UPCOMING EVENTS

SEMINARS FOR SEPTEMBER 2017

MONROEVILLE
Tuesday, September 12, 2017
2:00PM
The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

MURRYSVLLE / DELMONT
Tuesday, September 12, 2017
7:00 PM
Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant on Rt. 22

MURRYSVLLE / DELMONT
Thursday, September 14, 2017
2:00 PM
Holiday Inn Express
Delmont/Murrysville
6552 Route 22
Delmont, PA 15626
Behind Lamplighter Restaurant on Rt. 22

MONROEVILLE
Thursday, September 14, 2017
7:00 PM
The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

MONROEVILLE
Saturday, September 16, 2017
9:30 AM
The Estate Planning Centers
3824 Northern Pike, Suite 801B
One Monroeville Center
Monroeville, PA 15146
Just west of Red Lobster on Rt. 22

 
 

 
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12 Long-Term Care/Medicaid Mistakes

Few things cause the level of financial terror than calculating the expense of a long term nursing care stay. Here in Pennsylvania, the average nursing home expense is approximately $100,000.00 per year. For families struggling with the issues that surround caring for an individual who can no longer care for themselves, dealing with the question of how to fund such care can be overwhelming. Unfortunately, a difficult situation is made worse when people try to navigate this difficult terrain on their own.

Here are some of the common Nursing Home/Medicaid Planning mistakes we see.

Giving away assets without a plan. Some people in need of nursing home care give away their assets, thinking it makes them Medicaid eligible. Unfortunately, when gifting is not properly planned, you can end up subject to a Medicaid penalty which can prevent you from receiving benefits for many years. That $14,000 per year you can give away each year?  It has nothing at all to do with Medicaid, and will result in a $13,500 penalty.

Selling the home to the children for a dollar. People have heard that you can't give your house away, but you can sell it to your children for a dollar. As far as Medicaid is concerned, however, any transfer for less than fair market value can create a substantial penalty against eligibility. The government figured this trick out a long time ago.

Claiming money wasn't gifted to children, but was payment for services. Some applicants try to get around the Medicaid penalty by saying they didn't actually give their assets to their children, but instead it was “payment for care services” which the children were providing. Unfortunately, Medicaid presumes that children will gratuitously care for their parents, and any paid care-giving must be pursuant to a bona fide agreement. Medicaid wants to see this agreement in writing, and executed before the payments are made, not as an after-the-fact justification. Further, if this is bona fide compensation, they expect to see these amounts reported as income (and subject to income tax) on the children's income tax returns. A comprehensive and proper Family Caregiver Agreement can be implemented, but care must be taken to do so correctly.

Improper family loans. Some people try to get around the gifting penalties by claiming that the gift was actually a loan, which will conveniently be forgiven at death by the Medicaid applicant. Other families try to use a demand note, saying the children have to pay the money back, but not until the parent demands it. Any of these transactions will still result in a penalty, unless the loan agreement is bona fide, and complies with a detailed set of regulations.

Waiting to plan. If you don't think about your long-term care needs, and how they will be financed, until you are standing on the doorstep of the nursing home, you have severely restricted your options. There are strategies available which can reduce and often eliminate Medicaid penalty calculations, and keep assets available for the family. In general, earlier is always better for Medicaid planning, as some of the best strategies take time to mature and implement.

I will wait to call the attorney until I see how I do on my own. Some people hate attorneys, and everybody hates paying attorneys’ fees, so many people want to wait to see if they can qualify for Medicaid through their own planning. These people figure that if it doesn't work out, they can then bring the attorney in to help. Unfortunately, once a Medicaid penalty has been assessed, it is usually too late to go back and effectively fix it. The best time for Long Term Care planning is always before you apply for Medicaid, not after.

Doing nothing. With very few exceptions, none of us are going to get stronger as we get older. The deterioration of our health is a natural consequence of life, so we might as well plan for it. With the time to plan in advance, many assets can be safely moved out of Medicaid's reach, preserving assets for you, your spouse, or your family. Even when a nursing home stay might be right around the corner, there are still last-minute exceptions which can be employed to protect some of your assets. While Medicaid wants you to simply spend all of your assets until you are broke, we can use a variety of tools to help preserve your wealth.

Failing to consider insurance. More nursing home expenses are paid by the Medicaid program than by any other source. Unfortunately, this means that more families have to go broke to get nursing home care than any of the other options available. For many families who have saved a nest egg, it makes sense to at least evaluate the purchase of long-term-care insurance. The best time to consider this option is when you are still healthy, so the premiums are reasonable. When you get older, and are facing likely nursing home care, the premiums will be exorbitant. More importantly, you may develop a serious health condition which makes you uninsurable. Insurance is not the answer for every family, but it is impossible to know if it is appropriate for your family until you take a look at it.

Planning for Medicaid but ignoring other options. There is no doubt that Medicaid is a valuable program in this country, but it is not the entire universe. Many people would prefer to stay in their home, which Medicaid will not assist with in most circumstances. Medicaid doesn’t cover stays in an assisted-living facility. A Medicaid recipient may not be able to obtain admission to their preferred nursing care facility, as the facility would rather extend its space to a private pay or private insurance recipient. Military veterans who served during any of our periods of combat, and the spouse of such a veteran, may be eligible for financial benefits outside of Medicaid which decrease the financial strain and increase family flexibility. It is important to consider all of the angles.

"But my neighbor/brother/a guy at work said…"  The Medicaid program is a complex interrelationship of state and federal statutes, regulations, internal operating procedures, financial maneuvering and medical determinations. Hands down, the worst resource for sorting this all out is that person you know who had a situation somewhat similar to yours recently. Every person is an individual, every family different, and every case is unique. Further, many people fail to properly communicate what their parent or family member truly did, and you end up relying upon advice which is just plain wrong.

Thinking Medicaid won’t find out. Many people think that as long as their money is gone before they apply for Medicaid, no one is going to ask where it went. Quite to the contrary, a Medicaid application requires providing a pile of records, including records your financial accounts over the last five years. They are looking for any unusual transfers, in order to identify possible penalties. In addition, failing to report your information fully constitutes Medicaid fraud, and the government IS looking. In fact, they have an anonymous phone tip line to make it even easier to get caught.

Failing to plan for your spouse. There are strategies which can be used to preserve assets for a healthy spouse who will not be in the nursing home. This can substantially reduce the amount of money which needs to be spent before you would qualify for Medicaid. Other techniques, such as irrevocable trusts and annuities, may be used to further protect a spouse. Families can benefit by transferring assets to a disabled adult child, or a family member who lives in the home. It is not Medicaid's job to advise you of these exceptions, but instead it is up to you to find someone to help you chart a path.

This is just a sample of the numerous issues which arise when thinking about planning for long-term care needs, and evaluating Medicaid eligibility. Those who fail to plan seemed content to plan to fail. It is very difficult to attempt to navigate the complex issues of long-term nursing care funding and Medicaid planning on your own. If you would like to take advantage of a complimentary attorney consultation to review your personal estate planning situation, please feel free to contact us.