FREQUENTLY ASKED QUESTIONS
(very limited), 2) LTC Insurance (too few people have it), 3) Private Pay (what most people who do not plan will end up doing with their money), 4) Medicaid.
The lookback period is the time before the Medicaid application that Medicaid will look back to see if the applicant or the applicant’s spouse transferred or gave away assets for less than fair-market value. In 49 states this lookback period is 60 months; however, in California the state has dragged its feet on implementing the 36-month lookback required by OBRA 93 and the 60-month lookback required by the DRA of 2006 and continues to use the original 30-month lookback first introduced in the MCCA. Medicaid does not prohibit transfers during this period, it merely assesses a penalty period if transfers are made. Note: Medicaid only has a lookback period for transfer before an application for long-term care Medicaid and not for their community health insurance program.
Assets that can be owned and are not count towards the resource allowance when determining the amount the applicant must first spend down before being eligible for long-term care Medicaid assistance. The following are a common list of assets that fall under this description:
• Homestead – The homestead is exempt for a married applicant with a community spouse. If the applicant does not have a community spouse, the homesteads is only exempt if the applicant intends to return home and the home’s equity falls below the state’s equity cap. Many states require the home to be sold after a certain period of time when they presume the applicant is not going to return.
• Some Life Insurance – Term life policies are excluded and some small life insurance policies are excluded. States vary in the amount that they exclude. In most states, the life insurance must be less than $1,500 in face value to have its cash value excluded.
• Irrevocable Funeral Trusts – Most states allow for the purchase of a funeral or burial, provided it is in an irrevocable trust. State set limits on the amount that can be spent
on these pre-need funeral trusts, with the most common being $15,000.
• Personal Property – Medicaid will disregard personal property and belongings (e.g., clothes, furniture, etc.) provided that they are not considered investment-grade. The print of a Piccasso you buy at Wal-Mart would be excluded; buying an actual Picasso would not.
• Community Spouse Resource Allowance (CSRA) – For applicants with a community spouse, the spousal impoverishment rules kick in and protect a certain amount of resources for the community spouse. For 2016, the maximum allowable CSRA is $119,220. This amount adjusts annually. Many states use a formula to determine the amount of the CSRA. The CSRA can be made up of a wide variety of assets, but those assets are typically required to be re-titled in the name of the community spouse shortly after Medicaid is approved for the applicant.
This amount varies from state to state, with most states using the $2,000 asset limit. This goes by many names depending on the state, but is commonly known as the Individual Countable Resource Allowance. Some states increase this figure annually based on inflation. A state like Pennsylvania also gives an extra $6,000 disregard to single applicants who have low incomes. These paltry limits cause near complete financial devastation when a person need to pay for long-term care for any extended length of time.
Medicare is health insurance for people over sixty-five. It pays for hospital stays, doctor visits, and medical tests. It covers only limited skilled nursing care. Medicaid is health insurance for limited income people who meet certain economic criteria for eligibility – it does cover the costs of nursing care.
Medicaid Planning involves developing a plan to reallocate your assets in such a way that Medicaid will not take them into consideration when determining your eligibility for coverage. If nursing home care is needed in the future, you can qualify to have Medicaid pay for the cost of care, rather than depleting your own resources to cover these costs.
Medicaid eligibility is based on the amount of your monthly income and your assets. We are experts in Medicaid law and know how to ensure you qualify for coverage in the shortest time possible.
This question goes to the heart. Estate & Elder Law uses a trusts to ensure your assets will not be taken to cover the cost of nursing home care. Our trusts permit you to maintain full control and access to your income while ensuring your assets are not counted towards your eligibility for Medicaid.
Many people apply for coverage without any help. But beware – Medicaid will not tell you how to protect your assets. What we offers is its specialized knowledge, skill, and experience to help you follow all the proper application procedures, and handle all of the necessary legal correspondence with your local Medicaid office. More importantly, we offer a range of options for protecting your assets should you need nursing home care. We will see your case through to its conclusion and work hard to produce a positive outcome for you and your family.
We offer our services as per a specific fee schedule based on your particular needs. (Often times, once we become familiar with your personal and financial situation, we are able to protect your assets with less work than what was originally anticipated.) Our services are designed to pay for themselves over a relatively short time. For example, our Foundation Medicaid plan with Trust is approximately the same as the average cost of one month’s stay in a skilled nursing facility. By helping you obtain Medicaid qualification and protect your personal assets, this plan can effectively cover that amount many times over.
No, they cannot take your house, nor do they want to. This is one of the Three Myths Of Medicaid. While Medicaid does require the spouses of beneficiaries to contribute some portion their available assets (above a level determined by each state) to the cost of care, the federal Spousal Impoverishment Protection law excludes your family home from that calculation.
To put it simply, eligibility is based upon your ability or inability to pay long-term care expenses. Medicaid allows each state to establish specific standards for eligibility based on personal income and assets. The general standard is the applicants can be eligible for coverage if the couple’s “countable” assets (cash, investments, etc.) and income fall within state-designated limits. This calculation excludes the family home, car, certain limited life insurance coverage, and personal household possessions, such as clothing, furniture, etc.
No. This is one of the Three Myths of Medicaid. Under federal Spousal Impoverishment Protection rules, you can receive Medicaid benefits and retain your home, your vehicle, your household effects, and “countable” assets up to a state-determined maximum.
Power of attorney is a document that authorizes someone else to make legal decisions on your behalf in the event you are unable to make them yourself – decisions and actions such as paying bills, selling real estate, accessing bank accounts, and so on. There are several different types:
- Non-Durable Power of Attorney – Your designated agent is only authorized to make legal decisions for you until your disability. When disability occurs, the power of attorney terminates.
- Durable Power of Attorney – The legal authority is still valid after you become disabled.
- Springing Power of Attorney – This is a variety of durable power of attorney in which the authority to act is triggered by some future event, identified in advance, typically involving physical or mental incapacity.
Bear in mind that power of attorney documents are valid when signed, kind of like a blank check. One important goal of this designation is to provide specific instructions consistent with your estate plan, so that important planning decisions you have made cannot be undone through use of power of attorney. The standard statutory Power of Attorney used by most lawyers are insufficient to protect your assets or to do estate planning if you become incapacitated. It is critical your Power of Attorney contain the necessary language to authorize all authority needed. For more details, contact us today.
Simply put, effective estate planning is the best way to ensure that you will be able to control your property while you’re alive and well, provide for your loved ones and yourself if you become disabled, and leave your assets when you die to whom you want, when you want, the way that you want.
Every state has laws that govern what becomes of your assets if you die or become disabled. But the government also allows you to establish your own set of rules that supercede those laws, if you so choose. The process of establishing your rules is called estate planning. So, for instance, while the state may require your will to go through probate, you can choose to spare your heirs this sometimes drawn-out legal process. But you can only do it through estate planning.
No. Medicaid treats any asset with your name on it as yours unless you can overtly prove that the joint owner actually contributed assets to the account. To learn more about options for asset protection, contact us today.
No. If your children get into financial trouble, the assets become available to their creditors. If your children go through divorce, the assets may become available to their spouses through divorce settlements. If your children have health problems, the assets may be at risk, as well. In any case, by transferring your assets, you are losing control of them. For more information on asset protection options, contact us today.
No. It is never too late to protect your assets. The sooner you get started with Medicaid Planning, however, the more you can protect. Contact us today to find out more.
No. General rule of law holds that whatever you can access, others may access as well. Assets in a revocable living trust are open and available to you; therefore, they are also open and available to Medicaid. What would make your assets safe is an irrevocable living trust, These allow you to retain access to and control of your assets, while protecting them at the same time. For details on this and other Medicaid Planning Issues, contact us today.
It is a document that empowers someone else to make health care decisions for you in the event that you have lost the capacity to make those decisions yourself, due to some disability. Bear in mind that, in many states, the decision of whether or not to administer care to someone who is incapacitated automatically defaults to the physician, not the spouse…unless you have it in writing that you want someone else to have that power. Having Estate & Elder Law prepare a health care proxy for you is a good way to ensure that your decisions are being implemented by someone you trust…and that your specific wishes with respect to medical intervention are spelled out in unambiguous detail.
Not all trusts are created equal. Because our firm is a member of the Medicaid Practice Network, we are authorized to use the trademarked trusts developed for Asset Protection and Medicaid planning. These are unique legal documents that provide for the protection and preservation of your assets, with specific attention to the requirements of Medicaid qualification. Only MPN™ member firms can offer you the benefits of these trademarked trusts.
Richard B. Lutz is the principal partner at Estate & Elder Law, PLLC. Mr. Lutz has been a licensed attorney in Michigan since 1990. Richard assembled a group of experts in Estate Planning, Elder Law, Medicaid planning, and Asset protection.
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