Congress is continually making it more difficult to protect your home and life savings from expensive nursing home care. It’s difficult, but it’s NOT impossible! Here is a useful technique to protect your assets from Medicaid, called Care Agreements.
First, some background. Lots of times children and other family members provide care to help mom or dad stay at home. Maybe it’s driving mom to the doctor, or picking up groceries. Perhaps it’s more extensive, like putting out the medications every morning, or helping dad dress and bathe. And sometimes it may mean living with mom or dad because they can’t be left alone. This work can be hard, physically and emotionally. Yet, most times kids provide this help without expecting to get paid.
But here’s the planning tool. Plan ahead for nursing home care by paying a child or other family member for services provided. Here’s an example. Say dad has $100,000. His daughter has provided all kinds of care for years, for free, just because she’s a good daughter. When dad has to go to the nursing home, he can’t just give away his money to his daughter—that will be penalized. His entire $100,000 will go to the nursing home before he gets Medicaid. But if dad has planned ahead and pays his daughter for help, he could protect some or all of his savings. Let’s say he pays his daughter $4,000 a month for her hard work. In two years, his entire $100,000 would have gone to his daughter, not the nursing home. If he then goes to a nursing home, Medicaid will pay.
One of the tricky issues is setting the appropriate payment amount. It must be a fair amount for the services provided. You can’t pay a child $10,000 for one trip to the doctor. But you could call a professional caregiving service and get a written estimate for the care your parent needs, then use that to set your fee. Also, services must actually be needed by the parent.
The agreement needs to be formalized by a written contract drafted by a lawyer. Otherwise, Medicaid may say these are gifts, not payments for services. And gifts are penalized. Additionally, Medicaid won’t let you pay afterwards for services provided without a written contract. You can go forwards, but not backwards.
Most people are willing to pay their fair share for long term care. But you shouldn’t have to lose everything you’ve worked so hard for. A caregiving agreement is one of the many legal strategies that allow you to protect at least some of your life savings.
Showing posts with label Medicaid. Show all posts
Showing posts with label Medicaid. Show all posts
Wednesday, January 19, 2011
Wednesday, June 2, 2010
DO YOU KNOW WHETHER YOU NEED ESTATE PLANNING OR MEDICAID PLANNING?
Most people don't. I meet with clients all the time who come in thinking that they need to protect assets from the nursing home and find out they really need new Wills, Trusts and Powers of Attorney. Or, the other way around!
Estate planning is the process of providing for yourself and your family in the event of your retirement, disability or death. Through a properly-crafted estate plan, you put your legal and financial affairs in order so that the assets you have accumulated during your lifetime will be preserved and transferred to your heirs with the least amount of financial and emotional cost. The most common estate planning tools available include a Will, a Trust, a Durable Power of Attorney, a Health Care Power of Attorney and a Living Will Declaration.
This encompasses sitting down with your family to plan out some of the most important issues you face. For example, who will handle your affairs when you are incompetent or dead, how do you want to pass your assets to the next generation and what kinds of medical treatment you want OR DON'T WANT at end of life.
You also have to plan to avoid probate, minimize federal and Ohio estate taxes and not leave a mess for your family. Your plan will vary depending upon your family situation, assets and goals and plans for the future. The more your net worth, the more complicated and more important the planning becomes.
Medicaid planning includes many of the same things as you need for Estate planning. However, the main focus is on how to protect and preserve your assets in the event that you need long-term medical care. It can dove-tail with Estate Planning or it can be mutually exclusive.
Often Medicaid planning means trying to qualify for Medicaid benefits, the only government program that will pay for long-term care at home, in assisted living and especially in the nursing home. However, it is a welfare program. You cannot have much in the way of assets or income to qualify.
With nursing home costs running up to $100,000 per year, people need to plan early to legally preserve as many assets as possible. This may include spending your money on certain protected assets or even giving them away. The planning is not easy, and must follow the letter of the law in order to not run afoul of the many regulations that exist. The longer you wait, the fewer options that exist.
You also need to plan to avoid the state's rights to recover any remaining assets from your or your spouse's estate if you die after having received Medicaid benefits. Again, there is not an easy or clear-cut solution.
So, how do you know which kind of planning you need? And, how do you know what specific planning tools you need among the hundreds of tools available? You must to investigate all the possibilities. Please be sure to see a qualified Elder Law Attorney for assistance. He or she will assist you in focusing your Estate or Medicaid plan on your own personal needs and wants. One size definitely does not fit all with these issues!
Estate planning is the process of providing for yourself and your family in the event of your retirement, disability or death. Through a properly-crafted estate plan, you put your legal and financial affairs in order so that the assets you have accumulated during your lifetime will be preserved and transferred to your heirs with the least amount of financial and emotional cost. The most common estate planning tools available include a Will, a Trust, a Durable Power of Attorney, a Health Care Power of Attorney and a Living Will Declaration.
This encompasses sitting down with your family to plan out some of the most important issues you face. For example, who will handle your affairs when you are incompetent or dead, how do you want to pass your assets to the next generation and what kinds of medical treatment you want OR DON'T WANT at end of life.
You also have to plan to avoid probate, minimize federal and Ohio estate taxes and not leave a mess for your family. Your plan will vary depending upon your family situation, assets and goals and plans for the future. The more your net worth, the more complicated and more important the planning becomes.
Medicaid planning includes many of the same things as you need for Estate planning. However, the main focus is on how to protect and preserve your assets in the event that you need long-term medical care. It can dove-tail with Estate Planning or it can be mutually exclusive.
Often Medicaid planning means trying to qualify for Medicaid benefits, the only government program that will pay for long-term care at home, in assisted living and especially in the nursing home. However, it is a welfare program. You cannot have much in the way of assets or income to qualify.
With nursing home costs running up to $100,000 per year, people need to plan early to legally preserve as many assets as possible. This may include spending your money on certain protected assets or even giving them away. The planning is not easy, and must follow the letter of the law in order to not run afoul of the many regulations that exist. The longer you wait, the fewer options that exist.
You also need to plan to avoid the state's rights to recover any remaining assets from your or your spouse's estate if you die after having received Medicaid benefits. Again, there is not an easy or clear-cut solution.
So, how do you know which kind of planning you need? And, how do you know what specific planning tools you need among the hundreds of tools available? You must to investigate all the possibilities. Please be sure to see a qualified Elder Law Attorney for assistance. He or she will assist you in focusing your Estate or Medicaid plan on your own personal needs and wants. One size definitely does not fit all with these issues!
Monday, October 12, 2009
Medicaid Coverage For Expensive Nursing Homes At Risk in OHIO--The Rest of the US Better Watch Out!
If you or a loved one must enter a nursing home, be ready for some "sticker shock." The monthly cost for nursing home care can easily wipe out your life savings at a rate of $6000 to $9000 per month. The one governmental program available to cover nursing home costs is Medicaid. It is a federal health care safety-net program, administered by the states, to provide coverage for the middle class for long-term care costs. As a welfare program, it is hard to protect any of your life savings and receive Medicaid benefits.
Bank accounts, stocks, bonds, IRAs and even the cash value of life insurance policies are countable assets. A single person may keep only $1500 of assets in order to qualify for Medicaid. A married couple can keep a home as long as one spouse is living in it, and one-half of the countable assets, up to a maximum of just under $110,000 ( in 2009, this amount is indexed annually). The excess assets have to be "spent down." In the past, it was relatively simple to keep and protect these allowable assets from Medicaid. However, the state of Ohio has Medicaid regulations that make it terribly hard to obtain benefits in the first place and then pass the allowable assets on to children or other heirs.
For example, Medicaid lets a married couple keep a home as long as one spouse is living there. However, if at the time the first spouse enters the nursing home, the couple has their home in a revocable living trust (very common for probate avoidance and perfectly legal), the house is NOT exempt and becomes subject to spend-down. Additionally, assuming Medicaid is available for the nursing home spouse, if the healthy spouse dies first and the house is left back to the ill spouse, it will be lost to nursing home costs. Under previous Medicaid law, in order to protect the house, we disinherited the ill spouse and left the house to the children, without a problem. Now, Medicaid takes the position that the healthy spouse could have and should have left the home to the ill spouse. Therefore, if we use the same planning, when the home passes to children, it is as though the ill spouse GAVE AWAY the home and he or she is disqualified from getting Medicaid benefits for a period of time because a gift was made at death. In fact, Medicaid now even forces the house to remain in the healthy spouse's sole name as long as the ill spouse is receiving Medicaid. Any attempt to change the title during the lifetime of the ill spouse will create a gift at the time of the title change and disqualify the ill spouse from Medicaid immediately!
Another punitive regulation is the procedure when a mistake is made in the application process. Mistakes are common because, typically, the person in the nursing home cannot apply on his own. A family member is handling the application. In the past, mistakes were handled simply and easily. The caseworker allowed the spend-down of any additional funds and Medicaid continued. Now, when a mistake is made, the mistake is presumed intentional, Medicaid fraud has occurred and the person can be turned over to the prosecutor's office for prosecution.
Medicaid planning is very complex. Note that this article includes OHIO rules, and every state is different. In order to protect yourself and your assets, you need to consult an attorney who is well versed in Elder Law issues, including Medicaid eligibility. If you need help in Ohio, or for more information, please see our website at http://www.budishandsolomon.com/.
Bank accounts, stocks, bonds, IRAs and even the cash value of life insurance policies are countable assets. A single person may keep only $1500 of assets in order to qualify for Medicaid. A married couple can keep a home as long as one spouse is living in it, and one-half of the countable assets, up to a maximum of just under $110,000 ( in 2009, this amount is indexed annually). The excess assets have to be "spent down." In the past, it was relatively simple to keep and protect these allowable assets from Medicaid. However, the state of Ohio has Medicaid regulations that make it terribly hard to obtain benefits in the first place and then pass the allowable assets on to children or other heirs.
For example, Medicaid lets a married couple keep a home as long as one spouse is living there. However, if at the time the first spouse enters the nursing home, the couple has their home in a revocable living trust (very common for probate avoidance and perfectly legal), the house is NOT exempt and becomes subject to spend-down. Additionally, assuming Medicaid is available for the nursing home spouse, if the healthy spouse dies first and the house is left back to the ill spouse, it will be lost to nursing home costs. Under previous Medicaid law, in order to protect the house, we disinherited the ill spouse and left the house to the children, without a problem. Now, Medicaid takes the position that the healthy spouse could have and should have left the home to the ill spouse. Therefore, if we use the same planning, when the home passes to children, it is as though the ill spouse GAVE AWAY the home and he or she is disqualified from getting Medicaid benefits for a period of time because a gift was made at death. In fact, Medicaid now even forces the house to remain in the healthy spouse's sole name as long as the ill spouse is receiving Medicaid. Any attempt to change the title during the lifetime of the ill spouse will create a gift at the time of the title change and disqualify the ill spouse from Medicaid immediately!
Another punitive regulation is the procedure when a mistake is made in the application process. Mistakes are common because, typically, the person in the nursing home cannot apply on his own. A family member is handling the application. In the past, mistakes were handled simply and easily. The caseworker allowed the spend-down of any additional funds and Medicaid continued. Now, when a mistake is made, the mistake is presumed intentional, Medicaid fraud has occurred and the person can be turned over to the prosecutor's office for prosecution.
Medicaid planning is very complex. Note that this article includes OHIO rules, and every state is different. In order to protect yourself and your assets, you need to consult an attorney who is well versed in Elder Law issues, including Medicaid eligibility. If you need help in Ohio, or for more information, please see our website at http://www.budishandsolomon.com/.
Saturday, January 3, 2009
Today is my first post
Today is Saturday, and I am working on my laptop computer. I have been reading more about blogging and on-line marketing, and so now I take the leap into that.
I am an Elder Law attorney and I see so much fear in the eyes of my clients. I want to help everyone that I meet, and sometimes it's not possible. When someone comes in to meet with me, and they are able to sleep again at night after our planning meeting, it is really a good day. I just wish everyone would make an appointment.
I help people at a very bad time, when a spouse or loved one is ill, dying, going into a nursing home or just getting old. That is the majority of who I see. I help with estate planning, Medicaid planning, disability planning, probate, trust administration for lots of people.
I would like my blog to reflect my frustrations with "the system" and how people can be helped. See our website too: http://budishandsolomon.com
Subscribe to:
Posts (Atom)
Posts
