Understanding Arizona's Medicaid - ALTCS Overview
Arizona’s Medicaid program, administered through the Arizona Health Care Cost Containment System (AHCCCS), includes the Arizona Long Term Care System (ALTCS, pronounced “All-Tex”). Arizona Medicaid’s program focuses specifically on long-term care services and is a key component of AHCCCS.
For more details, click here to learn about the difference between the Arizona Long Term Care System and AHCCCS.
This program is jointly funded by federal, state, and county resources. It delivers essential long-term care support to individuals with limited financial means, as well as those who strategically plan and legally position themselves to qualify.
What Is AHCCCS?
AHCCCS, which stands for Arizona Health Care Cost Containment System, serves as Arizona’s primary Medicaid agency. Established in 1982, it aims to control health care costs while providing access to quality medical services for low-income residents. As the state’s largest health insurer, AHCCCS covers over 2.2 million people—roughly one in three Arizonans—through a mix of federal, state, and county funding.
Key Features and Services of AHCCCS
AHCCCS provides comprehensive health coverage, including:
- Doctor’s office visits and preventive care (such as physical exams and immunizations).
- Hospital stays and emergency services.
- Prescription medications.
- Prenatal and maternity care.
- Behavioral health services.
- Long-term care options for eligible individuals.
About 99% of enrollees receive services through integrated health plans that coordinate physical, behavioral, and long-term care needs.
How to Apply for Arizona Long-Term Care Assistance
Applying is straightforward: Visit the official AHCCCS website (azahcccs.gov), use the Health-e-Arizona PLUS portal, contact DES directly or hire a professional to help you with the Arizona Medicaid Application Process.
Keep in mind that over 79% of self-applications are denied. If you’re currently paying $3,600 to $8,670 monthly for home care, assisted living, or nursing home services, that’s $120 to $290 per day without Arizona Medicaid benefits.
Hiring a Certified Medicaid Planner™ can make a big difference. Fees vary by case complexity but are often less than one month’s care cost. In contrast, law firms may charge up to three times as much—I’ve heard quotes around $10,000, while my services are typically less than a third of that average.
Our approach uses a flat fee structure, covering all planning and application support until approval. Unlike law firms, we don’t bill for every phone call.
Why Understanding Arizona Medicaid Matters
The Arizona Long Term Care System offers vital support for those requiring ongoing care. Gaining a clear grasp of how this Medicaid long-term care program works is essential for anyone seeking assistance with long-term care needs in Arizona.
Non-Financial Eligibility Requirements
These are basic criteria unrelated to income or assets:
- Be an Arizona resident.
- Be a U.S. citizen or qualified immigrant (documentation may be required).
- Have a Social Security Number (SSN) or apply for one.
- Live in an approved living arrangement, such as your own home, an AHCCCS-certified nursing facility, assisted living facility, or other certified setting.
Medical Eligibility Requirements
Arizona Long Term Care System is designed for those who require a nursing home level of care, even if they receive services at home. Eligibility is determined through a Pre-Admission Screening (PAS) process:
- An AHCCCS medical assessor will conduct an interview with the applicant (and caregivers, if applicable) and review medical records.
- The applicant must be at immediate risk of institutionalization in a nursing facility or intermediate care facility for individuals with intellectual disabilities.
- Qualifying conditions often include needing assistance with activities of daily living (ADLs) such as bathing, dressing, eating, mobility, toileting, or transferring; cognitive impairments requiring regular monitoring; or chronic conditions like Alzheimer’s, dementia, disabilities, or developmental disabilities (e.g., autism).
- Applicants must be age 65 or older, blind, disabled, or have a developmental disability.
Financial Eligibility Requirements
Financial criteria include limits on income and countable resources (assets). Arizona is an “income cap” state, meaning exceeding the income limit requires setting up a qualified income trust (e.g., a Miller Trust) to qualify. If resources exceed limits, a special treatment trust may be an option for those under age 65.
Income Limits (Effective January 1, 2026)
- Single Applicant: Gross monthly income cannot exceed $2,982 (300% of the Federal Benefit Rate). If your income is above this see Miller Trust or the Income Only Trust.
- Married Applicants: If only one spouse applies, the limit is $2,982 for the applicant (with allowances for the community spouse). If both apply, the combined limit is $5,964.
- Countable income includes wages, Social Security benefits, pensions, and disability payments.
- If income exceeds the limit, a qualified income trust can redirect excess income to make the applicant eligible (the trust pays for care costs, and remaining funds go to the state upon death).
- After eligibility, a “share of cost” may apply, calculated from gross income minus deductions like personal needs allowance, spousal/family allowances, home maintenance (if temporary institutionalization), and medical expenses not covered. (e.g., dental, eyeglasses, hearing aids).
Asset (Resource) Limits
- Single Applicant: Countable resources cannot exceed $2,000.
- Married Applicants: If one spouse applies and the other lives in the community (not in a medical facility), between $32,532 and $162,660 of the couple’s combined resources may be disregarded for the community spouse’s needs. If both apply, the limit is $4,000 combined.
- Countable Resources: Include cash, bank accounts (checking/savings/credit union), stocks, bonds, certificates of deposit, non-exempt vehicles (more than one), real property not lived in, and household/personal belongings over certain values.
- Non-Countable (Exempt) Resources: Include the home you live in (unless in a revocable trust), one vehicle, burial plots/irrevocable burial plans, up to $1,500 designated for burial expenses, life insurance (if face value ≤ $1,500), and certain accounts like ABLE accounts, Flexible Spending Arrangements, or 529 education savings.
- If over the limit and under age 65, a special treatment trust may hold excess resources to qualify.
Additional Considerations
- Estate Recovery: Arizona state may recover costs from the estate for services received after age 55.
- Application Process: Apply online via Health-e-Arizona Plus, by phone (1-888-621-6880), or at a local AHCCCS office. Provide documentation for all criteria. The process includes financial verification first, followed by medical assessment if financially eligible.
- Appeals: If denied, you can appeal within 30 days.
- Spousal Rules: Special protections apply for married couples to prevent impoverishment of the non-applicant spouse; request the Community Spouse Information Sheet from AHCCCS for details.
For personalized guidance, contact AHCCCS directly, as individual circumstances (e.g., trusts, transfers, or penalties for asset transfers within 5 years) can affect eligibility.
Steve Dabbs, CMP™, AIF®
Steve Dabbs is a Certified Medicaid Planner in Arizona. With over 35 years of experience, Steve Dabbs has helped many people to get qualified for benefits.
More than 79% of applicants find their applications getting denied for approval due to minor errors, so seeking professional help is something you should definitely consider!
Applying for insurance coverage is a very complicated process, but Steve Dabbs can help you get qualified for benefits through his Professional Value-Added Services, which will save you money and Time.
Call us for Free Consultation!
Consulting with a Certified Medicaid Planner can help you navigate the application process.
Eligibility – Medical and Financial
To meet the Eligibility Requirements, the applicant must be both medically and financially eligible.
Someone can be financially qualified and not qualify medically, so they would not be approved.
What are the Arizona Medicaid Medical Requirements?
To meet the Medical Requirements, an applicant must first undergo a medical assessment called the Pre-Admission Screening (PAS). A score of at least 60 is required to qualify medically.
The first step of the PAS process is to collect and forward a set of documents to the assessor. The details shared must include proof of identity, date of birth, age, current living arrangement, and Arizona state form DE-202 medical information (from the applicant’s physician).
After reviewing the personal information, the assessor will evaluate the applicant’s medical condition and care needs via an in-person or over-the-phone medical assessment. Many aspects of the applicant’s current health are considered.
To understand whether the applicant requires nursing home care, the PAS assessor will want to know the applicant’s symptoms on his or her worst days. The assessor will list the medical conditions and back the applicant’s statements with essential medical reports.
Medical Conditions scored in the assessment:
Continence
The assessor will determine whether the applicant possesses the ability to control movements of the bladder and bowel. If not, they will assess the severity of the bladder or bowel incontinence.
Behavior
Assessing behavior is part of the mental and emotional assessment of the applicant. Is the applicant exhibiting disruptive or aggressive behavior? Is the applicant at serious risk of causing self-injury or injury to others? Is the applicant exhibiting symptoms of forgetfulness or dementia?
Level of Assistance Required
For seniors and people with physical disabilities, the most basic tasks can be exhausting and sometimes impossible to perform without assistance. The PAS evaluation will include questions on such tasks, called “Activities of Daily Living” (ADLs). ADLs include mobility, bathing, grooming, dressing, toileting, transferring, and eating. Each of these can garner up to 15 points toward the 60 point minimum score to quality.
These are called “Activities of Daily Living” or ADLs. ADLs include:
Mobility, Bathing, Grooming, Dressing, Toileting, Transferring, Eating.
Each of these can garner up to 15 points toward the needed 60 point score.
Orientation – Cognitive Issues
The assessor will check whether the applicant is aware of the surroundings. Can the applicant communicate with people helping them? Can the applicant recognize the people around them (loved ones, relatives, friends, etc.)? Is the applicant aware of the current time and place?
The assessor will assess the applicant’s mental capacity and orientation based on the answers to these questions. To further assess cognitive ability, the assessor will also interview the caregivers. Emotional well-being and sensory ability are also considered for medical assessment. A dementia diagnosis from a neurologist will score 20 points.
These are just some of the points the assessor will touch upon to ascertain whether the applicant requires nursing home-level care. After a thorough medical evaluation, a numerical score is assigned to the application, and a score of 60 points or higher will be eligible for approval for insurance benefits.
Despite fulfilling other eligibility conditions, many applicants fail to qualify because they do not know how to present their case during the PAS evaluation. For this reason, it is prudent to avail oneself of the help of a Certified Medicaid Planner™ (CMP™), who has witnessed many such evaluations.
The CMP™ can arrange a meeting between the applicant and health care professionals who can provide insights into what level and kind of care the applicant needs and can receive. Before applying for benefits, these professionals can provide a realistic assessment of the applicant’s chances of qualifying for the long-term care program.
Ultimately, applicants will have no difficulty meeting the Program’s medical requirements if they can prove they need nursing home-level care.
Arizona Medicaid Financial Eligibility Requirements 2026
Financial categorizes an applicant’s assets into two groups: countable and non-countable assets.
Countable Assets:
Countable assets include:
Bank accounts and savings.
Real estate properties (excluding the primary residence).
Cash value of insurance policies.
Stocks, certificates of deposit, and cash.
Non-exempt vehicles.
Note: IRAs and 401(k)s are considered countable assets in Arizona, unlike in some other states.
Countable assets include the total marital assets, regardless of ownership, even if a prenuptial agreement exists.
Non-Countable Assets
Non-countable assets include:
The applicant’s primary residence, provided their equity interest does not exceed $603,000. The property must either be used as the primary residence by the applicant or their spouse or be the home to which a single applicant intends to return once their health improves.
One vehicle (no value limit).
Burial plots, irrevocable burial plans, funeral trust plans.
Personal and household possessions.
Term insurance and up to $1,500 cash value in a life insurance policy.
For single applicants, the total countable assets must not exceed $2,000.
Special Considerations for Married Applicants
Married applicants can set aside a portion of their resources for their spouse, referred to as the community spouse (non-applicant spouse). This amount is determined by the Community Spouse Resource Allowance (CSRA):
Minimum CSRA: $32,532
Maximum CSRA: $162,660
These limits are adjusted annually, with the current figures effective as of January 1, 2026.
The Spousal Impoverishment Act of 1988 ensures the financial security of the community spouse by allowing them to retain a larger share of assets.
The applicant may retain up to $2,000, while the community spouse can keep up to $162,660.
If both spouses are applying for benefits, their combined asset limit is $3,000.
For more details on CSRA calculations, refer to the Community Spouse Resource Worksheet or consult with a Certified Medicaid Planner™.
Exceeding Asset Limits
If your assets exceed the specified limits, you may still qualify for benefits through strategic restructuring of your investments.
Income Sources and Eligibility 2026
An applicant’s income includes:
Wages, social security, pensions, and supplemental security income (SSI).
Immediate annuity and Medicaid Compliant Annuity payments.
Disability income and VA pension/compensation payments (excluding the VA aid and attendance portion).
Single Applicants: Gross monthly income must not exceed $2,982.
Married Applicants (One Applicant): The combined income is divided by two. If one-half exceeds $2,982, only the applicant’s income is considered.
Married Applicants (Both Applying): Combined monthly income must not exceed $5,964.
Examples of Income Calculation
Example 1: Single Applicant
Applicant’s income: $2,982/month.
If the income exceeds the cap, an Income-Only Trust (Miller Trust) is required.
Example 2: Married Couple (One Applicant)
Applicant’s income: $2,982/month.
Community Spouse’s income: $2,210/month (total: $5,192/month).
No Income-Only Trust is needed as the total income is below $5,860.
Example 3: Married Couple (Both Applicants)
Combined income: $5,046/month or less.
Example 4: Special Case (Healthy Spouse with High Income)
If the community spouse has significant income (e.g., $7,000/month), the applicant’s income is assessed separately.
The applicant retains a Personal Needs Allowance of $149.10/month, with the remaining income allocated to care costs. The community spouse retains their full income.
Income Trusts for Excess Income
Applicants exceeding the income cap may still qualify by allocating the excess to an Income-Only Trust (Miller Trust). For a detailed understanding of this process, consult a Certified Medicaid Planner™
How long does it take to qualify for coverage?
Even in the case of an error-free application, the process may take up to 60 days to complete. Hence, understanding and paying close attention to the medical and financial criteria may help reduce the delays in accessing much-needed care. The other set of conditions, determining medical and financial eligibility, is more complex, as discussed below.
You can also help our office by providing all the requested items in a timely manner.
Call a Certified Medicaid Planner for a Free Qualification Consultation!
What Is an AHCCCS Program Contractor?
People planning to apply for assistance often ask how the Arizona Long Term Care System provides services to the beneficiaries.
Program Contractors are insurance companies entrusted by AHCCCS to provide the services to members. The state pays the program contractors, who in turn pay the health care providers to deliver medical and long-term care services.
Before any long-term care services are rendered, the program contractor assigns a case manager (or care manager) to every AHCCCS member. The case managers must work closely with the beneficiaries to understand their medical situation and care requirements and authorize services to fulfill their needs.
The case manager must work closely with the beneficiaries to understand their medical situation and care requirements and authorize services to fulfill their needs.
For all practical purposes, the program contractor is the administrative arm of the Arizona Medicaid program, helping satisfy the members’ social, physical, medical, and emotional needs.
Approved members have three different program contractors to choose from – Mercy Care, Banner Health, United Health Care and AZ Complete Care. These providers may change in the future.
All FOUR contractors have a contractual obligation to provide care services to approved members.
Benefits and services offered by the three contractors are the same; the network of health care providers (facilities) may differ. The process of finding services based on the program contractor is similar to finding a doctor covered by your insurance provider. If you are looking for a nursing care home, you need to find a home in the program contractor network.
Approved members who want to move to an assisted living community must first find out with which program contractor the facility is registered. Sometimes, a care home may be affiliated with more than one program contractor.
Plans come bundled with certain restrictions (e.g., geographic restrictions). Thus, it is important to make sure the care home accepts the Arizona Medicaid plan that covers you.
It is important to emphasize the necessity of finding the right service based on the relevant program contractor. For example, if you choose Mercy Care as your provider and the care home you select is not contracted with Mercy Care, you will have to choose a different facility, and you will be unable to change until the open enrollment period.
A Certified Referral and Placement Specialist is an invaluable asset in such situations, as they can help locate facilities affiliated with your program contractor and offer the care services you need.
ALTCS.org is a great resource to find approved providers.
In addition, applicants should gather information about the network of service providers before opting for a contractor.
About the Program Contractors:
Mercy Care Plan
As Arizona’s leading not-for-profit health plan, Mercy Care holds your health care needs as its top priority.
This mission-driven plan is a product of a partnership between St. Joseph Hospital and Carondelet Health Network. The two organizations joined hands in 1985 to form the Southern Catholic Health Network (SCHN) which became an AZ state program contractor under the name of Mercy Care Plan.
In addition, Mercy Care operates a wide range of benefit plans throughout Arizona. The Mercy Care Plan covers a broad product portfolio with more than 360,000 members and its ALTCS division alone has enrolled more than 10,100 members.
The program Mercy Care serves members in Pinal, Pima, Gila, and Maricopa counties in Arizona.
Banner University Family Care (B-UFC)
Banner Health aims to provide members with better long-term care so their life can be easier.
The Banner Care plan is also available to eligible AHCCCS Complete Care (ACC) members. Both ACC and ALTCS members must meet medical and financial eligibility requirements to claim benefits from Banner Care.
Banner Care is a non-profit system that is one of the largest in the country, with more than 275,000 members.
A branch of Banner Health is situated in Tucson, Arizona. B-UFC operates in 10 counties that include Yuma, Santa Cruz, Pinal, Pima, Maricopa, La Paz, Greenlee, Graham, Gila, and Cochise.
United Healthcare Community Plan (UHC)
The United Healthcare plan offers you the flexibility to pick providers of your choice. UHC is a non-profit insurance organization that at present provides services to around 34% of all eligible members.
UHC has a vast network of service providers in cities, towns, and rural areas of Arizona. It covers counties such as Yavapai, Pinal, Navajo, Mohave, Maricopa, Gila, Coconino, and Apache.
UHC takes pride in its highly trained care managers who are assigned based on specialized language, region, behavioral health needs, and other factors.
To provide for the immediate needs of beneficiaries, the care managers get in touch with the members within 12 days of application approval.
Case managers revisit the members and reassess their needs regularly. The goal of regular visits or reassessment is to identify problems, implement solutions, and provide for the members’ unmet needs.
Why Plan for ALTCS?
If you are part of the high-risk group – above 65 or suffering from physical disability – do not take your long-term care lightly. Life can change in a moment. While you should not be pessimistic about the future, it is important to plan for the future so that you are prepared to face any challenges you may face.
For many elderly people, professional planning for eligibility is the best way to secure their future. The government-sponsored Program helps meet your long-term care needs. The following are three important reasons to consider ALTCS:
- Traditional long-term insurance is expensive and can be hard to obtain.
- Medicare is only for acute medical needs, while long-term care services are limited.
- Paying for long-term care out of pocket is quite costly and will put your financial future in jeopardy.
After deciding to apply for Arizona Medicaid, it is important to plan well and well in advance. Poor planning has resulted in thousands being denied benefits. Even those who are sure they meet the eligibility criteria must prepare in advance, because the application process can take 45 to 60 days to process an application.
Hiring a Certified Medicaid Planner™ (CMP™) will meet these two important goals – proper planning and preparation in advance. A CMP™ can also help you preserve the bulk of your assets while also qualifying for long-term care.
The Application Process – How to Apply for ALTCS?
Preparing to Apply – Pre-Screening
To age well and live life to the fullest, it is necessary to consider long-term care. Planning well in advance helps achieve peace of mind, knowing that your actions today will ensure you reap positive benefits in the future.
Although most people are aware of ALTCS, they postpone the application until they cannot do without its benefits. One reason for delaying the application is the fear of not qualifying.
As discussed earlier, all applicants undergo a Pre-Admission Screening (PAS). A PAS assessor will evaluate the applicant’s current medical condition, functional capability, the requirement of assistance, and other details. ALTCS admission is based on the points scored by the application after assessment, as discussed above in the section on medical criteria.
To clear last-minute confusion and alleviate doubts about eligibility, applicants can request a private PAS assessor for evaluation.
Whether for an official pre-admission screening or a private exercise, you can prepare by having the following resources ready.
- Contact information of your general physician and specialist doctors
- All current prescriptions, dosages, and details of therapy sessions (if any)
- All medical records, including test reports, care reports, staff notes
- A family member and/or caregiver must be present during the PAS session to provide information or corroborate your medical reports.
Get more information about how to apply.
Ten Most Common Mistakes During the Application Process
Long-term care can cost up to $350 a day, depending on the level of care required. When you or a loved one desperately needs financial assistance to pay for such care, this important Federal Insurance program can help cover the costs. Unfortunately, the application process is tedious, overwhelming, and confusing to many.
For anyone planning to apply, there is good news and bad news. The bad news is that 70% of the applications are rejected because of mistakes made by either applicants or Arizona State caseworkers. People make these mistakes because they are unaware or don’t pay attention during the application process.
The mental strain on people going through the application process is too high to calculate, and it goes way up when the application is denied. The situation can often feel hopeless.
The good news is that it is easy to avoid mistakes on the applications, which will ensure peace of mind for you and your loved one and save thousands of dollars in out-of-pocket costs!
Learning about the most common mistakes can help you avoid them. The following are the 10 most commonly made mistakes during the ALTCS application process.
Mistake #1: Home in a Trust
Having your home in a trust is the biggest mistake made by those applying for ALTCS benefits because the State of Arizona will try to recover or recoup what it has paid for long-term care.
Before you apply for ALTCS, remove your home from the trust.
Unless your home is part of a more sophisticated spend-down strategy, wait until your Certified Medicaid Planner™ (CMP™) tells you to remove it from the trust.
Consult your advisor if you are unsure what to do at this point.
Mistake #2: Failure to Provide the Required Documents
The ALTCS application must include specific documents that provide proof of the applicant’s marital status, residence, income and asset eligibility, and medical eligibility.
Failing to provide all required documentation can delay the application’s processing and approval or even cause a denial of ALTCS benefits.
At times, your caseworker may ask you to produce documents that are unnecessary to decide your Medicaid qualification. Last-minute requests to produce documents can cause delays, extend the processing time, or even lead to the rejection of the application.
A CMP™ can help you avoid such delays by ensuring that all essential documents are ready before the application is presented. If a state caseworker mistakenly asks for unnecessary documents, your CMP™ can help resolve the issue without delaying the application process.
The following are some of the documents needed when applying for ALTCS:
Residency: Proof of residence (lease agreement, copy of the house deed, etc.), deed of any other property owned by the applicant.
Personal Information: Photo ID (passport, driver’s license, etc.), birth certificate, marriage certificate, and health insurance card.
Income: Proof of salary and any pension income. This must be a current statement provided by the payor, which you can get by contacting the actual payor and requesting a benefits statement.
Assets: The caseworker will ask for the month of claim, bank statement(s) for the past 30 days, life insurance policies, stock certificates, savings bonds, burial plot deed, funeral arrangements, the title of all non-primary vehicles, annuity statements (for up to 5 years), and investment account statement (up to 5 years).
Medical: Unpaid and outstanding bills related to medical and assisted living expenses at the time of the application.
Mistake #3: Failure to Divulge All Income and Asset Sources
Long-term care in Arizona and the United States is expensive, and the idea of hiding income or assets from the state agency may be tempting to some applicants.
You might think ALTCS will not find your hidden assets, but they have several resources for finding income and assets.
More importantly, failing to disclose all income and asset sources and/or hiding resources from the state is a CRIME.
In several states, any attempt to hide, deliberately non-disclose, or destroy records to ensure eligibility is considered fraud against the state. ALTCS applicants who engage in such actions will face both civil and criminal penalties.
The rejection of your application and denial of long-term care assistance should be the least of your worries if you are thinking of not reporting assets on your Medicaid application. Civil penalties can include paying fines and damages—up to three times the amount received from ALTCS. Criminal penalties can include jail tail.
Bear in mind that negligence or oversight is no excuse. Such explanations may not prevent the state from taking legal action against the applicant.
Instead of hiding assets, consult a CMP™ who can safeguard your assets using legal and ethical asset-protection strategies.
Mistake #4: Applying for ALTCS Too Early or Too Late
What is the best time to apply for ALTCS? This is a tricky question to answer.
A CMP™ can provide you with a more accurate answer after reviewing your financial and medical status.
Applying at the correct time can have far-reaching effects. A CMP™ can advise you on the right time to apply to maximize the benefits while minimizing any penalties and expenses.
Mistake #5: Failure to Make Pre-paid Funeral Contracts Irrevocable
Funeral trusts give you peace of mind by ensuring that there are funds to cover funeral expenses after your death. The trust funds can only be used for the memorial, funeral, burial, or other related expenses. These legal agreements are also valuable planning tools to help you qualify for ALTCS
However, these funeral trusts are useful to spend down and park your excess resources only if they are irrevocable. This means the funeral trust cannot be changed or canceled, and the funds in it cannot be refunded to the applicant.
When the trust is irrevocable, the person who creates the trust is no longer the owner of the funds in the trust. As a result, the funds become non-countable as an asset.
When creating an irrevocable funeral trust (IFT), you must name the state as the residual beneficiary. The applicant can also create IFTs for close relatives.
In Arizona, an individual can hold up to $9,000 in IFTs as well as up to $15,000 in a goods and services agreement (G&S), which is a list of items and services for which the funeral trust funds can be used. Such goods and services include funeral home payments, clergy fees, funeral director and staff payments, burial plots, caskets, embalming, clothing, and death certificate fees.
Mistake #6: Failure to Properly Create and Fund a Miller Trust or Income-Only Trust
In Arizona, a Miller Trust is also referred to as income-only trust. This type of trust allows applicants with higher incomes that exceed the limit set to qualify for ALTCS.
The 2026 income cap is $2,982; one dollar above the cap will results in a denial of the application unless the applicant has an income-only trust/Miller Trust.
How does an income-only trust work?
All income is deposited in a trust bank account created under the income-only trust/Miller Trust and is managed by a trust.
There are strict rules governing the use of funds in the trust.
Money deposited into the trust can go to the ALTSC beneficiary as Personal Needs Allowance, which is currently $149.10 per month. These funds can also potentially be used for other unreimbursed medical expenses not covered by Medicaid in Arizona State, although the state must preapprove these expenditures.
Medicaid allows the funds to be used for the welfare of the community spouse as part of the Minimum Monthly Maintenance Needs Allowance (MMMNA).
It’s important to note that the state must be named as the beneficiary of the trust. After the death of the Medicaid recipient, any funds left in the trust will be used to reimburse the state’s expenditures on long-term care.
Many people create income-only trusts/Miller Trusts but don’t properly fund them. Funding the trust for just the first month or partially funding it is not considered proper compliance with the trust rules.
Medicaid rules change often. You need professional help to properly create and fund an income-only trust/Miller Trust. Failure to do so will defeat the trust’s purpose and affect the applicant’s eligibility.
Mistake #7: Failing to Dispose of Insurance Policies with Cash Value
People of all ages and walks of life take out life insurance policies to ensure that their loved ones are financially secure after the policyholder’s death.
However, some life insurance policies can impact your Medicaid eligibility.
Term life insurance does not impact eligibility, but whole life, universal life, and policies with cash value do because these latter policies accrue cash value. As a result, the policyholder, who is also the applicant, can cash out the policy or take a loan against it.
In Arizona, any life insurance policy with a cash value greater than $1,500 is considered a countable asset. Naturally, any applicant having a life insurance policy with a large cash value will need to take steps to qualify for ALTCS.
The applicant has several options to avoid disqualification for having a policy with a cash value above the exempted limit.
Cash Out and Spend Down: The applicant can cash out the policy and use legal, Medicaid-approved ways to spend down to meet the ALTCS assets limit. This method has a drawback: Once you cash out, the policy ceases to exist, meaning your loved ones won’t receive any death benefits.
Transfer the Life Insurance Policy: This option is a tricky one. The applicant can transfer the ownership of the policy to the community spouse. In this case, the cash value will become part of the community spouse’s resources allowance. The policy can also be transferred to an adult child if the child is blind or disabled and remains exempt.
Take a Loan: You can take a loan against the cash value and then spend down the money received. In this case, the cash value of the policy decreases, and the applicant becomes eligible for Medicaid. The applicant still owns the policy and is obligated to pay premiums. The drawback of this strategy is that the cash value will increase over time, which may put the countable assets over the Medicaid limit. Therefore, the applicant needs to keep an eye on the cash value of the policy.
Sell the Life Insurance Policy: The applicant can sell the ownership of the policy to a relative or third party and then spend down the proceeds of the sale. The applicant can spend the money on medical equipment, home modifications, etc.
Mistake #8: Failure to Apply for Other Benefits
ALTCS expects applicants to apply for all benefits for which they are eligible. If the state agency finds the applicant, based on the details in the application, entitled to receive potential benefits from other sources, then the applicant will be notified.
For example, if a person needs nursing home care or medical care at home, they may qualify for social security disability benefits. In addition, a wartime veteran or the surviving spouse of a wartime veteran must apply for Veterans Pension with Aid and Attendance benefits before they apply for ALTCS, which our office can help you with.
Ultimately, applicants should apply for any other possible benefits before approaching Medicaid.
Mistake #9: Failure to Create a Contingency Plan if the Community Spouse Predeceases the Beneficiary
Under Medicaid, an applicant can reduce income and assets by transferring some of the resources as an allowance to the community spouse. But how does the death of the community spouse affect the Medicaid eligibility of the spouse in the nursing home?
If the community spouse dies, the assets will automatically revert to the ALTCS beneficiary, which will increase the resources owned by the spouse in the nursing facility.
Even if the community spouse creates a will disinheriting the Medicaid spouse, the law allows the applicant to claim some of the assets in the choice. This is called a statutory or elective share.
To avoid suspension of ALTCS long-term care services in the future, the couple can create a special trust. Bear in mind that the ALTCS beneficiary cannot become the trustee. A family member, friend, or relative can be put in charge of the trust, and the trust funds can be used for paying non-Medicaid services.
Mistake #10: Poor Planning
More than 70% of all people who reach 65 today will need long-term care in the future. There are many things you should do to prepare before a crisis occurs and you find yourself scrambling to meet the deadlines that are part of the application process.
Preparation should include:
- Gather current statements of all income sources. Contact the payor to have a current month’s statement of benefits sent to you.
- Be prepared to provide various bank statements and explanations for any unidentified transactions that exceed $500 in any one month.
- Have a complete list of doctors and the medications you are taking.
To qualify for ALTCS, you must navigate the complicated application process that starts long before the application is presented.
The path to ALTCS qualification is laden with pitfalls, and one wrong step can result in the denial of benefits, which causes delays and costs money!
A Certified Medicaid Planner™ is an expert experienced in this subject and can help avoid these common mistakes.
If the ALTCS application is rejected despite your best efforts, the CMP™ can help with the appeal or help reapply after rectifying the mistakes.
If the actions of a caseworker lead to mistakes or delays resulting in a denial of benefits, the CMP™ can take the appeal to a supervisor.
Frequently Asked Questions
Do I Need an Attorney?
Strictly speaking, No. Individuals planning to apply to ALTCS do need an expert who is well versed in ALTCS and elder law, but this expert need not be an attorney. In fact, since qualifying for ALTCS is vital for accessing quality long-term care, a Certified Medicaid Planner (CMP) would be a better option than an attorney.
The Medicaid governing boards around the country understand the importance of Medicaid for the elderly and physically disabled. They know the value of personal guidance to help applicants plan and qualify for the long-term care benefits.
For these reasons, ALTCS does not require the use of an attorney. Thus, Certified Medicaid Planners can guide and assist the elderly in understanding ALTCS, checking their eligibility, managing and preserving their resources, planning for qualification, and applying for benefits.
What Happens if My Parents Give Away or Transfer Excess Assets to Qualify for ALTCS?
People with more resources than allowed by the ALTCS asset limits will look for ways to offload their excess wealth. The most common step is to gift or transfer excess assets to reduce countable assets.
Gifting is not illegal and can be a great strategy to qualify for ALTCS. However, you should never take such a step without first consulting with a Certified Medicaid Planner or elder law expert familiar with ALTCS rules. A professional CMP or attorney can navigate the strict ALTCS rules to find legal and ethical means to preserve wealth and qualify for benefits.
Some people decide not to transfer excess wealth because they believe that the federal tax rules only allow gifting up to $17,000 a year without tax consequences. In this regard, Arizona Medicaid rules and federal tax laws do not align; moreover, the $17,000 limit is often misunderstood. Further, the lifetime limit is $12,920,000. Thus, unless you are gifting that amount, the $16,000 does not play a role in the taxation of the gift.
While gifting or transferring assets to be eligible for ALTCS is absolutely illegal, it will make you ineligible for a defined period. The period of ineligibility is determined by the Divestment Penalty Divisor (DPD), which is currently $8,912.70. Thus, the gifted amount (GA) divided by the (DPD) equals the months of ineligibility. For example, a $120,000 gift ÷ by $8,666.72 = 13.84 (13.84) months of ineligibility.
This penalty applies for all transfers within the past five years for less than the market value. Moreover, the applicant must disclose all such transfers at the time of application.
Again, this approach is perfectly legal, and you should not listen to anyone who tells you otherwise. If an ALTCS Financial Eligibility Worker tells you it is not legal, simply report them to their supervisor.
Will ALTCS Take My House?
This is extremely unlikely. There are strict rules regarding when and how the State of Arizona can claim certain rights over the beneficiary’s home. The two special circumstances are a TEFRA Lien and the Estate Recovery Program.
TEFRA Lien
The state can exercise a right of lien on the property of a beneficiary who is permanently institutionalized for at least 90 days or more.
AHCCCS cannot impose a lien on a beneficiary’s house under the following circumstances:
- If the property is also home to the spouse or beneficiary’s children (less than 21 years)
- If the property is also home to the beneficiary’s blind or disabled child
- If the property is also home to the sibling who is residing there for at least 12 months before the beneficiary moved to a nursing home
No attempt to recover from lien property shall be made if the beneficiary has a spouse, child (under the age of 21), or disabled or blind child.
Further, no action on the lien property should be attempted if the sibling has resided in the house for taking care of the beneficiary for 24 months before nursing home admission.
Estate Recovery Program
Only individuals over the age of 65 are eligible for ALTCS benefits. That said, people under 65 who are physically disabled or mentally unsound are entitled to the same benefits.
No attempt to recover cost is made if the beneficiary has left behind a spouse or disabled child of any age.
Get to know more about ALTCS taking your house.
Will ALTCS Decide Where I Will Live?
ALTCS beneficiaries in need of nursing home services are free to choose any facility. That said the facility must be affiliated with the ALTCS program contractor that you have chosen.
Before making a decision, beneficiaries must check out the network of service providers linked to their program contractor.
If I Receive ALTCS, Will the State Take Over My Social Security and Pension?
There is no provision in ALTCS rules to lay claim or take over pension funds, income, or social security payments.
ALTCS may ask you to pay your share of costs for accommodation, medical treatment, care services, and spending and spousal allowance.
How Much Will I Have to Pay for My Care While on ALTCS?
Beneficiaries of ALTCS are required to pay a part of the cost of the services they receive. Referred to as ‘share of cost’ the ALTCS member’s contribution is decided by the program contractor.
How much you will pay is determined by several factors including the type of care you receive, income, medical expenses, living arrangement, and spousal allowance.
ALTCS members receiving care services at their home can keep more than beneficiaries living in a nursing home.
Those receiving in-home care are allowed to retain Personal Needs Allowance (PNA), which is $2,982, and out-of-pocket expenses and the rest of their income will be applied towards their care.
In contrast, beneficiaries who are single and residing in a nursing care facility will save a lot less of their income.
They are entitled to just $149.10 as a Personal Needs Allowance. After deducting the PNA and out-of-pocket medical expenses, the remaining will be paid to the care facility.
In the case of married beneficiaries, if the income is made available to the community spouse, they will retain a part of the beneficiary’s income to make up for the shortfall of the spouse’s allowance (CSMIA), which is no less than $2,984 and not exceeding $5,968.
Conclusion:
Medicaid planning can ensure that you are able to take advantage of all the available resources. There are legal ways to convert a countable asset to a non-countable asset. You can use an Income-Only Trust/Miller Trust if your income is above the limit or utilize the “Name on the Check” rule to transfer income to or from your spouse. A Medicaid Compliant Annuity and/or an outright gift may also be the right solution.
All these options require professional guidance from a Certified Medicaid Planner. To learn more about how we can help you, contact us to schedule an Appointment.