Planning for Long Term Care
It is not uncommon for people to work and save money all of their lives, only to have their hard-earned assets depleted by the cost of nursing homes. We never expect to be faced with the reality of needing home care or ever think about the possibility of having to enter a nursing home, but the fact is, sometimes there are no other options. What you may not realize is that there are ways to protect your assets and still be eligible for a skilled nursing facility. In addition, it is not too late to protect your assets once you have entered a nursing home. Although planning years in advance can help preserve significant assets through the use of specialized trusts, gifting, and insurance, assets can still be saved even when a move to a nursing home is imminent.
Spousal Refusal for Medicaid
Spousal Refusal is a technique used to shelter the assets of a married couple when one spouse is in need of nursing home care and applies for Medicaid. If the ownership of assets are transferred effectively to the healthy spouse, also known as the Community Spouse, then the Medicaid eligibility can be obtained and a substantial amount of the cost of long term care can be mitigated. If the Community Spouse submits a statement to Medicaid stating that he or she is unwilling to contribute financially toward the medical costs of the other spouse after assets have been transferred to the Community Spouse, then financial exposure to long term cost can be lowered.
Spousal Refusal is legal and recognized by the legislature and courts as a valid Medicaid planning tool. However, just because it is legal, does not mean that there are no consequences to Spousal Refusal. Medicaid has a right of recovery against the refusing spouse. It doesn’t always pursue the refusing spouse, but the right to do so is there. But even if they do pursue the refusing spouse, the cost that is being paid is the Medicaid rate for the nursing home, not the private pay rate that is substantially higher.
Promissory Notes and Gifting for Medicaid Planning
If a person is about to enter skilled nursing, he or she may want to consider using a Gift/Loan to preserve some assets from the cost of a nursing home. In this case, a person would gift some of his or her assets to their agent through a Power of Attorney or to a beneficiary(ies) of their estate and loan the balance of the assets to them. A simplified explanation is as follows: Assume that you have $200,000 of assets, and that a nursing home cost $10,000 per month. When you move to the nursing home you gift the beneficiary(ies) of your estate $100,000 and you loan them $100,000. You then apply for Medicaid. Medicaid says you now qualify because you have less than $16,800 and your income is less than the monthly cost of the nursing home. However, because you made a $100,000 gift you are ineligible for benefits for approximately 8 months. During that 8 month period your children repay the loan in equal monthly increments and these funds are used to pay the cost of the nursing home. At the end of the 8 months the ineligibility period as a result of the gift expires and Medicaid starts paying the monthly cost of the nursing home. This way, a person has been able to protect $100,000 from the cost of the nursing home.
This technique would not be utilized until just prior or after admission into a skilled nursing facility. It is important to note that the Statutory Gifts Rider to your Power of Attorney and the admission agreement to the nursing home must allow this technique to be used if an agent needs to act on the individual’s behalf to make financial decisions.
Whether clients are planning for the future or facing an immediate need for advice on asset preservation, our elder care attorneys advise on current rules and regulations, asset protection techniques, and preparation of the appropriate documents. If it becomes necessary to apply for Medicaid, we can prepare and submit Medicaid applications, and represent clients at Medicaid interviews. Many individuals never expect to be faced with the reality of needing home care or the possibility of needing skilled nursing. We advise our clients of the various options that exist to be able to protect their hard-earned assets from the approximately $200,000 per year cost of skilled nursing services. We separate this need into two areas: pre-planning and crisis planning. With the former, we always say that the best time to plan is when you don't need to. With the latter, many operate under the misconception that once you enter into a skilled nursing facility, there is no way to preserve your assets. We will navigate you through your best options under either scenario.
Nursing Home Admissions
Should the time come when you or a loved one require nursing home care, our compassionate team can help ease the transition. Whether made in advance or as the result of an acute crisis, the decision to enter a nursing home requires careful consideration of important factors including location, cost, staff, and available services and activities. Our team offers extensive experience and can smoothly guide you through nursing home selection and financing options, to ensure the best quality of care.
Advance Directives, Powers of Attorney and Health Care Proxies
This area encompasses powers of attorney, health care proxies, and if necessary, guardianship proceedings. These tools are vital if a client is incapacitated and cannot make financial or health care decisions for themselves. Our team will provide guidance to you and your family with the hope of avoiding a public, expensive, and often divisive guardianship process.