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What to Do If You Lose Your Medicaid Coverage

During the COVID-19 pandemic, states could not take away Medicaid coverage from any residents enrolled in this program. In recent months, however, this has been changing. If you are on Medicaid, be sure to take some time to understand whether your coverage may be at risk.

How the COVID-19 Public Health Emergency Affected Medicaid Enrollees

Enacted in March 2020, the Families First Coronavirus Response Act (FFCRA) prevented states from disenrolling Medicaid beneficiaries until the end of the COVID-19 Public Health Emergency. The act paused states’ review of the eligibility of Medicaid enrollees, a process known as Medicaid redetermination. The continuous enrollment provision increased coverage during the pandemic, reducing the rate of uninsured people. As a result of the act, no beneficiaries could lose coverage during the Public Health Emergency.

However, through the Consolidated Appropriations Act of 2023, Congress ended continuous enrollment on March 31, 2023. The federal COVID-19 Public Health Emergency declaration came to a close on May 11, 2023.

As states resume their Medicaid redetermination processes, they can now disenroll individuals who no longer meet Medicaid’s eligibility requirements. As a result, millions of people may lose health insurance coverage. Over the next year, between 7.8 million and 24.4 million people could lose their Medicaid coverage, the Kaiser Family Foundation estimates.

Many Americans were unaware of the potential risk of being dropped from Medicaid when the Public Health Emergency expired. One survey reveals that two-thirds of all Medicaid enrollees are not sure whether states could remove them from the program.

If you are unsure whether you will continue to receive Medicaid, you can contact Medicaid to review your enrollment status. Should your coverage end as a result of your state’s redetermination process, you may be able to purchase health insurance through the health insurance marketplace.

How to Know If You’re Still Eligible for Medicaid

During the redetermination process, your state evaluates your income, assets, residency, and other eligibility criteria for Medicaid. States legally must provide Medicaid coverage to low-income families, qualified pregnant women and children, and Supplemental Security Income (SSI) recipients. They may extend coverage to others as well, such as people receiving home and community-based services and foster children. 

Because the COVID-19 Public Health Emergency lasted several years, some Medicaid enrollees have not undergone eligibility review since prior to 2020. Others, who may have joined Medicaid during the pandemic, have never been through the renewal process.

While redetermination began as early as April 2023 for people in some states, others may receive a redetermination notice in later months.

Policies vary by state. Some state Medicaid agencies may automatically renew your coverage. Other states may require you to take steps to verify your eligibility, including providing documentation.

Learn more about your eligibility by contacting your state Medicaid agency.

Has My State Started the Medicaid Redetermination Process?

With this online tracker, you can search by your state to find out when its Medicaid redetermination process began, how many people have been disenrolled so far, how many enrollees were determined to be no longer eligible, and more.

There is some concern among health care advocates that certain states are disenrolling individuals who should remain eligible. For instance, as of June 2023, data suggests that in states like Florida and Arkansas, hundreds of thousands of Medicaid recipients may have mistakenly lost their coverage due to procedural reasons.

Medicaid Renewal: Be Proactive

You may not yet have received any kind of notification regarding whether you remain eligible for Medicaid. However, there are steps you can take to help ensure your state Medicaid agency has the information it needs to evaluate your eligibility and to renew your coverage promptly.

• If you have moved or changed your phone number or email address, reach out to your Medicaid state agency to update your contact information.
• Each state will send out a letter to your mailing address regarding your coverage. Be sure to keep an eye out for this communication in your mailbox.
• You may be asked to fill out a Medicaid renewal form. If so, complete the form and return it as soon as possible.

Obtaining Health Insurance If You Lose Medicaid

If you are deemed ineligible for Medicaid coverage during the redetermination process in your state, you could obtain insurance via an employer or by purchasing an insurance policy on the Health Insurance Marketplace. State Medicaid agencies must assist as you transition to other coverage.

The Affordable Care Act established the Health Insurance Marketplace, where individuals and families may purchase health insurance plans. The Health Insurance Marketplace is available via Healthcare.gov.

You may enroll in insurance via Healthcare.gov during certain set timeframes. Each year, Open Enrollment is from November 1 to January 15. However, if you lose Medicaid coverage, you may be eligible for a Special Enrollment Period, which gives you 60 days to enroll in a Marketplace health plan.

To enroll in insurance, you must create an account and complete an application requesting information about your household and income. The application helps determine your eligibility for different health insurance programs.

After completing the application, you may view a list of available health insurance plans. You can compare these plans based on their coverage, premiums, deductibles, and other factors.

Premium tax credits can reduce the monthly cost of insurance premiums and lower out-of-pocket expenses. The amount of financial assistance depends on income and household size.

Consult Your Attorney

If you are concerned about the effect of the redetermination process on your Medicaid benefits, consider speaking with your attorney. They can help you understand whether you will continue to qualify for Medicaid and also can help you obtain alternate coverage.

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Pros and Cons of a Medicaid Asset Protection Trust

A Medicaid Asset Protection Trust (MAPT) is one option a person may consider to protect their assets from Medicaid and nursing homes or long-term care.

A MAPT is an irrevocable trust created during your lifetime. The primary goal of a MAPT is to transfer assets to it so that Medicaid will not count these assets toward your resource limit when determining whether you qualify for Medicaid benefits.

However, creating an irrevocable trust comes with a certain lack of control over the assets you transfer to this trust. Before making such a significant decision, consider some pros and cons to see if this long-term care strategy is right for you.

Benefits of a MAPT

1. You Can Still Benefit From the Assets of a MAPT

Although transfers of assets to a MAPT cause you to relinquish your ownership and control of them, the finality of the arrangement is not as harsh as it sounds.

In creating a MAPT, you select a person (trustee) who manages the trust assets for your benefit. So, if you transfer investment accounts to the MAPT, you can still receive the income generated from these investments. If you transfer your home, you can still live there. In exchange for giving up control of your assets to a MAPT, your assets no longer count against you for Medicaid eligibility purposes.

2. Your Assets Are Safe From Medicaid and Other Long-Term Care Creditors

Once your assets are in a MAPT and other criteria are met, Medicaid can’t seize them or ask you to spend them down to pay for your nursing home or long-term care costs. These assets also are not subject to Medicaid’s estate recovery program.

As a result, your heirs can benefit from the assets without the interference of Medicaid or liens it could otherwise file against your estate after you pass.

3. You Can Choose Your Beneficiaries

A MAPT also functions as an estate planning tool. This is because you can designate who receives what remains of the trust upon your passing. The beneficiaries you choose will receive the assets per the terms of the trust agreement, and the chances of a probate court getting involved are diminished.

In addition, you may be able to retain what is called a “limited power of appointment.” This allows you to change who the beneficiaries of the MAPT will be, should your wishes or family circumstances change.

4. Assets Are Protected From Your Beneficiaries’ Creditors

Even though you can designate a MAPT’s beneficiaries now, those beneficiaries do not have full access to the trust’s assets because of how it is structured. This also means their creditors do not have access to it. And, if your child is a beneficiary and is going through a messy divorce, neither does their spouse. You can also designate how bequests to beneficiaries can be used.

5. Protection From Capital Gains Taxes

A properly drafted MAPT preserves the full capital gains tax exclusion on the primary residence (currently $250,000 per spouse). Later, when a person’s beneficiaries sell the home, it would be valued at the market price at the date of gifting and not at the original purchase price. This can avoid or significantly minimize the capital gains tax that your heirs may owe.

Drawbacks of MAPTS

1. Timing Is Everything

For a MAPT to function as intended, it needs to be created in advance to avoid the Medicaid lookback period. In most states, this is five years for nursing home or institutional care. In some states, there may also be a lookback period for community Medicaid care (home aides, local programs, etc.).

If less than five years have elapsed since you created your MAPT, you may still be responsible for some or all of your long-term care costs until sufficient time has passed.

2. Income From MAPT Is Countable by Medicaid

Although assets in a MAPT may not be “countable” by Medicaid toward your resource limit, these assets may still generate income. If this income is payable to you, it may cause you to exceed the income limit permitted in your state.

If this happens to you, you may have other options, such as utilizing a pooled income trust, or may decide you will contribute partially toward your care.

3. Giving Up Control Is Non-Negotiable

A trust will not qualify as a MAPT if you retain control other than the limited power of appointment that may be permitted in your situation. You must accept that a person you select to act as trustee will manage the trust, distribute funds and income from the trust, and also be the effective owner of the assets.

In addition, creating a MAPT but not transferring assets to it is ineffective. You need to fully commit to the concept for it to benefit you.

4. Setting Up a MAPT Is Costly

Creating and implementing a MAPT is a complex legal task requiring many hours of work and expenditures made on your behalf. In addition, because MAPTs are tied to individual state and federal laws, the expertise of a qualified Medicaid attorney is essential.

You should expect that this expertise comes at the cost of several thousand dollars or more. However, your potential savings could be exponentially greater for you and your family. For this reason, the price is often well worth it.

5. Potential Effects on Care

It’s important to realize that while the MAPT strategy is designed to preserve assets and wealth, it assumes that a person will rely on Medicaid to pay for a portion of their care. However, Medicaid does not cover all facilities. For example, many assisted living facilities are not licensed as assisted living programs and only accept private pay residents. Thus, relying on Medicaid could affect the choice and quality of care a person may receive.

The pros and cons discussed above are not exhaustive, and there may be other ones that apply to your situation. Investing in a MAPT is a highly fact-specific process, and MAPTs are not suitable for everyone.

You should speak with your attorney to discuss how a MAPT may affect other benefits you receive, your overall estate plan, its tax consequences, and whether it is right for you.

What Are Medicaid Asset Protection Trusts?

Medicaid imposes strict rules on how much money and assets an applicant can have. To qualify for Medicaid, you must fall under the asset limit, which is $2,000 in most states.

Even with greater than $2,000 in assets, however, you may be able to get on Medicaid by establishing a Medicaid Asset Protection Trust (MAPT). When you put your assets in a MAPT, Medicaid will not count the money in the trust toward its resource limit.

Using Medicaid Asset Protection Trusts to Transfer Assets

After you create a Medicaid Asset Protection Trust, you no longer own the assets within it, allowing you to qualify for Medicaid following the five-year lookback period. People who are currently healthy but plan to go on Medicaid in the future might choose to use this Medicaid planning strategy.

It is essential to understand that MAPTs are irrevocable: Once you make the trust, you cannot change your mind and take those assets back. Your trust must be irrevocable for you to qualify for Medicaid because it means that you no longer own or control these assets.

In contrast to MAPTs, many types of revocable trusts, such as family trusts, are often ineffective in preparing for Medicaid. Having the power to revoke your trust would allow to retain control over your assets, and Medicaid would count the contents of your trust as part of your resources.

Creating a Medicaid Asset Protection Trust

Three parties are involved in a MAPT: the grantor, the trustee, and the beneficiary. When you make a trust, you become the grantor, the person who places assets into the trust. The trustee manages the trust, and the beneficiary — or beneficiaries — will receive your assets.

If you want your MAPT to ensure you qualify for Medicaid, you must name someone other than yourself or your spouse as the beneficiary. Designating yourself as the beneficiary would mean giving yourself assets, which Medicaid would count toward its asset limit.

You can, however, select your children or parents as beneficiaries. Using a MAPT, you can also make sure they get those assets when you pass away.

What Can You Place in a Medicaid Asset Protection Trust?

As part of your Medicaid planning strategy, you can place many types of assets in a MAPT, including:

• Checking and savings accounts
• Stocks and bonds
• Mutual funds
• Certificates of deposit
• Real estate that is not your primary residence
• In most states, your home

Although many states allow you to place your home in MAPT so that it will not count toward Medicaid’s resource limit after five years, Medicaid regulations vary by state. In Michigan, for example, placing your home in a MAPT will not prevent it from counting toward the asset limit.

Benefits and Drawbacks of Medicaid Asset Protection Trusts

Medicaid Asset Protection Trusts offer several benefits to individuals planning to apply for Medicaid:

• MAPTs preserve generational wealth, safeguarding assets for family members.
• After you pass away, the state cannot take your assets from your beneficiaries to reimburse them for your long-term care, as MAPTs avoid probate.
• Since nursing home fees can be exorbitant, MAPTs can save your family money, as they let you qualify for Medicaid once the lookback period has ended.

The drawbacks of MAPTs include the following:

• Once you establish a MAPT, you forfeit the control and use of your assets. If you need money, you will not be able to draw from the trust.
• The fees associated with preparing a MAPT can be costly, ranging from $2,000 to $12,000.

Speak with your attorney to learn about how using a Medicaid Asset Protection Trust could help you plan for your future.

How Much Long-Term Care Insurance Should You Purchase?

Long-term care insurance helps you prepare for financial costs associated with aging, such as nursing home care, assisted living, or in-home care. Yet long-term care insurance policies vary widely in terms of the amount of coverage and how long the protection lasts.

The Average Costs of Care

The 2021 Genworth cost of long-term care survey provides national median monthly costs for the following:

• Nursing home care = $9,034 (private room); $7,908 (semi-private room)
• Adult day health care = $1,690
• Assisted living = $4,500
• Homemaker services = $4,957
• Home health assistance = $5,148

Whether you have a health condition that you know will require care in a skilled nursing facility or prefer to prepare for unexpected medical events, you may consider purchasing a certain amount of long-term care insurance to account for future care.

Evaluate which services you expect to need. Although many individuals need nursing home care, others can avoid nursing home costs by combining assisted living services with in-home care or day health services.

How to Calculate Your Monthly Benefit

Most policies provide between $2,000 and $10,000 of funds per month. To estimate how much long-term care insurance you will need:

1. Review how much you can expect to spend on long-term care.

2. Subtract the cost of services from the amount of money you can budget toward your long-term care expenses; the remainder is the amount you need long-term care insurance to cover.

Suppose you have a monthly income of $2,500 and plan to move into an assisted living facility that costs $4,500 per month. In that case, you will need a minimum of $2,000 per month in long-term care insurance to cover the cost of assisted living.

In addition to determining how much coverage you need each month, think about how long you want your plan to last. Long-term care insurance that lasts longer can be relatively more expensive, yet it provides increased protection.

The Department of Health and Human Services states that most people need long-term care by age 65. The majority of people need care for two years, but 20 percent require care for longer than five years. Most people should obtain at least two years of coverage and contemplate purchasing additional coverage.

Medicaid Planning

As you plan for your future, consider purchasing long-term care insurance that protects you for five years if you intend to apply for Medicaid. Since the Medicaid lookback period is five years, you may transfer your assets to your family and begin to spend down your assets so that you can qualify for Medicaid after your five-year coverage ends. After five years on private insurance, you may be able to transition to Medicaid.

The amount of long-term care insurance you buy should fit your unique circumstances. 

Speak with your attorney to learn more about preparing for your future with long-term care insurance.

Plan Ahead Before Seeking Nursing Home Care: Avoid Unnecessary Debt for You and Your Family

Many senior citizens may need the services of a nursing home or at-home care at some point in their life. You might assume that government assistance or health insurance will step in and cover the cost if you cannot afford these services. Unfortunately, neither health insurance nor Medicare covers long-term care. Because obtaining long-term care insurance can be very expensive, Medicaid could become your only option.

Medicaid coverage is not a given, however. If you have assets or recently transferred assets, Medicaid may determine you do not qualify for coverage until a certain amount of time has passed. If this happens, you and their family can face significant medical bills. If you cannot pay, nursing homes may take you to court to get reimbursed.

What steps can you take to avoid this? First, before applying for Medicaid, get a better understanding of the timelines in your state – known as lookback periods – that can affect your eligibility. Then you can engage in proper Medicaid or asset protection planning in advance of these timeframes. A good age to begin planning is around age 65, although everyone’s situation is different.

Individual states run Medicaid programs, and every state has different rules regarding Medicaid eligibility. These programs were designed as a payor of last resort — in other words, to qualify, you must meet strict requirements. There are two primary types of Medicaid benefits: home care and skilled nursing home care.

Lookback Periods

You must submit an application to your local Medicaid office to qualify for these benefits. As part of this process, the state will look at any money or property you may have transferred within a certain lookback period. In New York, for example, this period of time will soon be 30 months for home care and 60 months for skilled nursing care.

These lookback periods can have serious consequences. If you have not engaged in appropriate asset protection planning, you may not be able to qualify for home care or nursing home care for many months. The result is that many elderly individuals must then spend down their savings and liquidate their assets to pay privately for their home care before Medicaid starts covering anything. If a person no longer has resources and is subject to a disqualification penalty period, family members may have to step in and bear these costs on their own.

So, what can you do? The answer is to start planning as soon as is practical.

Options to Explore

Speaking with an elder law attorney can help you and your loved ones explore options available to avoid you or them being personally responsible for the costs of your care.

• Medicaid Asset Protection Trust — One common approach is placing assets in a Medicaid Asset Protection Trust. You may be able to use this to shelter various assets such as stock accounts, savings, a home with unprotected equity, and much more.
• Pooled Income Trust — Another option you may explore is contributing income that exceeds Medicaid allowances to a Pooled Income Trust. This can allow you to qualify for Medicaid while diverting excess income to a trust that pays qualified expenses on your behalf. This will enable you to benefit from the income and not spend it on things Medicaid could have otherwise covered.
• Spousal Refusal — Your spouse may also have options that can help you qualify for Medicaid. One such option includes exercising a right of spousal refusal — a process available in some states by which the income and assets of your spouse can be removed from consideration in your Medicaid eligibility analysis.

Finally, an attorney can help you understand if certain transfers are permissible under Medicaid rules without triggering a penalty period.

Without proper planning, individuals with assets and income exceeding specific state-set thresholds would have to spend this income and their assets on their care or exempt items before they can receive Medicaid benefits. For assistance in planning, consult with your attorney.

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Home Health Aide Costs See the Sharpest Increase in Annual Long-Term Care Survey

Long-term care costs climbed again in 2021, with rates for home health aides and homemakers seeing the sharpest rises, according to Genworth’s annual Cost of Care Survey. The coronavirus pandemic continues to contribute to cost increases. 

In the past year, Genworth reports that the national median annual cost of home health aides shot up 12.50 percent to $61,776, and the median annual rate for the services of a homemaker also jumped 10.64 percent to $59,488. Home health aides provide hands-on personal care, but not medical care. Homemaker services help with household tasks like cooking or cleaning that cannot be handled alone.

Price increases for nursing home care were more moderate, with the median cost of a private nursing home room rising 2.41 percent to $108,405 and the median cost of a semi-private room in a nursing home now $94,900, up 1.96 percent from 2020. Meanwhile, assisted living facility rates grew 4.65 percent for a median cost of $54,00 per year. After falling in 2020, adult day care costs rose 5.41 percent from $74 to $78 a day.

Even though costs fell sharply there, Alaska continues to be the costliest state for nursing home care by far, with the median annual cost of a private nursing home room totaling $378,140, down 13.38 percent since 2020. Missouri was the most affordable state, with a median annual cost of a private room of $71,175.

The 2021 survey, conducted by CareScout for the 18th straight year, was based on responses from 14,698 nursing homes, assisted living facilities, adult day health facilities, and home care providers. 

As the survey indicates, long-term care is growing ever more expensive. Contact your attorney to learn how you can protect some or all of your family's assets from being swallowed up by these rising costs. 

For more on Genworth’s 2021 Cost of Care Survey, including costs for your state, click here.

Bankruptcy and Your Credit FAQ

Bankruptcy can come to your rescue while struggling with a financial crisis. However, the impact of bankruptcy will be there from years to a decade. Many Americans believe that bankruptcy will impact their credit for a lifetime. Yes, credit and bankruptcy are closely related. The impact will be more in the initial years. However, you can improve your condition slowly and win the trust of lenders.

 Will Discharges Remain On Credit Report?

There is no doubt that bankruptcy discharges will appear on the credit report for years. You will find credit and bankruptcy in California interlinked. However, the bankruptcy discharges will not stay on the credit report forever. Also, you can take a few steps to improve your credit score. When it comes to how long bankruptcy will remain on your credit report, it will vary based on the type of bankruptcy.

How Long Will Bankruptcy Stay on My Credit?

If you file bankruptcy under chapter 7, the discharges will stay on your credit report for around 7 years, and then fall off. Discharge accounts will show as a derogatory mark. Yes, the credit report will include discharged' or “included in bankruptcy” with a zero balance. However, they will not appear on your credit score after seven years. The benefit is that the accounts will not appear as past due or unpaid.

Will Chapter 13 Bankruptcy Offer Some Relaxation?

Under chapter 13 bankruptcy, the discharges will show on your credit report for seven years. This bankruptcy creates a repayment plan to repay some loans. The period for repayment is three to five years. After the bankruptcy process, you will get a discharge of qualified loans. However, discharges loans will reflect on your credit score for seven years.

Will Its Impact Diminish Gradually?

The bankruptcy will reflect on your credit report from seven years. However, the effect will diminish after a period. If you keep yourself financially responsible after declaring bankruptcy, you will notice improvements in your credit report. Lenders might work with you based on your current financial status, assets, and other factors.

What Are the Ways to Improve Your Credit After Filing Bankruptcy?

After filling the bankruptcy, you can check your credit report. You will have to ensure that only discharged accounts are on your credit report. It might take a couple of months to show the updates on the credit. If there are negative marks after the period, you will have to correct them. You can contact the credit bureaus and fix the errors. Besides, you can consider the following steps to improve your credit after filing bankruptcy. A professional law firm like Fong Law Group can help you in the same.

Check Credit Score

You can check your credit score to fix any errors. Also, it will help you to address any potential issue and prevent further damage.

Avoid Late Payments

Late payments will have a significant impact on your credit. Hence, you will have to pay bills on time without any exception.

Understand Your Limits

You will have to stick to your budget. You can avoid overspending and save if it is possible.

With careful planning, you can improve your credit score after filing bankruptcy.  Check your credit score to find improvement areas. Also, you will have to avoid overspending and late payments. Gradually, you will notice a difference.

Call Fong Law Group at (626) 289-8299 for a FREE consolidation, and talk to an attorney today. We are here to help you get through this difficult time in your life, and help you with a Fresh Start.