Arizona Long-Term Care Planning

Last updated: August 21, 2026 Jurisdiction: Arizona

Arizona planning starts with the ALTCS income cap

Arizona’s most distinctive long-term-care planning feature is its Income-Only Trust, commonly called an income-cap or Miller trust. AHCCCS says the trust can allow ALTCS qualification when income is tested under the 300% Federal Benefit Rate gross-income test, but it can only receive the customer’s income and cannot receive resources (AHCCCS Income-Only Trust policy). The official February 2026 ALTCS chart states the individual 300%-of-FBR amount is $2,982 per month (AHCCCS February 2026 eligibility chart).

The policy adds technical requirements beyond merely opening a bank account. It says the IOT account must be established with all or part of current monthly income, must have a zero balance when established, and generally requires the income assigned to and outside the trust to be no more than the geographic private-pay rate, subject to a stated case-by-case hardship process (AHCCCS Income-Only Trust policy). Trust drafting and funding should be reviewed before income is routed.

Transfers and the home require separate analysis

Arizona’s look-back period is 60 months. For a nonexempt transfer for less than value, AHCCCS calculates a penalty using the private-pay rate for the customer’s geographic area at the first ALTCS approval, rather than a single statewide divisor (AHCCCS transfer overview; AHCCCS transfer-penalty policy). The penalty does not have a stated maximum length and can result in a limited service package instead of full long-term-care services (AHCCCS transfer-penalty policy).

Arizona allows a beneficiary deed effective at the owner’s death and revocable during life, but the statute keeps the transfer subject to liens and other encumbrances (A.R.S. § 33-405). AHCCCS estate-recovery policy describes claims against probate and small-estate property, not a beneficiary-deed safe harbor (AHCCCS estate-recovery overview). A deed, life estate, revocable trust, and irrevocable trust can have materially different title, tax, creditor, transfer, eligibility, and recovery consequences.

Spouses and Partnership policies can change the result

For a married ALTCS applicant with a community spouse, the 2026 Community Spouse Resource Deduction range is $32,532 to $162,660. AHCCCS calls this a deduction from the couple’s countable resources before comparing the remainder with the applicant’s $2,000 limit (AHCCCS 2026 CSRD examples; AHCCCS community-spouse information sheet). Community-spouse policy is mandatory when applicable even if the spouse does not cooperate with resource information, according to AHCCCS’s policy (AHCCCS community-spouse policy).

Arizona also has an operating Long-Term Care Partnership program. AHCCCS says it began July 1, 2008 and provides a resource exclusion equal to qualifying policy benefits paid before ALTCS application; an equal amount is excluded from estate-recovery collection (AHCCCS Partnership exclusion policy). The next step is to verify the particular policy rather than assume that every long-term-care policy qualifies.

Arizona planning sequence: identify the PAS and living arrangement, test income and assets, evaluate a compliant Miller trust if necessary, review five years of transfers at the county-rate rule, then coordinate deed, recovery, spouse, and insurance issues with counsel (AHCCCS IOT policy; AHCCCS penalty policy).

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Arizona planning starts with the ALTCS income cap

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