We're Closing. Thank You.

Doug Cook is retiring and Steve Cook has moved to an in-house counsel position. As such, we are no longer accepting new clients. Thank you.

How To Pay For Long-term Care In Arizona

In our experience, there are generally three (3) ways to pay for assisted living or nursing home care, which we’ll collectively just call long-term care:

  1. Long-Term Care Insurance;
  2. Private Pay; or
  3. Medicaid.

Generally, the best option to pay for long-term care is long-term care insurance, if a person can qualify and if the premiums aren't astronomical.

Unfortunately, for most people over the age of 65, long-term care insurance just isn't an option. What then?

Well, private pay means that a person will be paying for long-term care costs using that person's own funds and assets, or someone else’s, if they are willing to pay for it.

Unfortunately, private pay just isn’t an option for many, if not most people. What then?

For many people, the answer may be Medicaid.

Special Report: 6 Things You Need to Know About How to Pay for Long-term Care

For a more in-depth look at how to pay for long-term care along with specific strategies, download our free special report.

Get Special Report

What is Medicaid?

In short, Medicaid is a federal program that provides health coverage for people who qualify. It covers the cost of nursing home care for those who meet the program’s economic requirements for eligibility and it can also pay for in-home care.

Although Medicaid is a federal program, but it’s actually administered by the states. Federal law empowers each state to enforce Medicaid eligibility rules according to its own interpretation. This means that application of these rules can vary significantly from state to state and, in some states, from county to county. Qualification for care in home is also different from qualifying for care in a nursing home.

In Arizona, Medicaid is administered by the Arizona Long-Tern Care System, or ALTCS for short.

Though there are many complexities to Medicaid planning, it’s important to understand Medicaid is there to help families. Medicaid planning is often the best way to ensure a person receives the benefits needed while ensure they protect as much of their hard-earned assets as the law allows.

The first step in Medicaid planning is education. The more a person knows about how Medicaid works, the better they will be able to look out for the interests of their family.

Because Medicaid is means-tested, a Medicaid applicant must meet certain types of eligibility requirements in order to qualify for Medicaid, which are as follows:

  • Medical Eligibility
  • Income Eligibility
  • Resource Eligibility

The medical eligibility requirements are often not an issue for people who need long-term care, however, the income and resource requirements can be problematic for many applicants, especially if they would like to protect those assets from long-term care costs.

FREE Workshop: How to Pay for Long-term Care

. .

New inheritance tax, estate planning and long-term care asset protecting planning laws are in effect. Are you prepared for the future?

Attend a Workshop to Find Out. Reserve your spot today.

Learn More

Income Eligibility

For 2016, the income limit is $2,199 for an ALTCS applicant ($4,398 for a married couple, if they are both applying for ALTCS).

But what constitutes "income" and how is it calculated? Well, there are two methods of calculating income eligibility.

The first method, often called the "Community Property Rule," adds together the income of both spouses and divides that income by two. If the resulting amount is less than 300% of the Federal Benefit Rate (FBR), the applicant is income eligible. However, if the resulting amount is more than 300% of the FBR, a second method of calculation can be used.

The second method, often called the "Name on Check Rule," disregards the income of the non-applicant spouse. So, if the amount of the applicant's income alone is less than 300% of the FBR, the applicant is income eligible. 

If the applicant is married and the applicant's spouse does not require ALTCS coverage (called the "well spouse") and the well spouse's income is less than the federally-set minimum income amount, the well-spouse is entitled to a Minimum Monthly Needs Allowance (MMMNA) equal to $2,199 as of 2016, which can be funded, in-part, by the institutionalized spouses's income.

If the applicant cannot meet these limits, a qualified income trust of "Miller Trust" can often allow a person to qualify.

These limits, however, don't necessarily mean that an ALTCS applicant will be able to keep the entire MMMNA; rather, an applicant may be required to pay on ongoing Share of Cost for his/her care, depending upon whether the applicant is "institutionalized" or is receiving Home and Community Based Services (HCBS).

If an ALTCS member is required to pay a Share of Cost, because he or she is institutionalized, that member is permitted to retain, at a minimum, a Personal Needs Allowance (PNA) of $110, as of 2016.

Resource Eligibility

The resource limit for ALTCS in 2016 is $2,000 for each ALTCS applicant. If an ALTCS applicant is married, a spouse who is not also an ALTCS applicant or ALTCS member may retain up to $119,220 of assets, called the Community Spouse Resource Deduction.

By default, all of a person's assets are countable resources unless they are either specifically exempt or unless Medicaid law simply doesn't consider the Medicaid applicant's interest in those assets to be countable.

1. Exempt Resources

The following are some types of exempt assets:

  • One home
  • One car
  • Burial plots
  • Burial plans
  • Life insurance

Although this list is not exhaustive, it does set forth most types of exempt assets.

2. Non-Countable Resources

Many types of trusts are expressly not countable as resources for purposes of Medicaid, however, most of these trusts require that the State of Arizona be a remainder beneficiary of the trust after the trust settlor passes away, among many other requirements.

But many people want to qualify for Arizona Medicaid or ALTCS while also not naming the State of Arizona as a remainder beneficiary in order to protect their assets.

Some trusts, however, are both: 1) not countable as resources and 2) do not require the State of Arizona to be a remainder beneficiary. But there is one major wrinkle, which we'll get to later.

In order for a trust not to be considered a countable resource while also not naming the State of Arizona as a remainder beneficiary, the trust must meet certain criteria, some of which are as follows:

The trust must be irrevocable and distributions cannot be made from the trust principle to or for the benefit of the Medicaid applicant. However, Medicaid does not count a right to income from the trust as a countable resource, though income actually received would likely be countable as income for purposes of income eligibility.

It's important to note that such a trust does not by its terms protect the assets of the trust from creditors of the trust grantor inasmuch as the grantor retains rights in the trust, rather, it simply makes the trust a non-countable resource for purposes of Medicaid or ALTCS eligibility.

Transfers

Here's the wrinkle.

Transfers of assets, for little or no consideration, to a trust that is not countable as a resource while also protecting assets, can make a person ineligible for ALTCS.

Arizona Medicaid or ALTCS is required to look for any transfers to such a trust within a 60-month period before the date a person applies for ALTCS. Further, if transfers for little or no consideration are found during such a period, such transfers generally result in a penalty period during which ALTCS will not pay for the long-term care costs of such person.

Free Webinar: How to Protect Your Life Savings in 3 Easy Steps

For a more in-depth look at how to pay for long-term care along with specific strategies, register for our free webinar.

Save Your Spot

This brief overview of some important considerations associated with ALTCS eligibility is by no means comprehensive. Always seek the advice of a competent professional when making important financial and legal decisions.

Arizona Estate Planning AttorneySteve Cook is a estate planning lawyer at Cook & Cook. Although his main office is located in Mesa, Arizona, he represents clients throughout the Phoenix, Arizona Metropolitan area including the following east valley cities: Scottsdale, Paradise Valley, Tempe, Chandler, & Gilbert.

Contact Us

If you are a current client of this firm, please do not send confidential or otherwise sensitive information via this site. Further, if you are not an existing client of this firm, unsolicited emails containing confidential or sensitive information cannot be protected from disclosure as no attorney-client relationship exists.