The 5 Year Look Back Period

I have discussed the fact that nursing home costs are very high and can deplete a person's resources.  Further, assets can not be transferred in order to qualify for medicaid which covers the cost of medicaid. 

The look back period applies to gifts made.  It also applies to assets placed in a Trust.  This would include trusts which have been set up for those with special needs if the trust was only addressing protecting public benefits of the special needs child. 

There are trust that serve as a protected Trust for Medicaid purposes.  If it were determined that a parent of a special needs child would have to be in a nursing home then monies can be placed in a Trust which is for the "sole benefit" of a disabled child. The Trust would name special needs child's estate, not other individuals, as remainder beneficiary in order to meet the "sole benefit" requirement.

Contact us at http://www.ythlaw.com/ for your estate planning and probate and elder law needs.

Asset Preservation

As our society ages, there are many issues that must be addressed.  In the area of preserving and protecting assets, we have to address the significant expense of nursing home care.  Can assets be protected from the cost of nursing home care?

There is now a 5 year look back period that pertains to transferring assets to other family members.  The look back period would apply to gifts. When applying for medicaid to cover nursing home costs, the question one has to respond to is whether any gifts have been made in the last 5 years. If so, it would extend the period of ineligibility for medicaid. The person would be treated as though they still have the money and therefore not qualify for medicaid for a period of time.

Let us help you plan for your future now and not wait until the need is upon you.  Contact us at http://www.ythlaw.com/

Medicaid Eligibility

As we continue to discuss the needs of families with loved ones who are disabled, let's take a look at the Medicaid law. Medicaid provides funding for longterm care nursing facilities, inpatient hospital care, clinical services, psychiatric care, prescription drugs and medical devices. Disabled persons are a category covered by medicaid if they meet the financial criteria.

The financial requirement for Medicaid requires that an applicant have assets, including income and resources, below a certain threshold. This is generally $2,000 in states like Pennsylvania. This criteria is also applicable to SSI.

Money or other assets of a disabled family member CAN NOT be transferred into a Trust to qualify for Medicaid benefits. There are special exceptions to this rule with very specific guidelines that MUST be followed. Such Trusts that can be used are payback trust; pooled trust; and, discretionary trust (this trust DOES NOT contain the money of the disabled family member). More on each of these trusts will follow over the next few days.

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Should A Person on Disability Inherit?

Medicaid and SSI both have very stringent resource (and income) thresholds that could be implicated by a bequest or gift. The result is that the disabled individual could loose their SSI and Medicaid benefits. Therefore, they could be forced to pay for or even forego nursing care or other healthcare benefits.

What exactly is meant by "resource"? A resource is defined as cash or other liquid assets or any real or personal property that an individual owns and could convert to cash to be used for support and maintenance. So even if one who is disabled inherits a small interest is a house (real estate), it is considered a resource because everyone with an interest in the property has the right to seek their financial (share) interest in the real estate. That means they can force a sale or be brought out by the other owners.

So, how can a disabled person obtain and inheritance and still maintain their Medicaid and/or SSI benefits? The legislature and courts in Pennsylvania have recognized special needs trusts or supplemental needs trusts that when properly executed can reduce the costs to famiies and provide additional resources for the disabled person on Medicaid or receiving SSI.

We will continue this week to discuss the different types of special needs trusts. Contact our offices at http://www.ythlaw.com/ for expert estate planning advice.

Estate Planning for Family Members with Disabilities

Over the next few days, I will discuss the issues pertaining to estate planning for families with disabled family members. Generally, family members desire to leave money to a disabled loved one in order to maintain or improve the quality of life. However, if this is done with a bequeath in a Will or an outright gift, more harm than good could result.

Medicaid and SSI both have very stringent resource (and income) thresholds that could be implicated by any significant bequest or gift. The result is that the disabled individual could loose their SSI and Medicaid benefits. Therefore, they could be forced to pay for or even forego nursing care or other healthcare benefits.

Let's discuss what can be done over the next few days. Feel free to contact us at http://www.ythlaw.com/ to discuss all your estate planning needs.

Inheritance Disclaimer and Medicaid

There was a question from a reader regarding whether a medicaid recipient can disclaim his inheritance. In this situation, a 89 year old man has been in a nursing home for 3 years and for the last 2 years he has been on medicaid. He had very little assets and once those resources were depleted he applied for and obtained medicaid to cover his stay in a nursing home. Now a relative has died and in their will left the 89 year old an interest in a home which when sold will yield him about $125,000. He prefers to disclaim this inheritance to enable a younger relative to inherit. Can he do this?

In order to answer that question, you must review the federal medicaid law and the state law interpreting and implementing that law. Unearned income is consider a resource for medicaid purposes and an inheritance is unearned income. But, if you disclaim an inheritance you never get this unearned income. However, does this disclaimer amount to a transfer of assets which brings with it a penalty for eligibility? Does medicaid have to be informed regarding the inheritance and the disclaimer? If the 89 year old should proceed to disclaim, there will be potential objections from medicaid and who would win depends upon all the factors mentioned.

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Special Needs Trusts

As I sit at my computer composing this post, we are in yet another winter snow storm. The snow whirls in tornado circles creating high drifts in the yard and on the roadway. Even the wildlife that I may generally see has bunkered down for this event.

I reflect now on the radio interview that I did yesterday. I received a call after the show about Special Needs Trusts. These are trusts set up for the benefit of those with special needs who receive or may receive medical assistance or other government benefits. When the money of the person with special needs is used there is an age restriction for medical assistance benefits.

For medical assistance eligibility, the Special Needs Trust must be irrevocable and for the sole benefit of one with special needs under the age of 65. If the special needs individual is over 65, then their own money CAN NOT be placed in a trust to enable eligibility for medical assistance. This is to avoid those who may be going into a nursing home to take all of their money and have it placed in a trust so that they can qualify for public assistance, medicaid.

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Long Term Care Insurance - THIRD -Consider the number of Years of Coverage

Yesterday, we addressed the second important thing to consider when purchasing long term care insurance. Today we look at a third consideration.

THIRD, Purchase several years of coverage. Given the unknown length of time anyone may require long term care in the future, many individuals purchase between 3-5 years of long term care coverage. Longer terms, of course, are also available.

If you would want to transfer any of your own assets, long term care insurance may be needed to cover the cost of your nursing home care. Any transfer of assets would be subject to the 5 year look back period for medicaid eligibility. During that period of ineligibility, you (through your long term care insurance) would have to pay for your care. After the ineligibility period, application for medicaid could be made.

Do you have any comments or questios? Leave your comments here or contact us at http://www.ythlaw.com/.

Elder Law - Medicaid

Nursing home cost can deplete the resources of most people who find themselves in need of full time nursing care. When you can no longer afford the cost of such care, many have to rely on Medicaid.

Unlike Medicare, Medicaid is not an entitlement program. You have to qualify for Medicaid. Since Medicaid is for those with low income or for the indigent, you can only have minimum assets. Assets can be transferred to others; however, this transfer must be made well before you apply for Medicaid coverage. There is a 5 year look back period for transfer of assets. If assets have been transferred within 5 years of applying for Medicaid, you may be ineligible for a period of time based upon the value of the transferred assets. There are some options available.

For a married couple, there are options available to provide support to the spouse. The spouse who is not in the nursing home is referred to as the community spouse and is entitled to a monthly maintenance needs allowance. Income from the spouse qualifying for nursing home care can be used to supplement the community spouse’s income so that the spouse does not become improvised. In addition, the community spouse is entitled to a resource allowance that would represent a certain part of the total resources of the couple. This includes certain types of annuities, cash, checking accounts, savings accounts, stocks, bonds, CDs, and the retirement plans of the nursing home eligible spouse. If eligibility is still an issue after considering the community spouse's monthly maintenance needs allowance and spousal allowance, then you may have to consider spending down some of the assets to qualify for medical assistance.

The following is a list of the type of items available for spend down:
· purchase clothing or medical equipment
· pay off debts
· prepay funeral and burial expenses
· take a vacation
· make home improvements and repairs
· upgrade the car
Further, there are assets that are specifically excluded as resources for purposes of Medicaid eligibility. The community spouse does not have to include any of the following items when applying for Medicaid for the spouse in need of nursing home care:
· The primary residence is an excluded resource. If you are not married, the house could still be excluded as a resource if you intend to return to the home. However, if the equity in the home exceeds $ 500,000 (in Pennsylvania, may be higher in other states), whether married or not, you would not be eligible for medical assistance, Medicaid. If the community spouse intends to continue to reside in the home then the equity limit is not applicable.
· One car is an excluded asset.
· Household goods and personal effects are excluded.
· Pension funds of the community spouse, Mary, are excluded.
· Certain qualified annuity purchases are excluded.
Even if you do not currently need nursing home care, now is the best time to seek advice from an attorney and have a plan.

Our firm can help. Leave a comment or contact us at http://www.ythlaw.com/ You will be glad you did.