Since benefits will not be needed until sometime in the future, we do not file a Medicaid application as part of the preplanning. We file the Medicaid preplanning application when the applicant needs benefits which is some point in the future. Applicants often question what additional work will need to be performed at the time of filing the Medicaid application. At the time of completing the preplanning, it is impossible to know exactly what will be needed because we do not know for certain if and when we will be filing a Medicaid application.

As a general rule, the longer a preplanning applicant can wait between the preplanning and filing of the Medicaid application, the less work which must be performed. In some instances, no additional work will be needed other than just filing the application. This is true even if the application must be filed within the 5-year look back rule discussed at the beginning of this section. In many instances, individuals have already completed their estate planning prior to learning about Medicaid preplanning or consulting with a Medicaid professional. Individuals may have a will or trust already in place and believe that these documents protect them. The reality is they do not provide any protection from long-term care costs. Wills and trusts address the issue of what is to happen to assets when a person dies. In other words, they dispose of property, appoint personal representatives or trustees, avoid probate in some instances, save or eliminate estate taxes and provide for an orderly administration of the applicant’s estate.

They do not address the issue of long-term care either at home or in a nursing facility. Individuals who have done their estate planning and nothing further are not protected from these exorbitant costs. Although these individuals have already done their estate planning, they can still incorporate long-term care or Medicaid planning into their existing estate plans. Doing so is like adding a room to an existing house. When a person adds a room to an existing house, they do not tear down the house and start over. They simple construct the new addition, add the new room to the existing home and make the two work together. The same is true for adding Medicaid planning to an existing estate plan. The individual does not redo his or her entire estate planning but simply adds the Medicaid planning to their existing estate plan. Many people incorrectly assume incorporating Medicaid planning into their estate plan means they must give up control of their estate plan to others. This belief is false. The individual’s asset can be held in a properly structured special needs trust (without payback provisions) and/or a Medicaid qualified limited liability company for the individual’s benefit.

This trust helps protect the assets during the individual’s lifetime so they will be available to supplement the person’s Medicaid benefits and give him or her a better quality of care. Although Medicaid pays for nursing facility care, in-home health care, prescription medications and medical expenses, it does not pay for everything. It does not cover the cost of private room care, eyeglasses, hearing aids, non-prescription medications, wheelchairs, clothing, hair care, undergarments and all other items which make a person more comfortable. The assets in the special needs trust can be used to supplement Medicaid to keep the applicant in a private room or pay for any and all items not covered by Medicaid or which the applicant may want or need. When the applicant dies, any remaining assets pass to heirs free all Medicaid liens or claims.