Phoenix Tax Law Blog


Arizona Long Term Care System–ALTCS (Medicaid): A Brief Description of Arizona’s Version of Medicaid

This is a brief description of the Arizona version of Medicaid prepared by the Elder Law and Mental Health Section of the State Bar of Arizona.

 

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Arizona Long Term Care System – ALTCS (Medicaid)

There is no easy or quick explanation of ALTCS.  It is a complex program and every rule has an exception.  However, we hope that this little article will help point out the general eligibility requirements and help you focus on some of the most commonly asked questions.

Of course, the policies are constantly changing.  Make sure you do your own research before giving advice or relying on this article.  We hope you find it helpful, however, in understanding the basics of the program.

Eligibility Requirements:

o Needs based program.

o Must be a citizen (or meet the other ‘citizenship’ requirements.

o Income Limit ($2094 per month)

o You can create a “Miller Trust” or “Income Only Trust” if the applicant’s income, or ½ the combined income of the applicant and his/her spouse exceeds the income cap.  Any money that remains in this type of trust after the applicant dies, will be used to pay the state back for services rendered.

o     Asset Limit:  $2000 for the applicant; Maximum of $113,640 or minimum of $22,278 for the spouse.

o      Medical Need for Long Term Care

COMMON QUESTIONS

What Assets and Income do we Count?

All assets held in the applicant and/or spouse’s name are counted, including accounts or other assets held jointly with children or other family members.  The most common assets that are excluded are the home (if the tax assessed value is less than $500,000 for a single person), one car, personal possessions, $1500 cash value of life insurance, burial plots or pre-paid funeral arrangements.

All income received in the applicant’s name is counted.  This includes pensions, most VA benefits, and social security.  Interest on investments is not counted as income.

How do we determine how much we can keep?

In general, ALTCS takes into account all assets in the name of the applicant and the spouse (regardless of premarital agreements or how the asset is titled (i.e. sole and separate property)).  That total number is divided in half.  One half of the assets are allocated to the applicant and one half to the spouse.  For example:

Jane and Bob have:

One house with a fair market value of $200,000 and a tax assessed value of $150,000 EXCLUDED

CD:                            $50,000  COUNTED

Bank Accounts:       $20,000  COUNTED

Stock:                        $10,000  COUNTED

Car:                            $5,000     EXCLUDED

IRA (Bob)                  $10,000   COUNTED

IRA (Jane)                 $5,000     COUNTED

Total Counted Resources:  $100,000

Bob, the applicant, is entitled to only $2,000.

Jane, the spouse, can keep ½ of the total assets to a maximum of $113,640, so she keeps $50,000.

The remaining $48,000 is “at risk” of a spend down.

            What is a Spend Down?

A Spend Down is the total amount of money that is left over after money is allocated to the couple.  The money can be used to pay for care, home improvements, the needs of either spouse, a new car or anything else where the couple receives a benefit equal to the payment.  If they gift money to their daughter, that is considered a transfer without value and may result in a penalty period. 

            What is the Penalty Period?

The penalty period is the amount of time you are penalized for having given away money or assets.   Under the current rules, for each $6481.94 (for Maricopa county) you give away, you are not eligible for benefits for one month, after you are “otherwise eligible” for services.  This usually means after you have met the medical requirements and financial requirements.  The state of Arizona has decided that if you had $6481.94 available and you gave it away, you were able to pay for your own care for that month and you cannot now ask the state to cover your costs for that month.  For example, if a gift was made of $7500 and you give it to your daughter in November and are ready for benefits in November.  You would be ineligible for ALTCS benefits in November, plus part of December. 

What is the Look Back Period?

That is the time frame in which you will need to disclose any transfers made where you did not receive something back for fair market value.  Under the current rules, the look back is FIVE YEARS (60 months) for all transfers.  If you gave away $100,000 in 1998, and need to apply for benefits in 2012, that transfer need not be disclosed because it occurred more than five years ago. 

What is Estate Recovery?

For services provided to a person who is age 55 or older, the State of Arizona has a right to recover against that person’s assets when they pass away.

The state can file a lien against real property held by ALTCS recipient.  The applicant must be “permanently institutionalized” in order for the lien rules to apply.

There are no liens filed if the spouse, a minor child or a disabled child of any age live in the home, or a beneficiary’s sibling has an equity in interest in the home and was residing in the home for at least one year prior to the applicant being admitted to a facility;

There is no right to recovery upon the sale or transfer of the home, if the beneficiary is survived by:  a spouse; disabled child; child under age 21; sibling of the member resides in the home and had done so for at least one year prior to the beneficiary’s admission to the facility or a child of the beneficiary resided in the home for at least two years before the date of admission and provided care that allowed the beneficiary to stay at home.

The amount recovered is up to the amount the State paid for benefits.  There is no interest or other penalty fee on the recovered amount.  It is basically a low cost, interest free loan.

Clearly, no legal advice is being given by this short memorandum.  You need to do your own research regarding the current rules and how they apply to your client’s situation.

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