Coming to terms with the prospects of your loved ones aging is not a simple and enjoyable task, especially when you are the one responsible for making the most efficient medical and financial decisions for them. Not only are you tasked with these complex decisions, but you are also responsible for finding the best ways to protect your loved one’s assets from a nursing home. In order to make this process simpler and give you more time to spend time with loved ones, rather than worrying about legalities, an Elder Care Attorney can assist in the procedure. Around 73 percent of individuals over the age of 65 will need long-term care, thus is it quite logical to make decisions concerning this care prior to the individual reaching the specified age. Participating in the long-term care planning process early will give you the opportunity to consider which facility will best cater to your loved one’s individual needs. This will also give you the opportunity to plan your desired payment method for all of the medical and care expenses. There are various procedural strategies that can be followed to guarantee that your assets are being protected from a nursing home.
Strategy #1: Asset Protection Trusts
An Asset Protection Trust is a great way to preserve your assets when applying for Medicaid, as it allows you to maintain your wealth while still receiving coverage. This is helpful because a Medicaid applicant is only eligible for convergence if they meet the specified quantity of assets held within their account. Many individuals fall into the assumption that the best way to remove the additional assets that prevent them from getting Medicaid coverage is to transfer the assets to family members. This approach, however, is extremely flawed and risky because it often results in a Medicaid penalty. Incurring a penalty prevents you from receiving coverage for a specified period of time. A trust allows you to disperse these assets to the family members you had in mind at the time of creating a trust. The beneficiaries will not be subject to the payment if capital gains tax based on the increase in quantitative value your assets have accrued over time. It is important to note that transfers to a trust are still subject to the Medicaid Lookback period,which tends to include the last five years of your assets. This strategy is extremely effective when it comes to protecting your assets from a nursing home, while still receiving the coverage you are in need of.
Strategy #2: Income Trusts
Similarly to the Asset Protection Trusts, Income Trusts serve the purpose of protecting your assets and keeping your monetary income safe. This trust aids in maintaining the income limit set for all Medicaid applicants. Qualified Income Trusts and Pooled Income Trusts are beneficial towards those applicants that exceed the qualifying amount. These trusts give the applicant an opportunity to designate a sub quantity of their income to a specific trust in order to refrain from exceeding the standard acceptable quantity. The Qualified Income Trusts are irrevocable meaning they cannot be changed or removed. They serve as holding areas for the applicant’s excess income and protect this income from being taken by nursing homes. In states that allow applicants to spend down their excess income, these trusts are less effective, yet can still be utilized based on the applicant’s preference. In order to qualify for Medicaid many married couples must participate in the Spend-Down process, which pertains to the prospects of saving assets when only one spouse needs Medicaid. The purpose of this process is to ensure that the individual in need of long-term care receives the aid they need, while also guaranteeing that their spouse has the financial means of remaining in their home and covering the cost of all their living expenses.Pooled income trusts also happen to be irrevocable, however they specifically aid disabled applicants. The excess income is pooled together and is then cared for by a non-profit organization. This organization takes on the role as the trustee, meaning they are responsible for disbursing the funds.
Strategy #3: Medicaid Compliant Annuities and Promissory Notes
Oftentimes individuals require urgent long-term care services, however they have recently conducted a transfer of assets or are still in possession of the assets that limit the income cap they require to qualify for Medicaid coverage. There is no way to remove these assets in time to qualify for coverage because any movement of the assets will result in a Medicaid penalty.
The only options left to qualify for coverage under such short notice and with exceeding assets present would be to write an annuity or promissory note. This would serve as an insurance product that would payout the income. First, you would make an investment into the annuity. Then, the insurance provider would return your income by using a constant stream of income approach. The annuity has specific qualifications to ensure that Medicaid will approve of the strategy. The annuity must be fixed with all monthly payments being the same, while also being irrevocable. The annuity is unassignable meaning it cannot be transferred or sold to another individual. The payments on the annuity must be immediate in order to qualify for coverage.
Strategy #4: A Caregiver Agreement
A care agreement is beneficial to individuals who require additional services that will not be included within the mMedicaid coverage in a nursing home. This option is great for individuals who would prefer to be cared for by a family member or a trusted close friend. You would not only be cared for by an individual you already know and have a close relationship with, but you would also be benefitting the caregiver for their service. The caregiver will be paid for their duty in caring for you and you will receive the best care possible. In most cases the caregiver would be paid for their services in advance under a contract that defines the services provided and the hours being worked. In the case that the patient passes away all of the unearned funds must be paid to Medicaid in correlation to the amount that Medicaid paid for the patient’s care. A Caregiver Agreement can be the best option for numerous individuals who do not wish to leave home and go into the care of a nursing home.
Strategy #5: Spousal Transfers and Spousal Refusal
According to Medicaid laws transfers may occur between spouses without being subject to the five year look-back period. The assets who are under the name of the spouse in need of care should be transferred to the name of the spouse who doesn't require care. The spouse who is not in need of care is typically referred to as the community spouse. With the presence of spousal refusal, the community spouse may refuse to provide necessary support to the spouse in need of care. If this is the case, then the spouse who is in need of care will immediately be provided Medicaid services to ensure that they are provided with all the care necessary. Medicaid may then require the community spouse to make contributions even though that spouse initially refused to provide the necessary support. The community spouse will still receive a benefit because the reimbursements to Medicaid will be at specified discounted rates. Spousal refusal is present in New York and Florida, however it may not be present in other states.
With the aid of an Elder Care Attorney, nursing homes and other senior housing options become affordable even for individuals who did not allocate money specifically for elder care. Government programs can provide assistance to elderly in financial need of aid. This government aid will come in the form of Social Security, Veteran’s Benefits, Medicaid, and various state programs. Additionally, there are insurance coverage options for those who do not qualify for government aid. These insurance options pertain to Medicare, Medicare Supplement programs,and Short-Term Care Insurance. There are potentially private assistance options, such as certain nonprofits and foundations that aid elderly in need of care. Once you have a senior housing option in mind, it is a great time to start thinking about the medical and financial power of attorney. A durable power of attorney allows an individual to make decisions for the benefit of your loved one in regards to financial and medical concerns over their well-being. This allows documentation to stay in place even if the elderlt loved one becomes incapacitated and is unable to make decisions independently. This individual is in charge of paying your bills, managing your assets and investments, and directing your medical care when you are unable to do so yourself. The medical power of attorney establishes your loved one’s plans for healthcare, such that the agent will work with medical professionals to ensure the individual is cared for in a manner in which they personally prefer. The financial power of an attorney gives an individual the ability to make financial decisions involving real estate and more. The agent can be responsible for depositing Social Security checks, managing tax returns, and other fiscal tasks. An esteemed Elder Care Attorney will assist you in completing these documents, as well as selecting the designated agent and specified senior housing. All the while, the attorney will guarantee that your assets will remain protected from the nursing home.
For further Medicaid eligibility information please contact the Law Office of Inna Fershteyn at 718-333-2395 to effectively protect your assets from nursing homes.