Introduction
Planning for long-term care is an essential component of estate planning. The cost of elder care can be substantial, resulting in financial, emotional and physical hardships.
According to a 2021 Cost of Care Survey that analyzed the costs of home care providers, assisted living facilities, and nursing homes, the annual cost for these services ranged from $48,000 to more than $100,000.
Fortunately for those in need of care, Medicaid and ALTCS benefits are available in Arizona but the application and qualification process is complicated. This guide is an introduction to the process of estate planning with respect to long-term care in Arizona.
Long-Term Care Insurance
Some people are able to build a nest egg over time to pay for their long-term care. Self-pay often requires many years of savings and even then, it may not be enough to cover round-the-clock care. Long-term care insurance is available to cover all or part of a person’s long-term care if they are ineligible for Medicaid or the Arizona Long Term Care System (ALTCS). However, not everyone qualifies for long-term care insurance.
Long-term care insurance may be denied for the following reasons:
- Age – Most insurance carriers requires individuals to purchase insurance well before coverage is needed. This means that older adults that try to get long-term care insurance may be denied or approved at a high premium.
- Health – An insurer may reject an applicant who has certain pre-existing health conditions.
- Income – Individuals with a modest to high income will usually face higher premiums. In some cases, these higher premiums may be too high to be a justified expense.
For those who are unable to self-pay or are ineligible for long-term care insurance, Arizona offers some public benefits that can help cover long-term care expenses.
Medicaid
Medicaid is a joint state and federal program that provides health coverage to people with low income. As of July 2018, there are 1,688,791 people covered by Medicaid/CHIP, according to HealthInsurance.org, resulting in a 42 percent reduction in the uninsured rate from 2013 to 2017. Medicaid covers a comprehensive scope of services, such as inpatient and outpatient hospital care, home health services, physician services, and x-ray and laboratory services. It also covers most long-term care services.
Eligibility for Medicaid is determined in part by the applicant’s value of resources and income. According to the Arizona Health Care Cost Containment System (AHCCCS) that outlines eligibility requirements for Medicaid’s long-term care coverage, the maximum household monthly income after deductions in 2024 is $2,829 per individual and up to $2,000 in resources as of 2024.
Applying for Medicaid in Arizona can be a long and complex process. It is best to have a qualified Arizona attorney to assist with the process.
Arizona Long Term Care System
The Arizona Long Term Care System is the long-term care sector of Arizona’s Medicaid agency. ALTCS was created to help pay for the long-term care needs of eligible recipients, whether provided at home or in a long-term care facility. The ALTCS may be used to cover a variety of services, such as institutional care in a nursing facility, behavioral health services, medical services, home and community-based services, preventive services, and hospice services.
Arizona Long Term Care services are available to people age 65 or older who are physically disabled, developmentally disabled, require skilled nursing care, or require placement in an assisted living facility or with an in-home care provider.
However, ALTCS applicants must meet certain eligibility requirements to receive coverage. An applicant cannot have certain resources valued over $2,000. Applicants must also meet certain non-financial requirements, such as having a Social Security number, being a resident of Arizona, and living in an approved facility or their own home.
Preservation of Assets
Long-term care expenses can put an individual’s assets at risk. After a person’s death, Medicaid may attempt to collect medical care costs from the deceased person’s estate. This process is referred to as “estate recovery.” With help from a qualified estate planning attorney, individuals can develop a strategy to preserve as much as their income and property as possible. Some of the most common ways to protect assets include the following:
- Special Needs Trust – A Special Needs Trust allows a chosen trustee to manage the property of a beneficiary who has a disability. This allows the beneficiary’s resources to remain protected even if they receive ALTCS benefits.
- Income Only Trust – An Income Only Trust, sometimes called a Medicaid Trust, permits individuals whose income exceeds ALTCS limits to qualify and receive benefits if they are unable to pay privately.
- Annuity – An annuity can turn resources into a stream of income and can be an effective way to preserve assets. A single premium annuity may not always be the best option for a single person but can be advantageous to married couples.
Long Term Care Planning
The expenses of long-term care in Arizona can be very overwhelming. If you are facing long-term care but are concerned about how these costs will impact your estate plan, speak with an experienced long-term care attorney at JacksonWhite Law.
Contact the JacksonWhite ALTCS team today at (480)467-4337 and learn more your options for long term care.
