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Will ALTCS Take My House?

The Arizona Long Term Care System (ALTCS) is Arizona’s Long-Term Care Medicaid program.  The program covers day programs, some in home care, memory care centers, group homes, assisted living centers, nursing home care and many more services.  The purpose of ALTCS is to ensure that people with limited income and assets combined with medical needs are able to be served all while making sure the spouses of such individuals do not become destitute.

Some people are unwilling to explore the availability of using ALTCS because of the fear of losing the home.  There are usually two main concerns:  the house will make my loved one ineligible for ALTCS or, the State will take the home when my loved one dies.  

It is certainly true that to qualify for ALTCS the assets and income of the applicant must meet certain criteria. For a married couple where the spouse lives in the home, the house is an excluded resource regardless of the value of the home. The home must be the primary residence of the person receiving ALTCS. The home is also excluded from being considered a countable resource in these circumstances:

-The customer or spouse lives in the home property;

-The customer is absent from the home property due to institutionalization but the customer’s spouse or dependent relative lives in the property as his or her principle residence;

-The customer lived in the home property, is absent due to institutionalization, but intends to return to the home.

However, if the applicant is unmarried, the equity value of the home must not exceed $595,000 (2020) if it meets one of the criteria above. Additionally, while the property is for sale, it is also excluded. Although the rules might be confusing, in general, owning a residence is a not a reason to avoid using ALTCS services to help pay for care. 

That brings us to the second concern i.e., the State will get the house upon the death of the ALTCS recipient.  This can get complicated because ALTCS has an estate recovery program and lien rights.  Under the estate recovery program, ALTCS only recovers property that is subject to a small estate affidavit or a probate.  Therefore, a home owned with rights of survivorship and the survivor is living or where a beneficiary deed was recorded before the death of the ALTCS recipient, will avoid estate recovery.  

ALTCS also has the right to file a lien against real property. However, if a spouse is alive, a lien will not be filed.  Additionally, the State only has a right to file a lien against the real property if the ALTCS recipient was in a long-term care nursing home for 90 or more days with no intent to return home.  There are some additional exemptions to these rules as well.

While the rules are confusing, it is always beneficial to investigate whether an ALTCS application is worth pursuing.

Written by: Emily B. Kile, Esq.

The Importance of Long Term Care Planning

Why Estate Planning is so Important for Long Term Care Planning?

Daily, clients call our office and tell us, “My mom has dementia and I don’t think it is safe for her to be home alone any more and she cannot afford to have 24 hour home care or go to a group home or memory care unit”. During our consultation, I ask the family member to provide me with copies of the current estate planning document and most importantly the financial power of attorney.

Without a financial power of attorney, if mom is no longer competent to sign documents, we might have to go to Court to get permission to sell the home and manage the resulting funds. This could be true even if mom’s spouse is still living as there is no statutory right to sell a house for someone.

Additionally, if mom’s income is higher than the cap, we might need to create and fund an Income Only Trust or Miller Trust. Again, without specific authority in the documents, we could need a Court action to get that in place and unfortunately, court matters can take time and be fairly expensive.

Although accessing ALTCS (Arizona’s Medicaid program that helps pay for long term care costs) is the last resort, trying to preserve some of the assets of the person in need can still be a goal. ALTCS does not pay for hearing aids, dental care or a private room. Additionally, it can take 3-6 months to get an approval from ALTCS and typically there is no retroactive pay unless the person is in a nursing home.

The power of attorney document might allow the Agent to make gifts of mom’s property or get paid for acting as the Agent. This might allow us to do some planning to maximize the remaining assets and still obtain ALTCS benefits. While making gifts or transfers of mom’s property might delay when ALTCS will be available, doing so does not necessarily mean that benefits will never be available.

Even if the decision is made not to move forward with ALTCS planning, obtaining a reverse mortgage on the property, getting a home equity line of credit to pay for care, or just to sell the house will still require you to have a power of attorney.

Written by: Emily B. Kile, Esq.

Terms Defined: “Transfers” & ALTCS

What is a “Transfer” for ALTCS Purposes?

ALTCS (Arizona Long Term Care System) is Arizona’s Medicaid program that pays for long term care services. ALTCS might help cover the costs of home care, day programs, respite, assisted living centers, memory care or nursing home care. To be eligible for ALTCS benefits, the person must meet the income and assets limits while also meeting the medical criteria.

It is important to remember that ALTCS is a welfare program. As part of the application process, the applicant or his/her representative must tell ALTCS if the applicant has made any transfers or gifts within 60 months of the date of the application. “Transfers” or “gifts” refer to the applicant giving something away to someone for less than fair market value. The value of the gift will determine how long the applicant must wait before ALTCS will assist in covering the costs of care. This is called the “penalty period”, although I prefer to call it the “waiting period”.

There are some exceptions to this process. For example, any transfers between spouses has zero impact on eligibility. Transfers to disabled children or trusts for certain disabled persons also has no impact on eligibility.

However, other than a few exclusions, most transfers, whether to a charitable or religious entity or a family member or friend will unfortunately delay ALTCS eligibility. Even making tax free gifts of up to $15,000 per person per year will impact the timing of ALTCS eligibility. Please note that adding a child, or someone other than a spouse to a bank account will not impact eligibility. But, adding someone’s name to the deed to a home or other real property will.

While you must disclose any transfers made within the last 60 months, the period of ineligibility could be as low as a few days or as long as several years. Keep in mind that while the waiting period does not have time limits, the disclosure period does. For example, if you gave away $1 million and immediately applied for ALTCS, the person would need to wait approximately 11 years before ALTCS would help pay for care. If you gave away $15,000 and applied, the waiting period would be closer to two months.

ALTCS rules are complex, so please be sure you’re not making a decision that will negatively impact your end goal!

Written by: Emily B. Kile, Esq.

NEW Webinar – Estate Planning And Paying For Care: ALTCS and VA Benefits by Emily B. Kile, Esq.

PRESENTED BY
Banner Health
 
FEATURING
Emily B. Kile, Esq.
 

Do you have questions about estate planning? Long term care planning? Well you’re in luck! This webinar, sponsored by Banner Health, features Emily B. Kile, Esq. who has over thirty years experience as an estate planner. The program starts with Emily explaining the basics of estate planning. The  audience was able to ask questions that are likely on your mind as well; an example being, “Why can’t an IRA be titled to a Trust?“. Emily goes on to explain Healthcare Powers of Attorney, Living Wills, Do Not Resuscitate instructions and how COVID-19 is currently impacting peoples estate planning decisions. As Emily is also an experienced long-term care planner, she touches base on the costs of long-term care and the available options to pay for such, including financial and medical eligibility for Arizona Long Term Care Services (“ALTCS”).
 
This webinar was created to help you understand the intersection of estate planning, long-term care and VA benefits so you can better protect yourself and your loved ones.
 
 


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