This ALTCS Guide will help answer your many questions about ALTCS, giving you peace of mind, knowing that you can get assistance paying for needed long-term care.

What is Arizona’s Medicaid program called?

Arizona Medicaid is called the Arizona Long Term Care System or ALTCS (pronounced All-Tex). It is part of the Arizona Health Care Cost Containment System (AHCCCS).

Click on the link to understand the difference between ALTCS and AHCCCS.

This Medicaid program in Arizona is jointly funded by federal, state, and county funds; it provides long-term care for those with low financial resources and those who use ALTCS Planning” and “legally” position themselves to qualify for the program. 

In 2021 Medicaid spending was $748 billion. Twenty percent of the total was spent on long-term care services.

Medicaid is the number one payer for long-term care services nationwide.

This Medicaid Program can also be for those that properly plan. There are safe, sound, and legal ways to position assets and income so those that would otherwise be denied can be approved. 

Medicare vs. Medicaid 

ALTCS  has two key differences from Medicare.

  • First, while Medicare takes care of the individual’s acute and short-term medical needs, ALTCS is designed to cover long-term care.
  • Secondly, unlike Medicare, ALTCS is needs-based.

A common misconception about Medicare is that it pays for long-term care; it does not!
The Medicare program made some important changes for 2024. But what didn’t change for Medicare to pay for skilled nursing care, the Medicare beneficiary must have three full overnight stays in the hospital. Then It only pays for the first 60 days at 100%, then day 61 – 90 you pay $400. The from day 91- 150 you pay a $800 co-pay and on day 151,  Medicare pays nothing for skilled nursing.

To receive financial assistance from ALTCS, applicants must meet strict eligibility criteria. Anyone who meets these criteria may apply for ALTCS benefits.
See here three midnight stay rule here:

Noteworthy: With proper Medicaid Planning, even individuals with a high net worth and income may still qualify.

You don’t have to be entirely broke to qualify and benefit from ALTCS!

To gain assistance from ALTCS, the applicants must meet strict eligibility requirements.


Contact a Certified Medicaid Planner for Free ALTCS Consultation!

What Does the ALTCS Acronym Stand For?

A government-funded program, ALTCS is the Arizona Medicaid Program.

The acronym stands for  the “Arizona Long-Term Care System.” It is pronounced “ALL-TEX.”

It helps Arizona residents with low resources pay for their long-term healthcare needs. (With ALTCS, Planning helps those with high income and resources too.)

The Program aims to provide assistance or funding for long-term care services that fall outside what Medicare covers.

Arizona Medicaid / ALTCS long-term care services include but are not restricted to physiotherapy, speech therapy, other rehabilitation services, personal care (e.g., dressing, bathing, feeding, etc.), transportation, shopping, cooking, laundry, cleaning, nursing care, and more.

It pays for in-home care, assisted living, and nursing home expenses for qualified individuals.

ALTCS is not an insurance program; you are not obligated to pay a regular premium to receive benefits. Designed for those who are disabled, low-income, and over 65, the Program assists anyone who meets the eligibility criteria.

Once the ALTCS application for benefits is accepted, the beneficiary, their representative, or a Certified Medicaid Planner (who helped the individual with the qualification process) can meet with the caseworker to devise a long-term care plan to cover all the beneficiary’s needs.

Even people with above-average income or assets can gain immensely from the ALTCS program because a large portion of the population is one mishap or medical problem from financial ruin.  

Bear in mind not everyone who applies will qualify for ALTCS assistance. The Arizona Long-Term Care Service is an entitlement program, but you must meet the two main criteria to qualify. These are both medical and financial.

Why Is It Essential to Know About ALTCS?

It is essential to learn about Arizona Medicaid, even if you do not need the benefits immediately. ALTCS’s services are unique. Apart from covering nursing home costs, the long-term care program that works under the Home and Community-Based Services (HCBS) Program can provide certain in-home services.

In-home care was an excellent addition to the ALTCS program through the HCBS program. Home care is less expensive for the government than assisted living or nursing home care. Moreover, most beneficiaries prefer to stay in their homes and receive in-home care, wanting to delay moving to a nursing home for as long as possible.

Under the HCBS program, a family member can be a paid caregiver. Many ask how much does ALTCS pay a Caregiver?

This will vary based on the approved hours, with the maximum being 40 hours per week. The hours are determined by the level of care needed. We have seen as little as 10 to as much as 40 hours a week approved.

A caregiver is paid minimum wage as of January 1, 2024, which is $14.35 per hour.

Please note that if you currently have a caregiver you are paying more than the minimum wage, you can keep that caregiver and set up a program to pay them the difference of $25.00 and $14.35 per hour.

This must be done in a particular way so call our office to discuss this.

If you are a veteran, you may also qualify for the “Veteran’s Directive Care Program” on top of ALTCS. I discuss this in my book,

Individuals who foresee a need for long-term care should be proactive and start the planning process for ALTCS. The sooner you start preparing, the better your chances of being ALTCS Approved and having Arizona Medicaid pay for the long-term care services you need.

The Arizona Long-Term Care System benefits can be grouped into four categories:

  • Acute Care Services
  • Home and Community-Based Services
  • Alternative Facility Care Services
  • Specialized Care Services for Developmentally Disabled Adults and Children

How Do ALTCS Applicants Receive Services?

ALTCS is part of the Arizona Health Care Cost Containment System (AHCCCS). Most applicants receive services from either ALTCS-EPD or ALTCS-DDD, depending on care requirements and medical problems.

As the name suggests, the EPD (Elderly/Physically Disabled) program of ALTCS deals with people over 65 and those with physical disabilities.

The ALTCS-EPD program provides beneficiaries with nursing care services and home and community-based services.

The ALTCS-DDD program caters to the need of applicants with developmental disabilities. We will not discuss ALTCS-DDD in detail here, as the guide focuses on the elderly and people with physical disabilities.

Age and physical disability are not the only two factors to qualify, so all applicants should refer to the financial and medical requirements of the Program.

Of course, not everyone who applies will qualify for ALTCS assistance. ALTCS is an entitlement program, but applicants must meet the two main medical and financial criteria to qualify. However, careful preparation and expert service from a Certified Medicaid Planner (CMP) can help individuals gain eligibility. An experienced CMP who thoroughly understands the ALTCS system and how it works will help with the preparations.

What Services Does ALTCS Pay For?

ALTCS pays for several medical and non-medical services. It also reimburses the program contractor for services such as Medicare cost-sharing, case management, long-term care, behavioral care, and EPSDT (Early and Periodic Screening, Diagnostic, and Treatment) services.

Remember that for the ALTCS to pay, the services you seek must be medically necessary and reimbursable by Medicare.

ALTCS services are provided to members in the below-mentioned settings:

  • Home
  • Nursing care facilities
  • Adult development home
  • Center for trauma and brain-injured people
  • Assisted living center (accommodation for one)
  • Adult foster care home

The following are some of the services that ALTCS pays for:

Medical Services

Arizona’s Medicaid program covers diagnostic and treatment services for specific health problems. In addition, doctor and hospital visits and particular treatments by specialists are also reimbursed by the Program.

The costs of some preventive treatments, therapies, and long-term care services like the following are also covered by ALTCS.

  • Lifeline alert
  • In-home nursing services
  • Adult day health (or group respite services)
  • Respite care and personal care
  • Home health aide
  • Hospice services
  • Respiratory care therapy, instrument, and other related services (ventilator-dependent members)
  • Physical, occupational, and speech therapies
  • Nursing home services
  • Rehabilitation and therapeutic services
  • Certain medical supplies and medical equipment
  • Nutritional and dietary services
  • Non-prescription pharmaceuticals
  • Emergency medical services and emergency transportation
  • Attending physician services
  • Certain group therapy services
  • Other services approved by the case (or care) manager and ALTCS

Non-Medical Services

In addition to the medical services covered, ALTCS also pays for a wide range of non-medical services that promote the beneficiary’s general well-being. Know more about ALTCS Covered ServicesThere is a wealth of information on our website. We like to say we wrote “The Book” on Medicaid in Arizona, which is available on “Amazon.” See our book, “The Complete Arizona Medicaid and Veterans Pension Guide.”

Some of these services are not medical, but they directly or indirectly support the long-term care of ALTCS members. These include:

  • Environmental modification to prevent injuries
  • Personal care services (bathing, dressing, feeding, and other daily needs)
  • Homemaker to manage the home (cooking, shopping, laundry, and cleaning services)
  • Recreational transportation
  • Companionship services

Case Management Services

Upon joining ALTCS, beneficiaries are allotted a case manager to work closely to assess the situation, identify requirements, and coordinate with service providers to fulfill the member’s long-term care needs.

The case manager stays in touch with the beneficiaries and regularly monitors and reassesses their needs. The case manager may provide the following services:

  • Review current medical health and care situation to develop an initial plan
  • Ensures all documents and reports are present for the creation of the care plan
  • Make sure the ALTCS member participates in preparing the plan
  • Gather inputs from your primary care physician and other experts while developing your care plan
  • Ensure the services are provided within 30 days of becoming an ALTCS beneficiary
  • Monitoring your progress and resolving problems regarding services if and when they arise

Who Qualifies for ALTCS Benefits?

Individuals must meet two requirements to be eligible for the Arizona Long-Term Care System.

Before the medical and financial assessment, ALTCS ensures the applicant fulfills the following conditions.

  • The applicant must be a resident of Arizona to continue residence
  • The applicant must be a US Citizen or a legal alien (Lawful Permanent Resident Alien)
  • The ALTCS applicant must be aged 65, have a nursing home level of long-term care, or be disabled. You’ll be considered aged if you’re 65 or older. Disability will be determined during the Pre-Admission Screening (PAS) process
  • The applicant must seek other benefits, such as disability or pension benefits. (for example, Veterans should have applied for Veterans Affairs (VA) benefits and Veterans pension benefits)
  • The applicant seeking ALTCS benefits must have a Social Security Number or apply for the same
  • The individual must live in a nursing home, HCBS facility home, or other institutional settings
  • The applicant must be willing to cooperate and provide all necessary documents to ALTCS.


Steve Dabbs

Steve Dabbs

Steve Dabbs is a Certified Medicaid Planner in Arizona. With over 35 years’ experience, Steve Dabbs has helped many people to get qualified for ALTCS. 

More than 70% 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 ALTCS is a very complicated process but Steve Dabbs can help you to get qualified for ALTCS through his Professional Value-Added Services which will save your Money and Time. 

Call us for Free ALTCS Consultation!

ALTCS Eligibility – Medical and Financial 

To meet the ALTCS 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 ALTCS approved.

What are the ALTCS Medical Requirements?

To meet the ALTCS Medical Requirements, an applicant must first undergo a medical assessment called the ALTCS 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 ALTCS 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. The following aspects of the applicant’s current health are considered:

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. The assessor will collect a detailed account of the applicant’s health condition. Reports by the applicant’s regular physicians are reviewed thoroughly.

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:


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.


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 wellbeing 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 numeral score is assigned to the application, and a score of 60 points or higher will be eligible for approval for ALTCS 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 get from ALTCS. Before applying for ALTCS 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.

How long does it take to qualify for ALTCS?

Even in the case of an error-free application, ALTCS 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 Free ALTCS Consultation!

Contact a Certified Medicaid Planner for Free ALTCS Consultation!

What Is an ALTCS Program Contractor?

People planning to apply for assistance often ask how Arizona Long Term Care System provides services to the beneficiaries?

ALTCS helps eligible applicants through Program Contractors. These are insurance companies entrusted by ALTCS to provide the services required by ALTCS 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 ALTCS 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.

ALTCS members have three different program contractors to choose from – Mercy Care, Banner Health, and United Health Care. These providers may change in the future.

All three contractors have a contractual obligation to provide care services to ALTCS approved members.

Although the ALTCS 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.

ALTCS 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.

Some ALTCS plans come bundled with certain restrictions (e.g., geographic restrictions). Thus, it is important to make sure the care home accepts the ALTCS 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.

In addition, applicants should gather information about the network of service providers before opting for an ALTCS 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 ALTCS program contractor under the name of Mercy Care Plan.

In addition to ALTCS, 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 contractor serves ALTCS members in Pinal, Pima, Gila, and Maricopa counties in Arizona.

Banner University Family Care (B-UFC)

Banner Health aims to provide ALTCS 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 ALTCS 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 ALTCS beneficiaries, the care managers get in touch with the members within 12 days of ALTCS enrollment.

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, planning for ALTCS 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:

  • Non-ALTCS long-term insurance is expensive and 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 ALTCS, it is important to plan well and well in advance. Poor planning has resulted in thousands being denied ALTCS benefits. Even those who are sure they meet the ALTCS eligibility criteria must prepare in advance, because ALTCS takes 2-3 months 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 for ALTCS – 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. Individuals can approach ALTCS for a private PAS via an application or phone call.

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 for ALTCS.

Ten Most Common Mistakes During the ALTCS 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, ALTCS can help cover the costs. Unfortunately, the ALTCS application process is tedious, overwhelming, and confusing to many.

For anyone planning to apply for ALTCS, 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 ALTCS 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 ALTCS 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 recap 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 2024 income cap is $2,829; 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 $141.45 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:

  1. Gather current statements of all income sources. Contact the payor to have a current month’s statement of benefits sent to you.
  2. Be prepared to provide various bank statements and explanations for any unidentified transactions that exceed $500 in any one month.
  3. 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 $18,000 a year without tax consequences. In this regard, ALTCS rules and federal tax laws do not align; moreover, the $18,000 limit is often misunderstood. Further, the 2024 lifetime limit is $13,610,000. Thus, unless you are gifting that amount, the $18,000 does not play a role in the taxation of the gift.

While gifting or transferring assets to be eligible for ALTCS is not illegal, it will make you ineligible for ALTCS for a certain 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 $7,867.16 = 15.25 (15.25 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 ALTCS can claim certain rights over the beneficiary’s home. The two special circumstances are a TEFRA Lien and the Estate Recovery Program.


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 $2,742, and out-of-pocket expenses and the rest of their income will be applied towards their care.

In contrast, ALTCS beneficiaries who are single and residing in a nursing care facility will save a lot less of their income.

They are entitled to just $141.45 as 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 $2,523 and not exceeding $5,046.

The spouse of a beneficiary is not duty-bound to pay for an ALTCS member’s care.


Medicaid/ALTCS 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 Appointme

Call us for Free ALTCS Consultation!