How to keep your money within

How to keep your money within

How to keep your money within

Planning for your future is imperative for preserving and passing on your wealth. An estate plan will not only allow you to secure your earnings for your loved ones but also save money in estate taxes. When leaving an inheritance, your heirs may be subject to various estate taxes and fees associated with passing on assets. The idea of estate planning may seem unnecessary to some, whether due to non-marital status, not having children, or a perceived lack of assets. However, these are misconceptions that underestimate the value of your estate. Everyone, regardless of their family situation and finances, has an estate that can benefit from estate planning services. By seeking the expertise of an experienced estate planning attorney, you can preserve your estate, retain its value, and strategically plan for the future.

How to Keep Your Money Within the Family with Estate Planning

Why is estate planning significant? An estate plan enables you to decide who will inherit your assets, how they will be distributed, make plans for your funeral and burial, as well as select guardians for your children. For individuals in single households without children, spouses, or living relatives, estate planning becomes even more crucial as you need to consider the future of your assets and healthcare. Planning ahead ensures you are prepared for any sudden life changes.

Initiating a Trust

For individuals with substantial estates or concerns about their heirs' responsibility with inheritance, creating a trust and appointing a trustee for asset distribution is critical. There are many ways to set up a trust, but an irrevocable trust provides the most tax benefits. In an irrevocable trust, the money no longer belongs to you but to the trust itself, which protects it from estate taxes. Another way to ensure your money stays within the family is by setting up a dynasty trust, which safeguards the money within your estate for future generations and shields it from divorce, lawsuits, and creditor claims. In New York state, a dynasty trust remains effective for another 21 years after the death of the last person for whom the trust was created. This trust not only avoids estate taxes but also the generation-skipping transfer tax.

Retirement Accounts to Roth Accounts

Leaving heirs with traditional 401(k) or IRA accounts can result in substantial tax bills. Under current laws, non-spouse heirs are required to withdraw all the money within the account within a ten-year span, potentially leading to higher taxes due to the increased taxable income. Converting traditional accounts to Roth accounts can help avoid these tax burdens. While the amount converted is subject to regular income taxes, withdrawals from Roth accounts are tax-free, providing long-term tax savings.

Plan for Long-Term Care Expenses

Long-term care expenses can significantly impact your assets and financial well-being. Incorporating long-term care considerations into your estate planning can help mitigate these costs. One effective strategy is to explore long-term care insurance options that provide coverage for medical and care expenses in the event of a chronic illness or disability. Additionally, Medicaid planning allows you to structure your assets and income in a way that qualifies you for government assistance while preserving your estate. Setting up trusts, such as irrevocable Medicaid trusts, can protect assets from being counted for Medicaid eligibility purposes. Proactive planning for long-term care expenses safeguards your assets and ensures that you receive the necessary care without depleting your estate.

In conclusion, estate planning is a multifaceted process that can save you money and provide financial security for your loved ones. By considering the various aspects of estate planning, such as trusts, retirement account conversions, and long-term care planning, you can strategically manage your assets, minimize tax liabilities, and protect your estate. Consulting with an experienced estate planning attorney is crucial to ensure that your estate plan is tailored to your unique circumstances and goals. Take the first step in securing your financial future by contacting the Trust and Estate Planning Office at (718) 333-2395.

Unlocking Hidden Benefits: How Medicaid Expansion is Changing the Game for Veterans’ Health Care

Unlocking Hidden Benefits: How Medicaid Expansion is Changing the Game for Veterans’ Health Care

Unlocking Hidden Benefits: How Medicaid Expansion is Changing the Game for Veterans’ Health Care

Veterans of all branches of the United States military have throughout the country’s history endangered themselves and sacrificed huge amounts of time and energy to ensure that the freedoms all American citizens enjoy are protected. Committing to service in any branch of the armed forces means leaving one’s family and friends behind to fulfill contractual obligations. The United States, with gratitude for the sacrifices made by service men and women and their families, has created many organizations to provide services and benefits to both active duty and retired members of the armed forces, chief among them the United States Department of Veterans Affairs. These organizations provide a variety of services to veterans and their families, such as health insurance, mental health care, tuition subsidies, and home loans. Many veterans, however, are not aware or are not disclosed the full scope of services and benefits available to them, including those provided by the Department of Veterans Affairs. Many veterans are further unaware of the benefits available to them through Medicaid, particularly for those who struggle to find civilian employment or are unable to make ends meet. Consulting with an experienced Medicaid planning attorney will help you and your family understand the benefits available to you as a former service member and ensure that you receive the support you have earned for your many sacrifices.

Veteran Access To Medicaid

Brief Overview of Medicaid and Department of Veterans Affairs Benefits

Medicaid is a federal and state run program that ensures health insurance coverage for low-income families. Medicaid also provides health care-related services and benefits such as transportation and outpatient hospital care. The Department of Veterans Affairs, or VA, is a branch of the federal government that provides lifelong health care coverage for veterans and their families. In addition to health care services and coverage, the department provides home loans, pensions, disability compensation, tuition subsidies, life insurance, and burial services. It is important to note that VA benefits are available for both uniformed service members and veterans and their spouses, children, and parents. 

How The Expansion Of Medicaid Has Impacted Veteran Enrollment

Following the passage of the Affordable Care Act (ACA) and the implementation of the ACA Medicaid expansion in 2014, veteran access to Medicaid coverage and benefits increased, leading to better access to health care and improved outcomes. This is especially important because according to the Kaiser Family Foundation, about 10% of working-age veterans receive Medicaid, with a further 40% of those having Medicaid as their only health coverage. The 2014 ACA Medicaid expansion to include adults earning up to 138% of the poverty threshold made many adults newly eligible for the program in the 32 states that adopted the expansion, including New York. The results are staggering, as according to nine Health Care For The Homeless Projects, states that adopted the Medicaid expansion have a 55% share of veterans covered by Medicaid, as compared with a 5% share of veterans in states that did not adopt the Medicaid expansion. 

Why Medicaid Is Crucial For Veterans

According to a 2021 estimate from the Census Bureau's American Community Service, there are about 16.5 million veterans in the United States. When returning from military service, veterans must reintegrate back into civilian life, a challenge for many. Many veterans return from active service with a disability, long-term injury, or multiple crippling conditions. Over time, veterans may develop alcoholism, drug addiction, or a multitude of mental health issues relating to PTSD or other service-related injury. Most of these issues require long-term care, whether it's physical therapy to adjust to a prosthetic limb or psychiatric interventions to help combat suicidal thoughts or PTSD-related instability. In these cases, Medicaid plays a crucial role in providing coverage to veterans that might not otherwise be insured. Medicaid also helps to supplement Medicare or private, VA, or military coverage for roughly 60% of working-age veterans in order to reduce the out-of-pocket or copayment cost. According to 2022 Point-In-Time Count, 33,136 veterans lack access to other forms of coverage and tend to have higher rates of disability, chronic health conditions, alcoholism, and drug abuse.

Conclusion

Most veterans qualify for VA, however there are instances where a veteran either is not eligible for health-related VA benefits or simply lives too far from a VA facility to receive treatment. Other veterans might not apply for VA or Medicaid benefits because they do not know the potential benefits they are eligible for or believe they do not qualify. It is vital for veterans planning for health care coverage and other services and benefits upon returning to civilian life or retiring from active service to understand that there are many programs available to them to gain the coverage and services they need. One can also qualify for VA and Medicaid benefits simultaneously, so it is important to understand the process of applying and qualifying for both and how each program applies to specific expenses. With the end of the Federal COVID-19 Health Emergency 2023, yearly Medicaid renewal has resumed and changes in the eligibility and waiver process have occurred, making understanding potential Medicaid coverage and benefits more complex. In this case, having an experienced Medicaid planning attorney will help to understand what benefits are available to you and your family and how to ensure that you qualify for the program without running afoul of new Medicaid and Medicaid renewal regulations. To schedule a consultation to help ensure coverage for you and your family, call the Medicaid Fraud Attorney at (718) 333-2395.

Navigating the New Retirement Landscape: Social Security, Medicaid, and Financial Planning for a Secure Future

Navigating the New Retirement Landscape: Social Security, Medicaid, and Financial Planning for a Secure Future

Navigating the New Retirement Landscape: Social Security, Medicaid, and Financial Planning for a Secure Future

With prices and inflation rising as a result of the COVID-19 pandemic, disruptions in global supply chains, and the war in Ukraine, more retirees than ever before are returning to work. Some might find their retired life unappealing, while others feel their expertise can still be shared. The majority of retirees, however, are returning because they simply cannot make ends meet. As the cost of healthcare, housing, and basic necessities rise, many find that their savings or monthly income are insufficient to support their daily costs. This does, however, raise questions about Social Security and Medicaid. Those of full retirement age might be eligible for Social Security and Medicaid benefits, depending on a variety of financial and health-related factors, but those who return to work do run the risk of having their benefits reduced or taken away depending on their income and any private coverage they receive from a place of employment. Planning for Social Security and Medicaid are important factors to consider when drawing up a retirement plan, as qualification for benefits can be tricky to determine and acceptance into either program is not guaranteed. Financial planning, including asset protection and estate planning, are also important when considering retirement, as planning ahead with realistic goals in mind will help avoid future financial hardship or the feeling that one is a burden to their family. Consulting with an experienced elder planning attorney will help inform one’s planning, such as an appropriate retirement age or monthly saving’s goals.

planning for a comfortable retirement

Social Security and Medicaid

Upon reaching full retirement age, currently calculated as between 65 and 67, qualified retirees are eligible for Social Security retirement benefits without any deductions based on current earnings. Similarly, qualified retirees of full retirement age are eligible for Medicaid benefits based on income methodologies employed by the supplemental security income program of the Social Security Administration. Qualified individuals may begin collecting social security and Medicaid benefits before full retirement age, although coverage will likely be reduced unless their qualification is not dependent on age. Social security and Medicaid provide, among other things, health coverage, disability insurance, and assistance with the cost of prescription drugs. One can begin receiving partial social security benefits before their full retirement age, but their partial benefits will be reduced based on the Social Security annual earnings limit, currently set at $21,240. These reductions continue until the month before a person reaches full retirement age. 

Returning to work after retiring is a tricky prospect because this may affect one’s qualification for partial or full social security and Medicaid benefits. Income is a key factor when determining the coverage and benefits a retiree is eligible for from both Social Security and Medicaid. While social security benefits are not deducted for current income about full retirement age, the benefits are aimed at those of lower income or without any stable income stream. In the case of Medicaid, yearly household income is a key factor in determining one’s eligibility, so any income above thresholds for eligibility set by Medicaid may result in one having some or all of their coverage taken away. Going back to work after retirement, especially for those above their calculated full retirement receiving social security or Medicaid benefits, is not a prudent financial plan, even if a job provides better health coverage.

Financial and Estate Planning for Later Life

Medical emergencies, long-term treatment costs, and prescription drug costs are, among other physical considerations, a reality for most retirees. There is also the simple fact that retirees will, for the most part, still be paying their bills for housing, groceries, and electronics, among other things. Even with help from family, and the benefits and coverage provided by social security and Medicaid, retirees will increasingly find themselves with bills they cannot afford to pay. Planning for retirement, therefore, is a key aspect of ensuring that one’s later years are spent comfortably and without the stresses of potentially having to return to work or becoming a burden on family. 

Planning for things such as Medicaid coverage are best done before one reaches their full retirement age. Protecting one's assets and creating an estate plan will also be of great help when determining a plan for retirement, as an experienced estate planning and asset protection lawyer will help one to ensure they have a steady income for retirement and still qualify for Medicaid coverage. Social security and Medicaid are tools to help you in your later life, but comprehensive estate plans are important to ensure that you have a plan for emergencies. 

You have worked your entire life to ensure that your later years are spent enjoyably and that you can leave a financial legacy to your family, so ensure that you engage in retirement planning as soon as possible. To speak with New York’s most experienced elder planning attorney, please call the Trust and Estate Planning Law Office at (718) 333-2395.

Estate Planning Secrets for a Blissful Retirement Under the Older Americans Act

Estate Planning Secrets for a Blissful Retirement Under the Older Americans Act

Estate Planning Secrets for a Blissful Retirement Under the Older Americans Act

Old age is a daunting prospect for most, as leaving work and living a retired lifestyle simply is not compatible with most people’s lifetime of hard work and sacrifice. Old age, however, should not be seen simply as a transition to the end of one’s life, but rather the opportunity for fulfillment and expansion of one’s horizons. In 1965, the Congress passed the Older Americans Act to provide community social services for older people. This act, which has been renewed through the 2024 fiscal year, provides for, among other things, nutrition and social services to the aged and their caregivers, organizes opportunities for civic engagement, and community service employment for lower-income aged Americans. As life expectancy has increased, so has the commitment of the United States to provide for its elderly communities. The reality of estate planning when entering later life should also be as smooth a process as possible, and consulting with an experienced elder planning lawyer will help you to understand the potential benefits retirees and older citizens can receive and the programs they can partake in, such as those provided by the Older Americans Act.

Relieving the Anxiety of Older Age and Estate Planning

The Older Americans Act

The Administration for Community Living, an organization dedicated to the health and independence of older Americans, is currently seeking recommendations for proposed updates to the regulations of most of its Older Americans Act programs, the most significant set of updates in nearly 30 years. The government of the United States has long sought ways to improve the lives of older Americans, and one of the most significant pieces of legislation it has passed is the Older Americans Act. First passed by Congress in 1965, the act was initially targeted at a lack of community-based social services for aging Americans. The original legislation established grant authority to states for community planning and social projects, research and development projects focused on older Americans, and training for personnel in the field of aging. The act also established the “Administration on Aging” to administer grants and serve as a nucleus for matters concerning older Americans.

Since 1965, technological and medical advances have increased the life expectancy in the United States, which means that more people are able to enjoy their retirements in later years. In  response, the Older Americans Act has undergone several reauthorizations and amendments. The most recent reauthorizations, in 2016 and 2020, which will last through the 2024 fiscal year, have provided for a year-long extension for the Supporting Grandparents Raising Grandchildren Act, more autonomy for state and local governments regarding the allocation of National Family Caregiver Services to keep older people in their homes, and required the assistant secretary for aging to issues guidance to states on serving Holocaust survivors. These reauthorizations also have provisions for strengthening elder abuse prevention, screening efforts, fall-prevention, and chronic disease self-management programs. 

Estate Planning for Older Age

Although old age and retired life have been made easier since the introduction of the Older Americans Act and the expansion of benefits programs, estate planning and asset protection must be a priority for your golden years. An important aspect to consider in planning for later life is Medicaid.  As most older adults in the United States are at least partially insured by Medicaid, it is important to understand that eligibility is dependent on, among other things, one’s income and assets. Although estate planning might have the stigma of making one seem old or aging, it is responsible financial practice to plan ahead and ensure that you receive the health coverage you need. To this end, an experienced Medicaid planning lawyer will help you to create the best estate plan that protects your hard-earned assets while also ensuring that you receive the coverage you deserve.

It is important to understand that there are no entitlements with the Older Americans Act because Title III of the act does not create a legal requirement to finance services for individuals. Older Americans eligible for Medicaid benefits and over the age of 60 may receive services under the Older Americans Act, however, Medicaid-funded services often take precedence. Services that cannot be rendered by the Older Americans Act may still be available for Medicaid eligible persons. The intricacy of the social services provided under the Older Americans Act and other federal welfare programs such as Medicaid make having an elder planning attorney ever more important. An experienced attorney will help to determine which benefits and services one can receive and assist one in qualifying for the programs they need. 

Conclusion

Old age and retirement should not be seen as an anxiety-inducing or burdensome time, but rather as an opportunity for enjoyment. The older years of Americans have been made easier with the Older Americans Act and Medicaid coverage, but this should not prevent you from engaging in financial planning as soon as possible. Creating a comprehensive estate plan and planning for Medicaid will give you flexibility in planning your finances for your later years and give you the peace of mind to enjoy your retirement and the opportunities for engagement it provides. To speak with New York’s most experienced elder planning attorney, call the Trust and Estate Planning Law Office at (718) 333-2395.

How To Suspect If You Will be Investigated for Medicaid Fraud

How To Suspect If You Will be Investigated for Medicaid Fraud

How To Suspect If You Will be Investigated for Medicaid Fraud

Medicaid is a service that many people use in the U.S. It allows for those in low-income homes to have access to affordable healthcare. However, people sometimes find that they are under investigation for Medicaid fraud and abuse without knowing why. When investigators contact you, they believe that you are guilty of committing fraud from the evidence they have collected based on your income. It is possible to catch yourself before you are framed for being guilty for Medicaid fraud by accident. 

Fraud and Abuse Laws
heap of dollars with stethoscope
  • You do not receive any other form of government benefits 
    • Medicaid is only available to those who are low-income which means that it is common to have other benefits such as food stamps.  Those who qualify for Medicaid often have other forms of social welfare programs that assist in daily aspects of life. If you don’t have food stamps or another form of government benefit, it can indicate that you don’t actually qualify for Medicaid.
  • Your reported income does not match your lifestyle
    • When investigating recipients of Medicaid, investigators match every aspect of your life to your reported income. Medicaid fraud investigators compare what you’ve reported with other aspects of your life such as housing. If they find that you own a home, investigators have the ability to check your mortgage as it is public record. From there, they can check how much you pay monthly to your bank or mortgage company. If the payment is significantly higher than what your reported income is, it can raise suspicions. You can own a house and still receive Medicaid but even if you live in a high rent neighborhood, they can look into it. 
  • The same can happen if your car payments are quite high in comparison to your reported income. Similar to how they check on your house ownership, the same can happen with car payments. If the information is not consistent, they will look at your provided information deeper and possibly contact you. 
  • You receive financial assistance from family members 
    • People usually defend themselves when under investigation for Medicaid by claiming that they receive financial assistance from family members. Unfortunately, that is an extremely poor excuse as it is required to disclose if your family provides financial assistance for you when applying for Medicaid. By saying this, you may be claiming that you are not actually eligible for Medicaid. 

Before panicking, be sure to double check your documents and payments to ensure that the information you are submitting is correct and consistent. Without double checking, you may face up to ten years in prison and fines up to $500,000 without meaning to. If you or a loved one needs assistance in Medicaid fraud help, please contact the Law Office of Inna Fershteyn at (718) 333-2395.

What Documents Are Required for a Medicaid Application?

What Documents Are Required for a Medicaid Application?

What Documents Are Required for a Medicaid Application?

When applying for Medicaid, you must prove that you are within the income and assets threshold to be eligible for long-care services. Prior to applying, you must fully understand what is expected of you in proving your eligibility to submit a medicaid application.

Documents Required for Medicaid Application

Medicaid is a state-run program, so the criteria vary based on your location. It is required to prove that you are eligible for the benefits, placing the burden of proof on you rather than the state. It is your responsibility to provide standard identification of your birth certificate and proof of citizenship. However, when you apply for benefits there is far more to consider:

    • Proof of Income
      • Copy of any pay stubs, Social Security statements, and/or pension checks. Income tax returns for the past five years. Verification of any other sources of income.
    • Bank Records
      •  Copies of bank statements for the past five years. 
    • Property
      • Copy of the deed to any property you owned in the past five years and a copy of the most recent property tax bill. 
    • Retirement Accounts
      • Statements for the past five years of your retirement savings.
    • Insurance
      • Copies of all types of insurance you have.
  • Car Registration
      • Information for any cars you own.
    • Burial Arrangements
      • Copies of pre-paid funeral contracts and/or deeds to burial plots.
  • Transferred Assets
    • There are non-countable assets such as personal possessions, one vehicle, prepaid funeral plans, and principal residence. However, be prepared if the state requests information about these.

The state will verify the information. Intentionally providing falsified information is a serious legal offense. 

When you start to receive benefits, you are not done, as to maintain your Medicaid you must continue to adhere to the eligibility requirements. Verification will be needed, making the Medicaid application process long and complicated. To be as prepared as possible, you will need the help of an estate attorney.

To compile the documents required for a Medicaid application, contact the Law Office of Inna Fershteyn at (718) 333-2395.

Medicaid Lookback Period For Long-Term Home Care In NY

Medicaid Lookback Period For Long-Term Home Care In NY

Medicaid Lookback Period For Long-Term Home Care In NY

Medicaid is the main source of long-term care coverage for many people. There are many factors to consider when applying for Medicaid, and this is widely due to the eligibility requirements that Medicaid has. One of the main components of qualifying for Medicaid is that they look at applicants' previous financial information for a limited period of time. This is commonly called the Medicaid Look-Back Period. In general, while determining Medicaid eligibility, any gifting of assets within the look-back period will deem the person ineligible for Medicaid for a period of time. 

Medicaid-lookback-period-update-in-NY

All states, with the exception of California, have a five-year lookback period on applications seeking Medicaid for nursing home care. However, New York State recently adopted a law imposing a lookback period for long-term home care as well. Therefore, people need to take careful consideration before deciding if they need Medicaid for nursing home care and/or long-term home care in NY. Although the lookback period for long-term home care isn’t as long as five years, it can still negatively impact people who need Medicaid benefits sooner rather than later.

For long-term home care, the Medicaid lookback period is at least 15 months. Medicaid will examine asset transfers dating back at least 15 months before your application. This new NY Medicaid transfer rule will begin on October 1, 2022. After the date, anyone applying for Medicaid long-term home care benefits will be subject to the lookback period and might have to provide records up to 2.5 years before the date of application.

Here Are Some of The New Transfer Rules:

  • Applicants and their spouse filing after October 1, 2022, must provide all financial records within the lookback time frame (at least the last 15 months) even if the spouse does not currently need Medicaid services.
  • The lookback period will, at some point, increase to 30 months (2.5 years). The increase will be gradual. 
  • Any asset sold, gifted, or transferred below a fair market value during the lookback period could result in a period of ineligibility for Medicaid. 
  • Applicants will be required to submit a Department of Health (DOH) medical form. A licensed doctor must indicate their belief that the applicant meets the medical requirements needed to qualify for homecare.  This requirement is especially important because the DOH demonstrates that a transfer penalty can be activated in the month that an applicant is both financially and physically eligible for Medicaid home assistance. A transfer penalty is incurred during the timeframe that an applicant fails to comply with the Look Back Period. When the penalty’s duration ceases, an individual can then reapply for Medicaid. 
  • The Department of Health allows for an exception to the transfer penalty if the applicant’s circumstances fall under the definition of “undue hardship.” Denial of home assistance falls under this definition. However, this definition does not extend to community-based eligibility. 
  • Applicants who file their Medicaid applications before October 1, 2022, will NOT be subject to this lookback and will NOT incur transfer penalties. Early filing is key to getting the benefits you need for home care services.

Exceptions to the Transfer Penalty

Transfer of a Home to:

  1. Spouse
  2. Children under the age of 21 or legally blind/disabled of any age
  3. A caretaker Adult child that resided in the applicant’s home for at least two years and can prove that their care allowed the applicant to live at home rather than in a medical facility

Transfer of Property Other Than a Home to:

  1. Spouse
  2. Individual’s child who is legally blind/disabled
  3. A trust established for the benefit of an individual under 65 years old who is disabled
  4. Transfer of an asset that does not accumulate a penalty
  5. Assets were transferred for a reason other than to qualify for Medicaid nursing home costs 

If you need consulting on Medicaid eligibility for long-term home care, please contact the Law Office of Inna Fershteyn at (718) 333-2395.

How to Protect Your Home If You Need Medicaid

How to Protect Your Home If You Need Medicaid

How to Protect Your Home If You Need Medicaid

Most people wonder how to qualify for Medicaid and if their assets will be at risk when applying. Those who need long-term care worry about the possibility of losing their home in order to qualify for Medicaid. If you or someone you love need long-term care, you don’t have to sell your house in order to qualify for Medicaid to pay for long-term care. However, Medicaid could reach out in the future to recoup the costs of treatment. Once you are approved for Medicaid, the state may put a lien (charge) on your assets during your lifetime and collect the debt once you have passed away. This process is known as "estate recovery” which can lead to losing many assets that could have been passed down to future generations, even the family home. 

how-to-keep-your-home-if-you-need-medicaid

So how can one keep the home if they need to apply to Medicaid for long-term care costs?

Adding Someone to the Deed May Not Be The Perfect Solution

People often believe that by adding another person to the deed to their home (aka a life estate), the home cannot be used to pay back Medicaid. Unfortunately, this method won’t be enough to protect the home, and here’s why:

  • If the property is sold before the Medicaid recipient passes away, the value of the home has to go towards their care. 
  • If you decide to rent out the property, the net rental income is recoverable by the nursing facility, since it technically belongs to the recipient. 
  • Although the house avoids probate after the Medicaid recipient passes away, there could be significant capital gains taxes for the beneficiaries. 

Solution #1: Transfer Ownership of The House

What if I immediately transfer ownership of the family home to another person instead of adding them to the deed? This idea is to take the home out of their countable assets. However, unless the person who receives the house is an adult child, the transfer will only lead to problems.

A basic rule of Medicaid is that if you can afford to pay for your own care then you should. If you transfer property, let’s say worth $700,000, it means that a $700,000 gift has been gifted to someone. Another basic rule of Medicaid is that there is a five-year lookback period. This means that any assets you gave away or transferred in the five years before you applied for Medicaid, you still had the asset under your control. And Medicaid will not pay for your care in that case.

The good news is that there are some exceptions to the gifting rules. The following methods are not something to be navigated without the help of an experienced elder law estate planning attorney. Here are some of the exceptions:

Your spouse. The law recognizes that your spouse needs a place to live so a transfer of the home to your spouse does not result in penalties under Medicaid rules. This is a common practice and part of Medicaid planning.

A disabled child. A parent could transfer a house to their disabled child explaining that it is needed for self-support. It is not necessary for a child to lose a home just because a parent will need Medicaid. 

Solution #2: Medicaid Asset Protection Trust 

One of the best ways to protect your assets is to place your assets in a Medicaid Asset Protection Trust. These are also commonly called “income only” trusts because the appointed trustee (normally an adult child) maintains control of the principal, while the Medicaid recipient can only access the income from a pension or Social Security benefits.

A Medicaid Asset Protection Trust may be a better method for protecting the home if you:

  • Wish to continue living in the home. These trusts offer little to no disruption to a recipient’s life since they keep the exclusive right to use and occupy the home during their lifetime (and continue to receive all the tax exemptions on the home).
  • Are not going directly into care. Any assets transferred into a Medicaid trust are subject to a lookback period of up to five years. After five years, you can still live at home but if you need to go into a nursing home, the full value of your assets in the trust are protected. However, even if you end up needing long-term care earlier than you thought (before the five years) you get credit for any time that has passed since the creation of the trust. For example, if you created the trust today but need nursing home care after four years, then you would only have to pay for the remaining one year out of pocket.
  • Are contemplating selling the house. You will always have the option to sell your house without a Medicaid penalty because the money is paid to the trust. The trustee can also buy a new property (such as a smaller home) in the name of the trust so it remains protected.

If you need consulting on qualifying for Medicaid and how you can protect your family home, please contact the Law Office of Inna Fershteyn at (718)-333-2395.

Millions Could Lose Medicaid When Pandemic is Declared Over- How to Protect Your Coverage?

Millions Could Lose Medicaid When Pandemic is Declared Over- How to Protect Your Coverage?

Millions Could Lose Medicaid When Pandemic is Declared Over- How to Protect Your Coverage?

While the decline of COVID-19 cases is a relieving sign of progress, the end of the pandemic could mean the end of Medicaid coverage for millions. Federal law prevented states from stopping Medicaid benefits until the pandemic is declared over. As we near the end of the health emergency, it is vital you understand how to protect your coverage.

Congress passed a law providing that the state could not terminate the benefits of Medicaid recipients who were enrolled as of March 18, 2020. It states that the coverage must continue through the end of the month that the Secretary declares the pandemic has ended. Although the public health emergency has not officially ended yet, the Biden administration intends it to some time in 2022.

Protecting Medicaid Coverage After the Pandemic

The impact this could have on your Medicaid is not fully defined, but it is estimated that about 15-million non-elderly people could lose their coverage. Further, it is important you understand your options for maintaining your long-term care. Planning in advance is required for protecting your future health needs. Below are four different strategies you could adopt to help keep your Medicaid coverage.

1. Asset Protection and Income Trusts

Asset protection trusts allow your wealth to be distributed to the same people when you die so your loved ones don’t have to pay capital gains tax on the amount your assets have increased in value during your lifetime. Assets transferred to an asset protection trust don’t belong to you. Be sure to note that transfers to trusts that occur within five years of when you need the Medicaid will be subject to the look-back period, so you must plan well in advance of when you need the care.

When applying for Medicaid, the income limits are strict. If your income surpasses the qualification threshold, it must be adjusted accordingly. A method to do this is establishing a qualified income or pooled income trust. A qualified income trust is irrevocable and can be established to hold the amount of income that exceeds your Medicaid limits. In some states, you can spend down the amount of income that is excessive so you can meet eligibility requirements, while in others you cannot. A pooled income trust is another type of irrevocable trust that holds excess income, designed for people who are disabled. Moreover, you can decide which of these types of trusts is the best fit for your individual needs.

2. Promissory Notes and Private Annuities

Make sure you are not giving away your assets and money during the look-back period, as you will be penalized. A promissory note or private annuity allows you to create a cash flow from your other assets so you can use it to pay for your nursing home care during a shorter penalty period.

3. Caregiver Agreement

A caregiver agreement may provide access to services that otherwise would not be included in Medicaid. Under this, a trusted family member may leave his or her job to care for the elderly individual. Services may be paid for in advance to reduce the countable income for Medicaid eligibility. For a caregiver agreement to be accepted by Medicaid, you must do the following:

  • Define hours and services in the contract
  • Maintain a daily log of hours and services
  • Pay to Medicaid the unearned amounts that remain upon your death
  • Calculate lump sum payment using market rates for services and reasonable life expectancy

4. Spousal Transfers

Transfers of assets between spouses are both permitted under the law and not subject to the look-back period, making it an appealing means of healthcare coverage protection. This makes the ill spouse eligible for Medicaid, while Medicaid reserves the right to ask for monetary contributions from the healthy partner. Note that in states that don’t allow spousal refusal, both spouses' resources are counted towards the eligibility requirement, defeating the purpose of this strategy.

For more information on how to protect your Medicaid coverage, please contact the Law Office of Inna Fershteyn at (718) 333-2395.