| HOW TO BECOME LEGALLY ELIGIBLE FOR MEDICAID WHILE PRESERVING YOUR WEALTH FOR YOUR FAMILY
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What is Medicaid Planning?
by Kevin Purcell Attorney at Law (440.331.5883)
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is estimated that one in two Americans will need some form of long-term
care sometime in his or her lifetime. With the cost of nursing home
care running $60,000 per year, this sobering statistic points to the
huge crisis American families are increasingly facing: the catastrophic
loss of all but a small portion of their assets due to confinement in a
nursing home.
Medicaid-eligibility planning employs legal
techniques which will allow you to keep a significantly higher
percentage of your assets, should the need for long-term care arise.
The
non-partisan Government Accounting Office reports that based on its
study, over 90% of Medicaid nursing home applicants had on housing
resources of $30,000 or less, and 85% had annual incomes of $20,000 or
less. It found the effect on Medicaid-eligibility transfers to qualify
for Medicaid represented a very small fraction of the overall cost to
the program.
Nonetheless, Congress significantly changed the
rules for Medicaid eligibility in February 2006, with the "Deficit
Reduction Act" (the "DRA"). This complex set of new laws now extend the
"look back period" that the government can count gifts against someone
made when determining that person's Medicaid eligibility to five years
(from the former three years). Very importantly for planning, the Act
also changes the time that a period of ineligibility begins to run,
from the date of transfer to the date a person is, essentially, both
out of his or her non-exempt resources and in a nursing home.
Contrary
to what some commentators have reported, the DRA did not make it
illegal to make gifts to your loved ones in order to qualify for
Medicaid, it just changed the way one makes those gifts, in order that
the gifts do not disqualify a Medicaid applicant for the program's
benefits. Most of the gift-giving strategies that were legal before the
passage of the Act simply will not work now. New strategies, however,
have arisen to take their place.
"Is it important that I have
an attorney represent me in this planning?" Absolutely! Medicaid law is
very technical, and with the passage of the DRA, it is more important
than ever that you have competent, legal counsel guide you through the
maze of federal laws and state regulations, to help assure that if you
are in need of a nursing-home level of care, you can legally qualify
for such care while not losing the nest-egg you spent your lifetime
accumulating to the nursing home.
Unfortunately, much law is
yet to be codified, leaving important legal issues to vary not only
from state to state, but from county to county! Proper legal
representation by an attorney who regularly practices elder law in your county
is essential. Let's consider this example: Frank has $250,000 in
assets. His health begins to fail, so he gifts this money this week to
his children. Many people think Frank will now be ineligible for
Medicaid for 36 months (i.e. three years) with the clock ticking down
from the date of the gift. Wrong. Under the DRA, Frank has made himself
ineligible for Medicaid for 56 months, and the 56 months does not begin
to run until Frank is out of all of his bank and other investment-type
assets and in a nursing home or in need of one. What a disaster! With
proper planning, potentially 100% of his assets could have
been saved with no ineligibility period at all.
IT IS ALSO IMPORTANT THAT YOU DO MEDICAID PLANNING WHEN YOU DON'T NEED IT! The
biggest single mistake most families make is to wait until a major
long-term illness strikes. By then, it will likely be too late to do
the necessary planning to save your assets for your loved ones,
particularly if the illness has made you mentally incompetent.
"What
about long-term care insurance?" Long-term care insurance is an
excellent product. It is far more likely that such insurance will be
used by you than, say, fire insurance for your home. If you are healthy
and qualify, you should speak to your insurance professional about such
insurance.
Under the new law, special annuities--called "Medicaid friendly"
annuities-- also are powerful tools to help someone achieve Medicad
eligibility while protecting his or her assets in a legal way. Neither
my law firm nor I, of course, sell any type of insurance or investment
products. Although we have saved 100% of a clients' assets for their
families through the use of our Mediciaid qualifying trusts (see
below), often times working with your insurance professional and using
long-term care insurance and "Medicaid-friendly" annuities help us to
achieve your Medicaid-eligibility goals..
In
fact, we
encourage you to bring your insurance professional to your attorney to
work together to create a plan that will work best for you. Every
situation is different, and we need to develop a strategy that will
work for you!
Our office is a strong advocate of the use of trusts to further
implement a comprehensive Medicaid-eligibility plan. (Please see our
article "Why Use a Trust?" which appears as a link on the left side of
our web site's home web page.) Once the tool of the rich and privileged,
we use specially-designed copyrighted trusts as a means to preserving
any sized estate for someone's loved ones while qualifiying for
Medicaid. We regularly lecture on this topic, so call our office about
our next lecture, or watch our "Upcoming Events" tab on our web site.
Elder law, however, is not just about saving your
hard-earned dollars to keep it in your family. It is also about
preserving your quality of life even if you are faced with the need for
nursing home level of care. I believe an elder law lawyer has an
important role to play as to this quality-of-life issue, as well: all
too often, people are placed in a unnecessarily restrictive environments!
Tragically, there are often many options other than a nursing home to
which a family does not avail itself, simply because they were not
aware of them. There are even government programs in Cuyahoga County
that can help a potential Medicaid applicant save his or her home! I
believe it is the role of the elder law lawyer to work with community
resource professionals to help the client achieve the best quality of
living, while at the same time exploring the legal options to save his
or her assets from being wiped out by the devastating costs of
long-term care for a catastrophic illness.
"How do I learn more?" Call us. Remember, only an "informed you" can take care of yourself and your family should you suffer a disability. Thank you.
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