The seniors I serve in my practice all voice a very similar concern. They are terrified that they will need the services of a nursing home in their old age. For people who are fiercely independent, a nursing home represents not only a loss of personal freedom, but also a massive financial burden that can quickly erase the fruits of a lifetime of productive labor. Nursing homes around the country vary in terms of quality and price, but a recent industry wide study found that the typical price of a nursing home’s semi-private room was $222 per day and that the typical senior stayed in a nursing home for 835 days. For those requiring Alzheimer’s care and higher levels of individualized attention, nursing home costs can easily exceed $90,000 per year. That is going to scramble a nest egg of almost any size. This is when our Medicaid Planning services are most needed.
Deliberate advanced planning can help you preserve your estate and care for your spouse in the event that you need expensive long term care. If long term care insurance is out of the question and you anticipate relying at least in part on Medicaid to fund your long term care, you should speak to an elder law attorney to see what options are available to protect your assets while guaranteeing your care. Still not convinced? Here are five things an elder law attorney can help you accomplish while protecting your assets:
Qualify for Medicaid and Pre-Pay Expenses
For those who are on the cusp of qualifying for Medicaid, pre-paying certain expenses has the dual benefit of reducing qualified assets and paying off known expenses. Pre-paying for known expenses, like funerals, burial plots, and other long term home care expenses permits you to “spend down” the assets that are stopping you from qualifying for Medicaid now while making sure you are not burdening your loved ones when you do pass. An elder law attorney can help you identify what you can pre-pay and retain Medicaid eligibility.
Guaranty Financial Support for Surviving Spouses
Federal law ensures that you can provide for the “monthly maintenance needs” of your spouse while preserving Medicaid eligibility. It creates an allowance that ranges from approximately $2,000 to nearly $3,000 a month. This allowance lets you shelter income that Medicaid would rely on to deny your benefits when those assets are used to provide for your spouse’s long term financial care.
Determining which assets can be sheltered by this allowance and which will stop you from claiming Medicaid benefits is a challenging task and it depends on the nature of your family and a slew of other questions. An elder law attorney providing Medicaid planning services for you can help you take basic steps, like moving cash from a savings account to an annuity that names your spouse as a beneficiary, that will reduce your current financial strain and preserve your wealth over the long haul.
Elder law attorneys can also help you identify which assets are totally exempt from Medicaid’s qualification calculation. Assets like some cash value life insurance plans, personal property, a primary automobile, and certain jewelry are not held against a person who is applying for Medicaid. Knowing what assets are holding you back and which you can safely hold on to ensures both your eligibility and ability to leave a wonderful gift to your heirs.
Provide for Special Needs Family Members While Protecting Your Final Wishes
Irrevocable trusts are powerful tools that can help you qualify for Medicaid and preserve your assets. When created early on in the estate planning process, an irrevocable trust can shelter your assets, provide for the long term needs of your spouse, and create a legacy that will pass to your heirs. That it does all of these things without compromising Medicaid eligibility is what makes them such a profound long term care planning tool.
A Medicaid Qualifying Trust has to be created before the applicable look back period begins and it must comply with specific Medicaid eligibility, tax, and trust guidelines. The complexity of these instruments is worth it for some and is just another reason why an elder law attorney deserves a seat at your planning table.
For people planning for long term care while providing support for special needs children, the prospect of moving to a nursing home is especially daunting. If you are in this situation you can still provide for your family’s unique needs by funding a special needs trust to make sure your children are cared for when you are gone. Like Medicaid Qualifying Trusts, these special needs trusts can be complex and have major consequences if formed or maintained improperly.
Stay in Your House Longer
By taking an early and critical look at your assets and making some early changes, you could stay in your house longer – especially through programs like the CDPAP. States are increasingly allowing Medicaid funding to go to providing home health care. For many, the difference between years in a nursing home and years at home is the presence of a qualified home health aid. Because Medicaid does not consider your primary residence’s value in considering eligibility and will not go after your home’s value once you pass, this exemption means that you can likely leave a gift of equity to your heirs if things are handled properly.
Protect Your Heirs from Lawsuits
If qualifying for Medicaid was as simple as giving your family members and close friends all of your assets or selling things off for $1, everyone would do it! To stop people who would not otherwise qualify for Medicaid from claiming benefits, the system reserves the right to deny people who give away assets benefits and can sue an estate when benefits are improperly paid out. This could result in your heirs getting less of an inheritance and the government taking more of your money.
49 of the 50 states look at transfers made within 60 months of applying for Medicaid. California, the sole exception to this lookback period, only considers transfers made within the past 30 months. An experienced elder law attorney can add value to the gifts you give by ensuring that transfers are properly detailed and are structured to avoid Medicaid disqualification. While there are many techniques one could use to avoid disqualification, your attorney may advise you to make use of an exemption that allows Medicaid recipients to give their homes to adult children who provide substantial home care to their ailing parents. Simply adding your child’s name to the deed could have major tax and Medicaid eligibility consequences, but if done properly it would be smooth sailing.
Contact an Elder Law Attorney Today
While there are a few hard and fast rules concerning Medicaid eligibility planning, every client’s situation is unique and requires deliberate consideration. To create an individualized action plan with one of our qualified attorneys, click here to contact us and make an appointment.