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1. They Make You Wait. Most assisted living facilities will not allow a resident to enter the facility unless there is a promise that the resident will not apply for government benefits for a period of time (often 2 or 3 years). On the down side, the family needs a plan to cover the costs of care during that private pay period. On the positive side this private pay period is a planning opportunity if the family will is proactive and gets good legal advice.

2. The “Functional Screen” Is Key. The government determines eligibility for Medicaid benefits based upon the date when the County Aging and Disability Resource Center (“ADRC”) conducts an assessment of the resident’s medical needs. The government calls this assessment the “functional screen.” If a family does not get a functional screen it will end up costing the family money. The ADRC will not schedule a functional screen unless the family requests it, so the burden is on the family to get things started, even if the family has no idea what a functional screen is or why it is important.

3. Admission Is the Time To Act. Most families are overwhelmed when a family member needs to move to assisted living. There is so much information to take in and too many decisions to make. Planning for Medicaid benefits often gets pushed to the side. The assisted living facility talks about delaying Medicaid benefits for 2 or 3 years and nobody says anything about the functional screen. However, it can be important for a family to apply for government benefits at the earliest possible time after admission. Every family might have a different story regarding protecting assets and what is involved with the application in their particular case, but the value of timing the application at soon as possible after admission is fairly consistent. The family needs to be proactive and independent to move forward even though they have a lot on their plate.

4. Don’t Let The 5 Year Look-Back Hold You Back. The 5 year look-back rule is part of the government’s penalty system to deny Medicaid benefits. Most families view this rule as an obstacle to any efforts to protect and preserve assets. However, once a family member is admitted to an assisted living facility, carefully following the 5 year look-back rule may actually cost the family more money. The family should carefully evaluate their particular financial situation, their expected costs of care, their private pay promise to the facility and other factors to determine whether some more aggressive planning can better preserve and protect their assets.

5. Income Taxes Are Important. When thinking about qualifying for Medicaid and protecting assets, most families focus on the value of their assets and the eligibility limits for government benefits. While a family certainly needs to meet the eligibility requirements before applying for benefits, in many cases income tax considerations end up being more important. IRA’s, annuities and other similar assets include substantial amounts of deferred income taxes. Any effort to change these assets to qualify for Medicaid benefits will trigger the income tax and require that the family write a big check to the IRS and Wisconsin Department of Revenue. It is important for families to consider income tax issues when protecting assets in order to avoid writing a check to the IRS that is bigger than the checks that the government will write to the assisted living facility to pay for long-term care costs.

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