“A Failure to Plan is a Plan to Fail”. Benjamin Franklin
As we or our loved one's age, the possibility of long-term care looms in our consciousness. When the nursing home becomes a fact of life, issues of displacement, loss of independence, role reversals and in most cases the stark reality of financial ruin is thrust upon us as part of the nursing home experience. Catastrophe looms large for a family facing an $8,000-$10,000 per month cost for nursing home care.
Most people think that they will never go to a nursing home, however, according to statistics reported by National Public Radio one out of every three men will be in a nursing home before they die and one out of every two women will be in a nursing home before they die. While you may think you or your loved one will never go into a nursing home, more often than not it is a modern reality. It is a reality you should have a plan for.
When to Plan
The more challenging question for most of our clients is not “HOW” to solve the problem of paying for care, but “WHEN” to solve the problem when to begin to plan. What is not so clear though is the right time to plan for the nursing home. If we all had crystal balls and knew exactly when we would need nursing home care then we could all start planning at the perfect time.
We have found that the majority of clients will fall into one of three categories when it comes to Medicaid planning:
- The planner client (fixated on the future)
- The writing on the wall client (some indication that a problem looms ahead; Alzheimer’s, etc.)
- The emergency client. (already in the nursing home)
When planning for a nursing home stay, timing is a significant consideration. The sooner you begin to plan, the more options there are to protect the assets. Many different strategies exist to preserve the assets of the Medicaid applicant.
Each one of these three different types of clients has solutions to the dilemma of qualifying for Medicaid. As you might imagine though, the more time before the crisis occurs, the more you plan ahead, the more choice of strategies you have and the easier it is to solve the problem.
Paying the cost of long-term care has plagued American families for decades. The change in American demographics, the departure from the multi-generational household to a dispersed family, and the advances of medicine that enable all of us to live longer have created a crisis in care for the elderly.
How do you pay for this care?
Six Ways to Pay for Care
1. Private Pay
The first option is to pay from your own resources. We call this the Private Pay option. While there is absolutely nothing wrong with using Saved funds to take care of you or your family member, in all but the richest families, the cost of that care will wipe out those savings in short order. In cases where you fail to plan or take action, the war is over in short order with you as the loser.
One of the common myths connected with the option of private pay is that you need to pay privately to get the best care. This is just not the case. Private pay patients and Medicaid pay patients receive the same quantity and quality of care. There are actually strict federal rules that require the nursing homes to treat both private pay and Medicaid patients equally.
If the nursing home discriminates against Medicaid recipients, then the facility can lose its ability to participate in both the Medicaid and Medicare programs. Nowhere in the patient’s chart is there an indication of their payment source. The only people who know who is paying the bill are the facility’s billing staff.
The other common myth is that before you can qualify for Medicaid benefits you must spend all your assets on your care. Again, not true. While this kind of spend-down strategy will obviously get you to Medicaid qualification, it does so at the prohibitively high cost of all your assets. There exist many legal ways to obtain Medicaid eligibility that do not require you to spend all your funds on care. Read on.
2. Your Children or Other Family Members Private Pay
The second option, unfortunately, is one that we see far too often, is to have your children or other family members private pay. Without proper planning and the advice of a competent and qualified estate planning team, children and/or family members are thrust into the unenviable task of paying for the long term care (LTC) services. We have seen where this particular situation has caused the disintegration of even the most cohesive family units. This can and should be, avoided at all costs.
The third option used to pay for care is long-term care insurance. Insurance of any kind is a way to manage risk, whether, it be the risk of a fire in your home, or a car accident, or going into a nursing home. Insurance is a valid method of managing the risk of a stay in a nursing home. As with any
type of insurance, make sure that you have something to insure.
If your assets are only modest, spending thousands of dollars a year to protect your relatively small nest egg makes no sense. Long- term care insurance does not manage the risk of going into a nursing home but instead manages the risk of how to pay for the care without going bankrupt.
If you are close to, at or below the Medicaid eligibility asset numbers, you have no need for the insurance. Similarly, if you are way above the eligibility numbers, say over a million dollars in assets, you are effectively self-insured and may be able to manage the risk without using insurance.
Long-term care insurance has positive points but also some big negatives. The most often cited negative of long-term care insurance is its cost. If you ask someone why they have not purchased long-term care insurance the response is almost always, “It is too expensive.” Policies for the typical senior can run anywhere from $5,000 to $10,000 or more per person per year.
Seniors, living on a fixed income, are already worried about tight budgets, often do not see the value in long-term care insurance to pay for care. At some point in the future, they are trying to figure out how to pay for immediate expenses today. One of the positive aspects of using insurance is that it will often pay for more than just the nursing home.
Many policies today pay for other types of care, including home care and assisted living care. Long-term care insurance also provides a degree of certainty and peace of mind by solving the problem now instead of relying on a less certain solution in the future. If you do purchase long-term care insurance, make sure that you have enough coverage, not only for today’s cost of care but for what such care will cost in the future.
One of the most ironic situations I see as is when a person has insurance but only for a small daily amount. For example, if the policy pays $80 a day and the cost of care is $220, the $130 a day shortfall presents a significant problem. The person, despite having insurance, despite having paid premiums for years, will still have to use Medicaid to make up the $3,620 per month difference to pay for the care.
Talk about adding insult to injury. If you decide to buy insurance, a good rule of thumb for the amount of coverage you need in 2020 is at least $320 per day, with an inflation rider and/or what is called a future purchase option to keep up with the increase in the cost of care over time. The length of coverage should be no less than five years. Also, make sure that there is coverage for assisted living and home care, and that there is no prior hospital stay requirement.
4. VA Improved Pension Plus Aid and Attendance
The fourth way to help pay for care is by utilizing the little known VA benefit called the “Improved Pension plus Aid and Attendance”. This benefit is often referred to as the “underused benefit” or “the governments best keep secret”. If the Veteran, or their surviving spouse, meet certain criteria, they may qualify for this non-service related disability benefit. In many cases, this benefit may help to bridge the gap of the onerous expenses of LTC, until we can get the client qualified for Medicaid.
The fifth option to pay for LTC is Medicare which will only pay a limited amount of benefits if certain requirements are met. Medicare was created along with Medicaid to provide medical care for at least some citizens in our country. Both programs are the result of President Johnson’s unsuccessful attempt to create a national health care system.
Through various lobbying efforts, notably by the American Medical Association, combined with the political environment at the time, he was unable to create a universal health care system. What we ended up with was a split system, one system that paid medical expenses for the elderly, called Medicare, and one system, that paid medical expenses for the poor, called Medicaid. Oddly enough Medicare made no provision for the continuing payment of care in a nursing home. It was left to Medicaid pay for nursing home care.
The Sixth and final way to pay for care is by using the public benefits program called Medicaid. Medicaid is a jointly funded state and federal program that among many things, pays for nursing home care. It has its origins in the welfare system originally created in 1968 by President Johnson. Under the original Medicaid program, seniors would impoverish themselves, basically going on welfare to get the care they needed. Spouses would get divorced to get access to benefits. Assets would be exhausted and spent down to nothing.
Life savings would be wiped out paying for nursing home care until finally, the government would step in with some assistance. This “solution” often created more problems and required the person, usually an elderly individual, to reach poverty levels to be eligible for help. Recognizing that perhaps this was not the best way to take care of our aging population, President Reagan changed the federal law in 1986 to reduce the burden on our seniors and to keep them from impoverishing themselves.
This metamorphosis in the Medicaid law established new criteria to determine eligibility for public benefits. The new changes increased the number of assets a person could keep and still be eligible for Medicaid assistance to pay for care, eased restrictions on transfers and implemented new protections for the spouse of the Medicaid applicant. It was at this point that Medicaid effectively changed from a program focused on the poor too much more of a middle-class entitlement program more akin to Medicare.
Many people still believe that the Medicaid program is welfare; quite simply it is not. While Medicaid’s beginnings come out of a poverty program, it has evolved into our country’s answer to the pressing social problem that care in a nursing home presents.
The Medicaid law in 1986 was quite broad in its application. It allowed people to easily move assets to qualify for benefits. Since then there have been repeated changes in the law to limit and reduce access to Medicaid. There has been a steady swing of the legislative pendulum toward more and more restrictive rules designed to disqualify more and more people from accessing Medicaid benefits.
The greatest swing recently took place with the enactment of the changes to Medicaid contained within new federal legislation referred to as the Deficit Reduction Act of 2005. These draconian changes meant to all but kill off Medicaid. All the changes over time have created the convoluted legal structure that we use to determine eligibility for Medicaid benefits.
Qualifying for benefits is not as easy as “Let’s see your bank statement, okay, you’re under the limits... you get benefits.” Instead, there are look-back periods of five years, income caps and income trusts to get around these caps, transfer penalties and waiting periods, disqualifying transfers, exempt transfers, estate recovery taking family homes, good trusts and bad trusts, different rules for spouses and single applicants, even an asset is not an asset; it is either countable or not countable depending on individual circumstances.
Long-term nursing home care is expensive, averaging from $6,000 to $10,000 or more per month. More often than not, the family does not have sufficient income to pay for the ongoing cost of care and goes into what we call a negative cash flow situation.
This means that there is a steady and rapid depletion of the family’s assets as they are used up to meet the shortfall in income. The loss of assets is further accelerated and compounded if there is a spouse in the picture who is trying to maintain a life outside the nursing home. When the other spouse is still trying to survive at home, in the community, he or she has to maintain the home, pay everyday expenses as well as pay the added expense of the nursing home. Then, if the State pays any cost of care they can seize the family home through estate recovery.
The rapid drain on the family’s resources produces a bleak outcome: Complete depletion of assets, insufficient income to maintain the spouse still at home, and little or no inheritance to pass on to the children.
Why Protect Your Assets?
There are three main reasons why you might want to take action to avoid spending everything until it is gone.
Take care of the “WELL” spouse. The first reason to protect assets is to make sure that sufficient assets are maintained to take care of the spouse who is not in the nursing home. Husband and wife have usually combined their efforts throughout the marriage to create a pool of resources that they BOTH can draw upon to support both of them as they age.
When they run into the issue of long term care, suddenly these resources start disappearing into the nursing home leaving the healthier spouse without sufficient funds to maintain him or her.
Provide better and additional care. The second, and most overlooked reason, is to preserve the assets for the benefit of the person who is in the nursing home. By taking action to preserve the assets of the nursing home resident, you can then use those preserved funds to augment and supplement the care the person is receiving in the nursing home.
Those preserved funds can be used to pay for a private room instead of a shared room. The preserved funds can be used to pay for additional therapies, transportation or entertainment. Those funds can be used to pay for family members to fly in from distant cities to visit the resident. One of my favorite uses for the preserved funds is to pay for private duty nursing care to come in and provide one-on-one care for a few hours a day. All of these additional things benefit the resident and greatly improve their quality of life. None of them could be paid for without preserving the resident’s assets.
Leave a legacy. The third reason to plan is to preserve some form of a legacy for the children. You may have seen the bumper sticker that states, “I am spending my grandchildren’s inheritance.” Rarely though is this sentiment true.
An informal poll of our clients reveals the number one reason for saving their money is “...to give it to the kids.” I can’t tell you the number of times that a son or daughter of a client protest that they do not want mom or dad’s money. They miss the point. Whether they want the money or not is not
relevant. What is relevant is what mom or dad would want. Many times, we are dealing with the adult child of the Medicaid applicant and ask him or her, what would their parent say if he or she were sitting at my conference table? Would they want you to spend all their money on the nursing home if you had an option not to?
It is our intention that after reading these pages you will be less overwhelmed by the crisis the
nursing home can present. There are solutions to this seemingly unsolvable problem. With good planning and assistance, no one needs to be wiped out by the costs of long-term care.
In order to qualify for Medicaid, the applicant must meet the Medicaid program’s requirements for eligibility. The specific requirements the applicant must meet include (1) basic medical need referred to as a level of care, (2) age or disability, and (3) the financial situation of the applicant including the applicant’s income and assets. In order to be eligible for Medicaid, the applicant must satisfy all three requirements.
The first requirement is the medical need. This is the “Are you sick enough?” requirement. Medicaid requires that the applicant be unable to care for him or herself without substantial assistance. What degree of care or level of care is substantial enough? The person must have an impairment or illness severe enough to limit his or her activities of daily living to a point where a nursing home is the only appropriate placement. The specific standards used to determine if the medical need is present are:
- The need must require twenty-four-hour nursing care in a “skilled care facility.” A skilled care facility is one where professional nursing services such as physicians, respiratory therapists, audiologists, physical and occupational therapists are available.
- The person’s needs are so medically complex that he or she requires supervision, assessment or planning by a registered nurse.
- The person must need care daily.
- The person needs ongoing involvement of a registered nurse or other professionals in the individual’s medical evaluation and the implementation of a treatment plan.
- The person needs continuous observation to monitor for complications or changes in the status of his or her condition; and
- The care the person’s needs should not be of a degree, which would normally be provided by a hospital.
This first requirement is generally one of those things that you know when you see it. By the time I see my clients, the medical need requirement is usually a foregone conclusion and easily met. Generally, people do not try to place their loved one in the nursing home any sooner than they absolutely must.
Typically, we find that by the time placement is made, the caregiver has waited well past the point when they should have made the decision. Although in some situations, particularly when the person is suffering from a form of progressive disease like Alzheimer’s, the need for nursing home care
can sneak up on the family. The slow progression of the disease over time can make it difficult to know when to make the move to the nursing home.
The second requirement is age, disability or blindness. To be eligible for benefits, the applicant must be either over 65, be characterized as disabled, or blind. Disabled is defined as the inability to perform gainful activity for a period of time that is expected to exceed one year.
For example, a 60-year-old with Alzheimer’s would satisfy this requirement if Alzheimer’s disease sufficiently impairs his or her ability to work to such a degree that he or she is qualified as disabled. (Note that the person need not actually be declared disabled by the Social Security Administration or be receiving Social Security Disability payments.) A 70-year-old, on the other hand, clearly meets the age requirement and need not be disabled as long as he or she has the medical need and passes the financial requirements.
The general rule here is that the person needs to be 65 years old or older, however, the exception to this rule allowing disabled individuals under 65 to qualify makes this a particularly easy requirement to meet.
The third and final requirement is the financial requirement and it is the one in which most people are interested. It can also be the most confusing requirement due to the number of variables that must be considered and the special rules concerning moving assets and income. The financial requirement is further divided into two parts: The assets of the applicant and the applicant’s income.
We will address each aspect of the financial requirements next, starting with assets and then income.
To determine the exact amount of assets that the applicant may keep, we first have to know whether the applicant is married or single. The change in the Medicaid laws in 1986 had the effect of increasing the number of seniors who could qualify for the Medicaid program.
Congress was especially concerned with making sure that the spouse of the nursing home resident would not be forced into poverty. The amount of assets allowed for eligibility is quite different depending on whether we are talking about an applicant who is married or one who is single. Assets are broken down into two categories, countable and non-countable.
Some assets are counted and some are not when determining eligibility. This is an important distinction. Many applicants have assets that are non-countable and therefore do not negatively impact eligibility for Medicaid. For example, the first $500,000 of the value of the primary residence is not counted. The total value of the home of the Medicaid applicant, prior to 2006, was not counted as an asset. However, legislation signed by President Bush in February 2006 limits the protection for the home to the first $500,000 in value. The excess value will now be counted as an asset, potentially disqualifying the applicant.
It is important to know what an asset is. It is so discouraging for me to hear clients say that they have sold their home in a last-ditch effort to generate cash to continue paying for nursing home care. Why did they do such a rash thing? Because they did not know any better. Such ignorance of the law can cost your family dearly. I must stress that the primary residence is not counted as an asset. Exclude it (subject to the new $500,000 limitation) from your total assets when calculating eligibility. There are other types of non-countable assets, such as the car and a burial account, but usually none as significant as the home.
Be careful when determining which assets to count. Often, clients erroneously believe that a joint bank account is only treated as half an asset. This is not so, 100 percent of the asset is counted. Do not think that the other person on the account, your son, for example, can withdraw the bulk of the account and put it into his name; the law also specifically forbids this. Any transfer from a joint account is treated as if the applicant made the transfer thereby disqualifying the applicant.
Some assets, such as those you may have forgotten or don’t always associate with something that you actually own, can put you over the asset cap. A common example is that little life insurance policy you have been paying on for years. It probably has built up quite a nice cash value which will be counted as an asset.
The asset level requirement is not as easy as it would seem. Having too much income disqualifies the applicant who is over the cap even though he or she may have no other assets and no other means to generate additional cash flow. While the applicant may have a relatively high income, he or she may not be close to the amount required for care which often averages $8,000-$10,000 or more per month.
The applicant has fallen into what we call the Medicaid gap, too much income to qualify for benefits, too little income to pay for care. What can be done in this situation? Are you out of luck? Do you need to move to a state that doesn’t look at income? There is a better solution. Just as important as determining what is an asset, is identifying what is considered income.
At the risk of oversimplification, every source of income is considered countable income. Social Security, pensions, disability, VA benefits, interest income, non-taxable income, IRA distributions, annuity income (regardless of whether it is taken out of the annuity or not), dividends, and everything else that the applicant receives is considered income.
When a person is on Medicaid, his or her income is used to help pay for the care in the nursing facility. To qualify for and maintain eligibility for benefits, the applicant must pay for part of his or her care on an ongoing basis. This payment is called the patient responsibility.
The patient responsibility helps offset the state’s costs in providing care. Calculating the amount of patient responsibility is simple. The applicant contributes all of his or her income to the nursing facility minus a $60 personal needs allowance, increased by $30 if the senior is receiving VA benefits.
If there is a community spouse, then he or she can keep a portion of the income-based on his or her need. This is called the spousal diversion or minimum monthly maintenance income allowance. The exact amount due to the community spouse is calculated based on a formula. By whatever route, all of the patient’s income, except for a few small deductions for personal needs or a spousal diversion, must go to the nursing home.
Transferring assets violates the first commandment of Medicaid law; that “We can’t give our assets away to qualify for Medicaid benefits.” If the applicant has too many assets and wants to qualify for Medicaid, the tendency for most people is to give the excess assets away, usually to a family member.
The government will not allow you to simply give assets away to become qualified for benefits. There are very strict rules prohibiting gifts of assets to become eligible for Medicaid. Any uncompensated transfer or even an under-compensated transfer will disqualify the applicant from receiving Medicaid benefits.
Assets may be moved and preserved if done in a way the rules allow. It cannot be a gift or a transfer, but nonetheless, the assets can be moved, and if moved properly the assets become protected. This is the essence of Medicaid planning, the moving of assets to preserve and protect them without offending Medicaid’s rules.
It is not a crime to transfer assets to become eligible for Medicaid benefits although Congress has tried in the past to put you in jail for giving assets away. In January 1997, for example, legislation attempted to make it a crime to transfer assets to become eligible for benefits. This law came to be known as the Granny Goes to Jail Law.
The public outrage forced Congress to amend the law. Congress’s next attempt at Medicaid criminalization made it a crime for someone, even your attorney, to tell a client how to legally transfer assets in order to qualify for benefits. It was as if they were saying that while it was legal to transfer assets it would be illegal to tell anyone about it. The absurdity of such a law has been recognized by the courts and has been overturned for restricting constitutionally guaranteed free speech. Currently, the law is prohibited from further enforcement.
The most recent changes to Medicaid law under the Deficit Reduction Act of 2005, while not making it a crime to give assets away, make the transfer of assets fatal to Medicaid qualification. Generally, giving assets away disqualifies the person applying for benefits. If someone does give assets away, how long does the person have to wait before he or she can become eligible for Medicaid? This is the fundamental question for many people.
The law surrounding the transfer of assets has taken a dramatic turn against the interest of seniors. In February 2006, President Bush signed legislation that completely changed how people would be penalized for giving assets away.
The essence of the change is that, prior to the new law, the penalty period began running on the date the gift was made. Now, after the implementation of the new law, the Medicaid applicant is penalized from the date that he or she applies for Medicaid benefits after he or she enters the nursing home AND, but for the transfer penalty, would otherwise be eligible for Medicaid benefits. The implementation date is extremely important when accessing eligibility for Medicaid.
The amount of time the person has to wait for benefits to begin paying for care (the penalty period) is calculated by dividing the number of assets transferred by the average cost of care in a nursing home as defined by each state. This average cost of care figure, also known as the penalty divisor, does not usually reflect the actual current average cost of care but is simply a part of the state’s formula used to determine the ineligibility period.
Before the new law, if a person gave any assets away, they were disqualified for benefits starting at the date of the transfer. The transfer penalty clock started to tick when the money was given away. If the amount of the gift was not sufficient to result in at least one month of disqualification the penalty period was rounded down to zero months of disqualification. As a result, small gifts never disqualified an applicant.
Now, under the new law signed by President Bush on February 8, 2006, each and every gift a person makes, no matter how small during the five years before the person’s entry into the nursing home, are added together to create a “super transfer.” This super transfer is then divided by the penalty divisor to calculate the amount of disqualification time. The person is disqualified not from the date the transfer was made, but from the date he or she applies for Medicaid after entering the nursing home.
In other words, the penalty for giving something away is imposed when the person needs the benefits the most when they enter the nursing home. The transfer of asset penalty disqualifies the applicant only if he or she transfers assets within a certain period before applying for benefits.
This period is called a look-back period. There previously were two look-back periods; one that went back 36 months, the other 60 months. Under the new law, there is only one look-back period. Any transfer or gift made within 60 months prior to application must be disclosed during the application process.
The new look-back period starts at the implementation date but will take five years to be fully implemented. Any transfer that falls within the past 60 months must be disclosed at the time of the application for benefits. In the illustration above, if a $50,000 transfer was made 10 months ago, it must be disclosed at the time of the Medicaid application. Similarly, a transfer of $100,000 made 20 months ago must be disclosed. Whether or not the applicant is disqualified depends on when the transfer was made. Remember the transfer does not necessarily have to be one big transfer.
It can be an aggregate of all the transfers made by the applicant in the prior five years before the application. Transferring or giving assets away has been one of the most basic techniques used to qualify for Medicaid. Transfers under the new law, however, almost guarantee a denial. To successfully obtain benefits by an out-right transfer of assets, you must accurately predict the future. You must know when you will need to go into the nursing home. Such a prediction is usually impossible.
It is for this reason that we will rarely recommend an outright transfer of assets when assisting clients to qualify for Medicaid. Instead, we will utilize one or a combination of other strategies to obtain eligibility. These strategies reposition the client’s assets without the movement of assets being defined as a disqualifying transfer.
Key to Medicaid Planning
The goal of every good Medicaid planning strategy is to preserve the most assets while obtaining eligibility as soon as possible. To accomplish this you need to first start with an accurate assessment of the applicant’s assets and income. When long-term care becomes an issue it is often because the person can no longer provide for their care.
The same problems that put a person into a nursing home are often the same problems that remove his or her capacity to act on his or her behalf. There must be a plan in place before the loss of capacity occurs that appoints a “second in command.” The appointment is most often accomplished with a durable power of attorney.
Perhaps the most important component of Medicaid planning is a good durable power of attorney. A durable power of attorney is a document that grants authority to a designated person to act on behalf of another. The power of attorney functions to avoid the problems created when someone loses capacity. Without a power of attorney, no one is readily available to act on behalf of the incapacitated person. Once the person becomes incapacitated or incompetent it is too late to sign a durable power of attorney.
In cases where the opportunity to get a power of attorney has passed, a court-appointed guardian can act on behalf of the incapacitated individual. Setting up a guardianship is a time-consuming and expensive process. Even though a guardianship can be instituted, Medicaid planning done under the auspices of guardianship is more difficult and costly. Not just any power of attorney will do.
The tendency is to think that all powers of attorney are the same. They simply are not. In the context of Medicaid planning, the specific terms and limitations of the particular power of attorney document can have far-reaching effects. Many powers of attorney that we see either expressly, or by reference and incorporation of statutes, prohibit trust creation or prohibit or limit the ability to make gifts, sell homes, or access IRAs to name a few deficiencies.
A poorly drafted power of attorney may not allow you to do the things necessary to become eligible for Medicaid benefits. Specificity is the key to the power of attorney drafting; the more specific the better. The age of the document is also a factor. Older documents are more likely to be rejected than newer ones. The document needs to clearly describe what the attorney-in-fact can do. (The attorney-in-fact is the person who steps into the shoes of the incapacitated person.)
A broad language that states the attorney-in-fact can do anything that the person could have done if competent is not good enough. In most of our cases, we find that the power of attorney document is usually defective in some critical way that requires the document to be updated. Too often we see limiting language or the absence of language regarding the powers granted to the attorney-in-fact.
Make sure your documents are current and are competently drafted. Review your documents with an experienced elder law attorney before the loss of capacity ties your hands. Remember, after capacity is gone, so is the opportunity to get or fix a power of attorney.
We hope that by the time you reach this part of the article you have a better understanding of Medicaid and how it works to pay for the costs of a nursing home. You should know how Medicaid eligibility is determined, what is counted and what is not and lastly, you should have some insight into what can be done to become eligible for benefits.
Medicaid is a complex and convoluted system that is ever-changing and even though the Medicaid program seems to have strict financial requirements, the reader should now realize that there are options that can enable a family to qualify for benefits. Qualification preserves a large part, if not all, of the assets for the remaining family members as well as the person in the nursing home.
Planning to protect assets and obtain benefits for long term care takes careful consideration of the entire financial and legal picture of the applicant and spouse. The law of Medicaid continues to evolve. The most recent changes to Medicaid in DRA 2005 put seniors and their families even more at risk of financial catastrophe.
The changes to the transfer rules and the start date for disqualification penalties have the potential to disqualify every applicant from receiving Medicaid benefits. We have already seen some nursing homes reject the placement of potential residents simply because they reported making gifts in the last five years. At no time in the history of Medicaid is it more important to have competent guidance through this ever-changing area of the law.
Failure to plan will result in requiring that the assets be spent on nursing home bills until the asset eligibility levels are eventually reached. With proper planning, the spouse can keep the necessary funds to maintain a quality lifestyle and have assets left to ensure proper care for the person in the nursing home and maintain the potential inheritance for the family.
We realize that all of this can be overwhelming, rather undaunting and that everyone wants to make the right decisions to solve their realized and unrealized problems. It is our mission to walk you through this maze, with unmatched integrity and compassion, one step at a time, at your pace, and to protect and preserve as much of your hard-earned life savings as possible, to improve the quality of life of anyone receiving long-term care. We consider it an honor and a privilege to serve you.
James F. Malinowski
Attorney at Law