly over there, and there are some nursing homes who think they can make it without taking Medicaid, so they do that, but that is not the case in Arkansas.

Speaker 2:

All right, so now Medicaid planning is using the Medicaid rules to help arrange your assets and do things under their rules to protect some money, all right, and this helps families not lose everything that they have, particularly with the married couple. It is surprising and I'll get into this a little bit more later, but it is surprising how much money we can protect, and I can protect almost everything up to a million bucks or so, all right. So yes, if you have a loved one, if there is one spouse going into the nursing home and the other spouse is not, we can protect a ton of those assets. Okay, we can protect a ton of those assets, ok. So now let's address something that you know sometimes is the big issue in the room, and I can always tell when I do presentations for the public and I talk about Medicaid and I'm like, yeah, I can get someone upwards of a million dollars onto Medicaid, and if you're single it's not quite as good, but it's still pretty good, and I can get people with hundreds of thousands of dollars onto Medicaid sooner than you think you could. All right, Particularly with a single person. With a married person, I can do it the very next month with a single person. It is going to take some time, but we are able to preserve assets, and so a lot of times there's someone in the room who gives me this look like now, todd, why should someone with a million dollars be able to get on a public benefit? Why shouldn't they just pay for their care? Okay, I get that. I tend to be fairly conservative and I'm a small government top guy, but I know in this situation, as long as these rules are there, I am going to use them for my clients, and here's here's why I do this.

Speaker 2:

Ok, so let's talk about couple A and couple B. Ok, two couples exactly the same, exactly the same age. They got married back in the sixties and are the same 70s now. They got married back in the 70s, exactly the same. Mr A and Mr B worked at the same factory, same employment, they did the exactly the same job and they got paid exactly the same money. The wives were exactly the same. They primarily stayed home, helped raise the kids, but worked some part-time jobs. And they were exactly the same pay-wise.

Speaker 2:

Okay. So couple A they enjoyed their money, they got paid. They're like, hey, let's go on vacation, sure, let's do that, let's buy a new car, let's upgrade the house, let's get the kids lots of things for Christmas. Let's just, let's upgrade the house, let's get the kids lots of things for Christmas, let's just, you know they enjoyed their money. Okay, nothing wrong with that. If that's how you want to live your life, that's fine. Okay, this is America, you can do what you want to. And they were not big on saving money, but they, you know, enjoyed their money. While they did. Couple B, totally different. They're, you know, remember, same income, same everything. But they were like you know, we need to save for the future. And so they would put back money. And they did not go on the big fancy vacations, they did not buy the new cars, they stayed in the same house. They bought their kids very modest Christmas presents. They just lived a different life and they saved money, but exactly the same.

Speaker 2:

Okay, so now both Mr A and Mr B are now 75 years old and sadly, they both have strokes. Okay, they have a stroke, they both go into the hospital. Medicare pays for that, gets them up. They leave the hospital, they go to the rehab facility at the nursing home. They're progressing exactly the same. Okay, they get through about 30, 40 days of PTOT speech at the nursing home.

Speaker 2:

And so the social worker comes to Mrs A and says hey, mrs A, your husband, you know, has had a stroke. He's not progressing extremely well. He really does need to stay here. And she says Mrs A says well, how much is it? And they say it's $9,000 a month. She's like, oh, my goodness.

Speaker 2:

And the social worker asked Mrs A, how much money do you have in the bank? And she says we don't have any, we didn't save anything. We have like $20,000 in the bank and we have a house with a mortgage and we have nothing in the bank. And they're like, okay, with $20,000, you qualify for Medicaid, don't worry about it, we'll do the application and Medicaid will pay for his care here. And she's like, okay, that sounds great, and off they go. Okay, then she goes to see Mrs B. Mrs B, you know your husband's done okay, but he really does need to stay here. Mrs B says how much is it? She said $9,000 a month. She said, oh, my goodness, that's a lot of money.

Speaker 2:

The social worker asked well, mrs B, how much money do you have in the bank? And she said well, we've scrimped and saved and we have about $500,000 in the bank and our house has paid off. They said oh, you have half a million dollars in the bank. You're not going to qualify for Medicaid, so therefore, you're going to need to pay $9,000 a month until you know, for basically forever, because with half a million dollars you're not going to qualify for Medicaid. And she's like oh, you know she's devastated. She's like well, can I keep my house? And I'm like, yeah, you can keep your house, but you know you're, you know she's devastated. She's like well, can I keep my house? And they're like, yeah, you can keep your house, but you know you're just private pay until you burn through most of your money.

Speaker 2:

Now remember exactly the same income, exactly the same everything, but two different lifestyles. Mr and Mrs A did not save money, but made the same money, enjoyed their money, did everything that they thought was good. You know, they enjoyed their money. Basically, mr and Mrs B scrimped and saved and put their money back, and now they have to pay. They don't qualify for this public benefit. And I'm not a huge fan of what's fair or not, but that to me seems very unfair. Okay, that just because you choose to use your money differently, you qualify or you don't qualify for a benefit.

Speaker 2:

And I can almost always tell when I, when I do these public presentations, I can. I assume the person asking that question is probably Mrs B. Ok, she is sitting there thinking well, I've saved my money and you know why. Why do my tax dollars have to go to someone who's you know on Medicaid or you know, if someone has money, why should they get a public benefit? And when I tell this story, I can always see Mrs B go hmm, okay, I get it Just because we've scrimped and saved. We should not be penalized and not be able to qualify for this benefit if the rules allow it. And the rules do allow it, okay.

Speaker 2:

So let me jump into the importance of early planning. All right, early planning, it's not absolutely necessary. I can do a ton of things. When your loved one or when you are going into the nursing home, I can do some incredible things. Ok, I can get the married person on Medicaid the first of the next month, if you will listen to me and if we have the tools in place to do this. Okay, for a single person, it's going to take some time, there's going to be some gifting and there's penalties for that and the penalty is just a period of time. Medicaid's not going to pay for the nursing home and so I can't get a person single person with assets immediately on Medicaid like I can with a married person.

Speaker 2:

And one of the issues with married people is and I think Congress understood this so how we get the married person onto Medicaid is we basically get all of the assets to the spouse not in the nursing home. And let me just say real quick if you're thinking of pre-planning, it's like, oh OK, well, you know, I can tell this spouse is going to go into the nursing home. And let me just say real quick, if you're thinking of pre-planning and it's like, oh okay, well, I can tell this spouse is going to go into the nursing home first. This spouse is not, we'll just get everything into the spouse's name not going into the nursing home and that'll protect everything. No, those are not the rules.

Speaker 2:

When a married person applies for Medicaid, they're going to look at the assets of both spouses. It doesn't matter who owns them At the point the person goes into the nursing home. That's when Medicaid is going to look at everything and they assume everything is jointly owned between both and that plays into it. And just another note here real quick that makes sense if you've been married for like 60 years, ok, and everything that you have was jointly earned between the two of you. That just makes sense to switch everything to one spouse and the other spouse goes on to Medicaid. What doesn't make sense is late in life marriages when you get married later in life and he brings his money and she brings her money into this marriage and then one of them gets sick and we have to get all of the assets to the other spouse. That's when families get really like wait a second, you're going to give dad's money to my stepmom, yeah, to protect it. That's how we do it. Now. We can work through that, okay. We can definitely work through that In our crosses.

Speaker 2:

It gets kind of weird, okay, because people are like I don't know, but we can work through it if both sides of the family will work with us. Okay. But in general we get everything to one spouse and now that spouse and if I, like I said, if you're close to a million dollars, we can get that entire million dollars to the spouse not in the nursing home. Now what happens when they need nursing home care? Again, I can do some incredible things for a single person. But if a single person has a million bucks, it's going to be five years until I can get them onto Medicaid. Okay, you're going to pay privately for the next five years if you're single and you have over about six or $700,000. Okay. So I think Congress knew that it's like sure, we'll let one spouse goes in but the other spouse will never qualify If you only work under the crisis Medicaid rules, meaning you've not done any pre-planning. So with pre-planning I can fix that. I can make it so a single person qualifies for Medicaid much quicker. Single person qualifies for Medicaid much quicker and I can make it so that the second spouse, when they go in, we don't have to go five years without the assistance from Medicaid. Okay, I can use those rules in pre-planning. I can do some tremendous things. I can protect upwards of 80 to 90% of your assets if you will pre-plan with us, okay. And so the plea on this podcast is to say, hey, if you're over about 65 or 70 and you've done no pre-planning, you know nothing in light of long-term care, you need to come see us and let us work out a plan for you to help you plan for these assets and get things situated so that we can protect a much higher percentage. Ok, so we have to work around the five year, look back and if you can come in you know we don't know this, but if you can come in five years before needing long term care, I can do some tremendous things, okay. So what are some of the strategies? Okay, let's go through this real quickly. I will talk about some of those briefly. Like I said, I'm just going to touch the surface. I'm basically going to introduce you to this and I can do podcasts on these things individually, okay. Podcast on these things individually Okay.

Speaker 2:

So number one there are exempt assets when you're applying for Medicaid. Medicaid says we're going to look at everything, particularly with spouses and a single person, but we're going to look at everything and then the things that are not counted is a very short list in Arkansas. Number one your home, your home and anything that's attached to it does not count. Number two anything that is in that home Household, furnishings, things in your attic in your house, whatever If it's in your house, basically it doesn't count, okay. Number three one vehicle, one vehicle that you can drive, will be not counted, and so we can pick and choose the most expensive vehicle that are the one with the most equity. That can be your non-countable asset. Okay, now everything else is going to count of the cars and trucks and boats and trailers. Anything that's on your personal property list is going to count, other than one vehicle, all right. And then, finally, any prepaid funeral plans that you have. If you've done an irrevocable funeral plan with, like a, a funeral home, or done a, or if you did a life life insurance policy that is specifically for funerals not just any life insurance policy, but if you did a insurance policy for the purpose of a funeral, then that is not countable if it is irrevocable. So that's the very short list of non-accountable assets. So we utilize those as much as possible.

Speaker 2:

If a married person comes in, we're going to spend some money on those non-accountable assets pay off the house mortgage, fix up the house, buy a new carpet, put in new windows, siding, heat and air systems, whatever. And then we start looking at household furnishings you know buying things. You know washer and dryer, refrigerator, tvs, furniture, whatever needs to go in the house. We can spend money on that, okay. And then, um, get a new car and prepay for the barrel. So that's kind of the um spin down. That's what spin down is called. If you've heard spin down now, please make a note. Okay, if you're taking notes on this, please note that the spin down works best and sometimes only works after what is known as a snapshot date. The snapshot date is the first day that the person is in a nursing home, typically All right. Date is the first day that the person is in a nursing home, typically All right. And so you know, if you're looking at needing nursing home care soon and we're going to do crisis planning, don't pay off large things right now. Keep the money in your bank accounts because, based on the rules, particularly for a a or only for a married couple, we're going to have more assets in the bank. That means the spouse not in the nursing home gets to keep more. Okay, so the, so the.

Speaker 2:

The other playing tool which I've kind of alluded to is the spousal protection strategies. The, the Medicaid rules, have a whole section of the rules that protect the spouse not going into the nursing home, and so they understood when there's this situation where one spouse goes in, the other spouse does not. The spouse not in the nursing home needs to have some things, needs to own assets, a home, a car, household furnishings, and they need some income and they need money in the bank to live off of it. And so we take those rules and we use those very generously for the benefit of the spouse not going into the nursing home. Okay, so we can use those.

Speaker 2:

And by using those rules, like I said, with different tools, we can protect someone upwards of a million dollars, and I keep saying that because it's a general rule. If the spouse not going into the nursing home is younger, okay. If God forbid, if you know they're mid-60s and their spouse is going into the nursing home, I can protect even more than a million dollars, because a lot of it is based on age and life expectancy and a 60-year-old's life expectancy is quite long, okay, but if a married person is going into the nursing home and they're 96,. Okay, I can't protect a million bucks, okay, the numbers just don't work out as well that way. So it's a very general rule. But let me say, if you know someone or if this is your situation and you are the community spouse and you are younger and we're starting to see younger female spouses, typically you know there's 10, 15, 20 years difference there. 15, 20 years difference. There the person going into the nursing home can be 75 or 80, but the person not in the nursing home is late 50s, 60s, early 60s. I can protect a lot of money, but you've got to come see me, you've got to let us get on this as soon as possible. And, like I said, pre-planning is always better. And so I'll just kind of warn you.

Speaker 2:

One of the ways we get the married person qualified and even for single people, we actually give away assets for a single person, give it to a child or someone that you want it to go to. That does create a gift and penalty and the five-year look back. But the way we cover that with a single person giving away money or the spouse who has a lot of money and we can only spend so much on the house and car and things, and now we just have money that's causing them to be disqualified. We can actually convert that money into an annuity, a very specific Medicaid qualifying annuity that will pay income back to the community spouse or, with a single person, back to the person in the nursing home to help pay the nursing home bill during the penalty period. With a married couple, we don't have a penalty period, okay, we're not giving away money so that it is penalized. We're giving it between spouses, which is not penalized, so that's how we can get a married person onto Medicaid very quickly, and a single person.

Speaker 2:

It is going to take some time. Okay, let me address real quick a crisis tool, but even within those five years, people are so worried about giving away money. I love it when my clients give their money to their kids even before they go into the nursing home, rather than hang on to it until your death. Why don't you give away some now? It's perfectly okay. If that's what you want to do, don't let the Medicaid rules stop you from doing that.

Speaker 2:

If you want to make gifts, make gifts. The key thing here, though, is keep as much as you give away. Okay, and I've done podcasts on this. I probably need to do a new one. But with gifting, we can basically give away half and keep half, okay. And when I say, keep your kids, keep half. If a single person goes into the nursing home, as a general rule we can give away half of that money. We use the other half to pay during the penalty period which is created by the gift. Now, 50 is a very general rule. If you have good income and if the nursing home's not quite too expensive, we can sometimes get that up to 60, 70% and with like really good income. If you get a big pension from a company with like really good income, if you get a big pension from a company, sometimes we can get that up to 80 to 90%. That we get to keep Okay, and so it. It is okay to give away money. Just make sure that if you give a kid or grandkid $10,000, keep $10,000 back to say, hey, todd's going to need this when I go into the nursing home because we're going to use that kept money to cover the gifted money. All right, just a general rule. If you want to make gifts, perfectly, do it. Just keep back as much as you give away all right Now.

Speaker 2:

You may have heard of irrevocable trust. Irrevocable trust to protect assets from Medicaid. That is our pre-planning tool. That is how we can protect even more and particularly with a couple with a million bucks If you come in to see me and we're pretty sure we can make it five years, or we just simply have enough money to pay for five years to make sure at the end of five years, both spouses are really close to qualifying for Medicaid. I will tell you the tool we're going to use is an irrevocable trust and I can't go into it in extreme detail because it's extremely complicated, but I want you to be thinking about this and if you're thinking about coming to see us for pre-planning and you want to consider the irrevocable trust, there's a few things you need to think about.

Speaker 2:

I can further explain this. I and the other attorneys in the office can explain this to you. But just understand the irrevocable trust that protects your assets from Medicaid is a trust that you Definitely do not control and I highly recommend you do not benefit in any way from this trust. So you're basically giving it away, but you're not quite giving it completely to your kids. You're putting it in this tool between you and your kids, and there are some significant tax benefits to doing that, particularly if some of the things we put into this irrevocable trust is real estate.

Speaker 2:

Remember, I said your home is a non-countable asset, and that's true. It's non-countable all the way up until you die, but Medicaid may or will want to put a lien on it and get their money back at your death. And so if your kids want to sell this property prior to your death or they want to make sure Medicaid can't put a lien on it, the irrevocable trust does work well and we can put your home into the trust, but we definitely want to put other real estate that is not your home. Other pieces of property that you own will cause you to be disqualified from Medicaid because they're probably worth more than $2,000 and that's the limit for Medicaid. So you know, please understand, yes, we can protect these things, but you will not control what's in the trust and you will not benefit from what's in the trust other than your home.

Speaker 2:

We can put your home in this trust and we can put language in there to say you get to live in this house until you don't, okay, and since that is your home and it's a non-counterable asset. The benefit of living in your home will not cause you to be disqualified from Medicaid. If we put that into the trust and we will put that in there. But the other real estate, the other money that you put in this trust, you lose control and you lose benefits. So you need to be thinking about that and you know we can talk through that once you come into the office. Okay, so the risk of waiting all right, waiting will cause us to not do quite as good. We can do some amazing things if you come in to see us when someone's going in to the nursing home, we can get that person on Medicaid and protect a substantial amount of money. However, we can do so much better if you will do pre-planning. Okay, if you will come in early before those five years.

Speaker 2:

Everybody I do this with every time we do crisis planning they're like wish we'd done this five years ago. I wish mom and dad would have come to see you more than five years ago. I know I've. For 25 years now I've been putting the information out there to say please come see me, please come see me, and people are like, yeah, we'll get around to it. Well, they get around to it when they go into the nursing home. And, again, I can do some amazing things in a crisis, but I can do even more amazing things if you will come see us early.

Speaker 2:

Okay, we can set your mind at ease. We can make you, you know, help, you know, once you've done this, it's like okay, it's taken care of. I know we're going to protect X number of dollars and a much higher percentage is going to go to the children or the grandchildren or whatever, and I know that long-term care is going to be covered. Okay, we would love to help you with this. Please understand.

Speaker 2:

I would say there are probably less than about a dozen attorneys in the whole state of Arkansas who do this very well. All right, I am a certified elder law attorney. That means I've been tested and proven to know what I am doing by an outside national organization that says you know, this person has proven to be knowledgeable in all of this and at this point in time early 2025, there are only four certified law attorneys in the state of Arkansas and I would highly recommend that you work with one of them to do this and obviously, I would love for you to come see us. Okay, please visit our website GenerationsLegalGroupcom. There's a lot of good information there.

Speaker 2:

I've written basically what I've just said there and we would love to see you give our office a call, schedule an appointment with our intake coordinator, who will meet with you for free, get information, help answer a few basic questions, but basically say, yeah, you're the, you're the type of client we can help. What you know? Let me get all this information. We'll schedule a time with the attorneys. You can sit down with the attorneys and we can help you keep as much money as possible and give you some peace of mind knowing this is taken care of. Ok, thank you all so much. Please subscribe so that you get a notice every time we post a new podcast and share this with someone. If you know someone who's private paying for a nursing home, please, please, please, send this podcast to them. Let them hear this and know you don't have to be paying privately. The Medicaid rules are there to protect them and we can protect a substantial amount of money. All right, thanks again and I will see you next time.

Speaker 1:

And that's a wrap for today's episode of Answers on Aging. Thank you for joining us on this journey of discovery and understanding. For more resources, detailed show notes and expert advice on the many facets of aging, don't forget to visit our website at wwwanswersonagingpodcastcom. Remember, growing older might be inevitable, but doing it with grace, knowledge and empowerment is a choice. Until next time, stay informed and keep those questions coming.