When facing long-term care for a loved one, cost of care is often one of the first concerns. Neither Medicare nor healthcare insurance pays for long-term care costs. Costs are borne in almost all cases either by private pay or by Medicaid. An assessment of private pay capability and the requirements of the Medicaid rules must immediately be made. QMC is here to help you with those issue.
Oftentimes, assets can be preserved through strategic planning prior to entering a nursing home for long-term care. In most cases, the assistance of a trained professional (such as the professionals at QMC) or even a law firm, is required to ensure timely Medicaid eligibility. Medicaid planning is very common for families that will investigate all opportunities regarding financial planning, often with significant monetary savings.
The essence of Medicaid planning is the reduction of assets that must be spent on a loved one’s care before Medicaid assistance begins. Depending upon how early the planning begins, several specific strategies can be employed. The assets preserved are available to loved one’s and beneficiaries through strategic and Medicaid-accepted gifting. Oftentimes, such strategies can simply be incorporated into the care-recipient’s estate planning, prepared by a qualified estate planning attorney. All strategies discussed here create permanent savings for the resident’s family, with no estate recovery by the
For families that engage in Medicaid planning well before any actual need for long-term care, the principal planning strategy is a Medicaid asset protection trust (sometimes referred to as a MAPT), an irrevocable trust that is prepared early enough to bypass the five year lookback period. Financial assets as well as real estate can be transferred to the irrevocable trust. Once the assets have been transferred to the irrevocable trust, these assets are not considered countable assets, and the principal can still be used for the grantor’s benefit (if handled properly, the legal advice of an attorney with a qualified elder law firm). The funds can also be used for the benefit of loved one’s or family members thereafter without violating any gifting restrictions or invoking the five year lookback period. For families who think that care in nursing home might be required, but not in the immediate future, a Medicaid asset protection trust is a vital tool; additionally, all assets held by the trust will also avoid any probate court supervised estate. Since such irrevocable trusts have been established prior to the five year lookback period, they are typically not required to be reported on the subsequent Medicaid application.
Additionally, annuities can be used to preserve funds for a loved one entering long-term care in a nursing home. Such planning strategies allow a care recipient to purchase a Medicaid compliant annuity with approximately one-half of the care recipient’s funds to pay for care. The remaining one half of the care recipient’s assets can then be preserved for other family members and beneficiaries and are not subject to any state recovery. Medicaid compliant annuities are powerful tools for loved ones entering long-term care. Under certain circumstances. such annuities can be purchased for the care recipient through a power of attorney, if the recipient lacks mental capacity. Additionally, different strategies exist that allow a community spouse (for married couples) to benefit from Medicaid compliant annuities.
Multiple planning strategies exist for married couples, when one spouse is entering a nursing home and the non-applicant spouse will remain in the community. These rules, referred to as the spousal impoverishment rules, allow the couple to file a Division of Assets. These married couples are allowed to keep additional funds, held by the community spouse, enabling earlier financial eligibility. A spousal share can be allotted to the spouse still living in the community if such planning is completed at the beginning of the care facility stay. Additionally, the community spouse can receive a portion of the nursing home spouse’s monthly income to live on, lowering the income limit for monthly payment to the care facility. This will also foreclose any possibility of estate recovery, as all of the preserved assets have been designated as a spousal share and not assets held by the nursing home resident.
Another common avenue to transfer funds without invoking any Medicaid penalty period is through the use of an irrevocable trust (with the prospective care recipient as the grantor) established with any disabled or minor children serving as the beneficiaries. Such disability irrevocable trusts may be set up immediately prior and even during the care recipient’s stay in a long-term care facility; irrevocable trusts for disabled and minor children are not subject to the Medicaid lookback period, this avoiding any five-year penalty period. Like Medicaid Asset Protection Trusts, these disability irrevocable trusts should be set up by an experienced elder law attorney.
The strategies listed here are only the most commonly used Medicaid planning strategies. A full variety of other, lesser-used strategies, however, can be employed to assist with asset preservation for families in more-unique situations in full compliance with the Medicaid rules. Community spouses (for married couples), can purchase and move into a new primary residence with non-exempt financial assets if a home is not already owned by the non-applicant spouse. Additionally, for both single and married care recipients, payment for any outstanding debt is an option to reduce countable assets, including paying down a mortgage on the married couple’s primary residence, thus reducing the family’s countable assets, even if the community spouse is the only person living in primary residence after the institutionalized spouse has entered nursing home.
When long-term care becomes a reality, financial concerns can seem as important as care needs. At QMC, we specialize in guiding families through ANY and ALL of the Medicaid planning steps to be employed to preserve funds while ensuring the loved one receives excellent care in an excellent long-term care facility in full compliance with the Medicaid rules, and fully ensuring Medicaid eligibility. Some of the planning strategies do require an alteration to the care recipient’s estate plan, requiring the assistance of a qualified elder law attorney.