Long-term care in Arkansas can be expensive — the average cost of a semi-private room in a nursing home is $5,931 a month — and people often don’t understand their rights and options.

Long-term care insurance, a person’s individual finances and Medicaid are the primary sources of money for long-term care.

Savings plans or paying insurance premiums over time are ways for a person to prepare for a major, late-in-life change. But frequently Medicaid, which is means tested — applicants must have low incomes or limited assets — becomes the payment method of choice for long-term care.

For married or single applicants to nursing home care in Arkansas, the Medicaid income limit is $2,523 a month per individual (meaning $5,046 per couple) with assets of no more than $2,000 for single applicants and $3,000 for married applicants. The numbers are the same to qualify for waivers for home- and community-based services.

For married applicants with only one spouse applying, the asset limit is $2,000 for the applicant and $137,400 for the non-applicant.

Like most states, Arkansas has a five-year, Medicaid look-back period in which it checks asset transfers dating back five years from application to make sure nothing was sold or given away under fair market value. Violators pay a financial penalty as well as being disqualified and wind up paying for the care out of their own pockets after all.

But Arkansans can employ a few income and financial asset planning strategies to protect their money and assets.

A medically needy pathway exists in the form of a spend-down program that allows categorically aged, needy or blind people who are over the Medicaid limit to pay their excess income on their medical bills down to the income limit, after which they qualify for the remainder of the spend-down period.

A qualified income trust allows the overqualified to place the excess in an irreversible trust that is not considered part of Medicaid eligibility income. A trustee is named and the money is used for very specific purposes like accrued Medicaid expenses.

Medicaid Asset Planning Strategies

A Lady Bird Deed is a life estate deed in which the Medicaid recipient keeps their home for the remainder of their life, after which it is transferred to a beneficiary. Since home ownership technically changes, it is not considered part of a recipient’s estate.

A Medicaid Divorce is a legal termination of marriage when only one spouse is applying for long-term care Medicaid and protects the assets of the non-applicant spouse.

“Half a Loaf” strategies are a complicated way around the look-back rules by creating a revenue stream through a process of giving a family half of one’s assets and purchasing a Medicaid compliant annuity.

No family should undertake any type of long-term care Medicaid strategy without consulting a professional Medicaid planner. A number of sites like medicaidplanningassistance.org can help you locate professionals nearby to help navigate these critical decisions involving your loved one’s long-term care.

Basic Steps in Estate Planning

Power of attorney. Having someone authorized to navigate legal questions and administer wills and handle other legal matters can help a family avoid unnecessary expenses and proceedings after a loss.

Living wills. These address end-of-life issues like the life support question and funeral details, sparing the survivors doubt and uncertainty about the decisions.

Wills vs. trusts. You may need to think about guardianships for children or naming beneficiaries of an inheritance. A trust will be administered without court supervision by a trustee you designate. A will must be probated and administered by an executor, which could have legal costs attached.

Review. Once you’ve done your estate planning, return to it every time there is a major change in your life. A divorce or death might mean you need to change the beneficiary of an insurance policy or 401(k) or bank account balance, for example.

Sources: medicaidplanningassistance.org, agingcare.com, worldpopulationreview.com, wilsonegroup.com, Woodard Law Group