Medicaid: Five Years of Looking Back Without Penalties

June 6, 2022Filed Under: Elder Law, Long Term Care, Medicaid Planning

Planning for long-term care is important because nearly everyone will require it at some point in their lives. While we cannot predict the timing or level of care, we can take steps to prepare for an unexpected medical and financial crisis to help reduce the stress on ourselves and our family members. The cost of care continues to rise, but Medicaid planning can protect your assets, such as your home, hard-earned savings, retirement fund, or anything you wish to pass on to your loved ones.

Medicare is a federal and state program that helps seniors with limited assets and income afford long-term healthcare. Many seniors believe their only option to qualify for the program is to “spend down” their assets. However, proactive Medicaid planning can protect a substantial portion of your estate if done correctly. That means preparing at least five years before the potential need for benefits. The program’s eligibility rules are complicated, as is the application process. That’s why many people choose to hire an elder law attorney who specializes in Medicaid planning to evaluate their estate and reorganize assets over time.

Medicaid qualification requires a five-year look-back period at financial transactions in most states. The program verifies income and makes sure you haven’t gifted property to others under fair market value to reduce countable assets. Gifting assets is subject to a penalty that results in a period of ineligibility for benefits. The rules for gifting change state by state, and it’s important to know the rules where you live. If you begin early, you can ensure qualification for benefits when you really need them.

Qualifying for Medicaid Without a Penalty

A combination of options gives you the best outcome when applying for Medicaid benefits. An elder law attorney can customize a Medicaid planning strategy that works for your specific needs and goals. When you find yourself in need of long-term care services, you can receive Medicaid benefits to offset costs ranging anywhere from $60,000 to $100,000 a year.

The rising costs of long-term care can be overwhelming and unaffordable, depending on an individual’s needs. Your Medicare policy doesn’t cover long-term in-home or nursing facility services, and long-term care insurance premiums are very high. To discover more options, you’ll need a list of countable assets to determine ways to spend down that comply with Medicaid rules. It makes sense to spend down if it offers advantages:

Make home modifications like stairlifts, wheelchair ramps, walk-in showers, and other convenient amenities
Purchase a funeral benefits plan to cover final expenses
Pay off debt
Gift assets at fair market value with legal documentation
Create caregiver agreements to compensate for care

Caregiver Agreements are formal agreements to compensate caregivers who can be relatives or friends, but they need to be carefully drafted by a professional.

Qualified Income Trust

You may still have too many assets to qualify for Medicaid benefits, but those assets can be protected from Medicaid’s Estate Recovery Program. Your elder law attorney may recommend transferring them to a trust called a Qualified Income Trust (QIT) or Miller Trust. It is an irrevocable trust managed by a trustee who has legal control of the funds. Once they are transferred, they are no longer countable assets.

Medicaid Exempt Annuities

This life insurance annuity type is common to avoid Medicaid penalties during the look-back period. An annuity is a lump sum investment by an individual in return for a monthly payment for the duration of that person’s life or a set number of years. These annuities turn assets into income, lowering the countable assets of the Medicaid candidate below the eligibility limit. However, not all annuities qualify, and your attorney will help you choose the right product.

The surest way to avoid violating a look-back period when qualifying for Medicaid is to consult a qualified Medicaid planning and elder law attorney before you gift or transfer any assets. If a violation has already occurred, they can also offer assistance to correct a problem.

Always seek professional legal advice when creating your long-term care strategy using Medicaid. Applications are rarely successful due to mistakes when filling out forms, and it can have devastating long-term consequences on a family and their finances. Begin well before you anticipate needing long-term care. Become well-informed about all your options as you go through the application process. Proactive planning and expert legal strategies can help protect your assets and offer considerable help for your long-term care costs. We hope you found this article helpful. If you’d like to discuss your particular situation, please don’t hesitate to reach out. Please contact our Cincinnati office by calling us at 513-771-2444 with any questions.

Alzheimer’s Factors to Be Aware Of

March 1, 2021Filed Under: Elder Law

Alzheimer’s disease is a type of dementia that causes problems with memory, thinking, and behavior, according to the Alzheimer’s Association. Symptoms usually develop slowly and get worse over time, becoming severe enough to interfere with daily tasks. Alzheimer’s affects a growing number of people. There are several factors known to play a role in Alzheimer’s. Let’s look at these factors, both positive and negative.

Age

Age is one of the biggest factors to consider when discussing Alzheimer’s disease. Symptoms generally begin for most after the age of 65. However, the proteins that damage the brain can begin taking a toll on the patient well before symptoms appear. The Alzheimer’s Association reports that after the age of 65, the risk of Alzheimer’s disease doubles every five years. Alzheimer’s disease is associated with old age, but early-onset Alzheimer’s disease occurs in some people, although it is less common.

Genetics

Another factor associated with Alzheimer’s disease is genetics. Although family history is not necessary for a person to develop Alzheimer’s, a person with a parent or a sibling with Alzheimer’s disease is at greater risk of developing the disease. If more than one first-degree relative (meaning a person’s parent, sibling, or child) has Alzheimer’s, the person is at even greater risk.

There are specific genes that can increase the risk of Alzheimer’s disease. If a person receives a gene from one parent, they are at risk, and genes from both parents increase that risk. Although these genes can determine the risk of developing the disease, they do not determine that a person will develop Alzheimer’s disease. In some rare cases, there are deterministic genes that guarantee a person will develop Alzheimer’s disease. There are genetic tests that can identify risk genes and deterministic genes for Alzheimer’s. A person can elect to have these tests to determine their risk for Alzheimer’s disease.

Lifestyle

Lifestyle can be a great factor in helping to prevent Alzheimer’s disease. Researchers have found that aspects of a healthy lifestyle can help to prevent Alzheimer’s disease. Healthy eating, exercise, and sleep are some lifestyle factors that can be preventative medicine for Alzheimer’s. Exercise can help to increase blood and oxygen flow in the brain, and eating a heart-healthy diet also shows great benefit. In addition, strong social connections have been shown to be a preventative factor for Alzheimer’s disease. Remaining mentally active can also help to reduce the risk of Alzheimer’s. Lifestyle is one factor everyone has control over and can go a long way in slowing or preventing Alzheimer’s.

Other Factors

There are other factors that can determine whether or not Alzheimer’s takes hold or not. Socioeconomic factors can determine whether Alzheimer’s takes hold. Recent research suggests that the more higher-level education a person has, the less likely that person is to develop Alzheimer’s. Head trauma earlier in life can put a person at greater risk for developing Alzheimer’s. Race and ethnicity have also been shown to play a role in the risk for Alzheimer’s disease. African Americans and Hispanics are at a greater risk for Alzheimer’s disease, according to research. Gender also plays a role in Alzheimer’s disease. Research indicates that because women are likely to live longer than men, they are also more likely to develop Alzheimer’s disease.

Although we know some of the factors associated with Alzheimer’s disease, there are still many mysteries surrounding it. There is no known cure for the disease, and treatments can only slow the progression of Alzheimer’s. With this information, it is important to take control of the risk factors you are able to and be fully aware of early warning signs. Being armed with good information can help to slow or prevent Alzheimer’s from taking hold.

If you have any questions about something you have read or would like additional information, please feel free to contact us. Please contact our Cincinnati office by calling us at 513-771-2444 with any questions.

How an Elder Law Attorney Can Help You and Your Family

December 7, 2020Filed Under: Uncategorized

An elder law attorney or certified elder law attorney (CELA) specializes and acts as a legal advocate for aging adults and their loved ones. Elder law encompasses a wide range of legal matters affecting an older or disabled person. Issues related to guardianship, retirement, health care including advance directives, long term care planning, Social Security, Medicare and Medicaid, and other relevant matters to aging all fall under the umbrella of elder law.

An older family member who legally prepares for their aging process helps their family members by addressing day to day issues that affect their actual care through proper legal documentation should the senior become incapacitated. Seniors often falsely assume that a close family member, including a spouse, will automatically be able to make decisions on their behalf if something goes wrong with their finances or health. Postponing legal document preparation through an elder attorney generally winds up being more problematic and expensive to a senior’s estate and wellness.

Many seniors find making legal preparations uncomfortable at first, as the task forces them to confront and assess their mortality. Further into the process, many aging adults experience relief, having removed the fear of the unknown of aging to the best of their ability. Legal preparation can keep a senior from health or financial ruin if they become incapable of making informed decisions regarding these matters. In the absence of legal documents, their family is left with the expensive and time-consuming process of petitioning the courts for legal authority to act on their loved one’s behalf – referred to as establishing a guardianship. By planning early and making sure the correct legal documents are prepared stress on the senior and the senior’s loved ones is greatly reduced.

Personal choices regarding end of life care and the disposition of assets and property outlined in legal documentation guarantees that your wishes will be respected by law. This documentation is especially important for seniors when a family member might seek control over the process, whether moral or self-serving, to follow their whims when handling your wellbeing when you are most vulnerable. Besides adhering to your expressed wishes, having your choices documented relieves family members from guessing what you want.

When preparing for your aging process, seek out a well-regarded attorney who specializes in elder law. While many general practice attorneys may have some experience with elder law topics, regulations are ever-changing and complex. It is best to find an attorney who specializes in elder law so that you get the best and most up-to-date advice.

Proactively address your aging process with a qualified elder attorney to make sure your wishes are carried out now, and in the future, regardless of what happens with your health. Both you and your loved ones will garner invaluable peace of mind knowing that your wishes are known and legally documented. We would be happy to help you with your planning and we look forward to hearing from you.

Strategies to Help Cover the Cost of Assisted Living

July 31, 2020Filed Under: Medicaid Planning, Senior Health and Wellness

With the price of assisted living rent varying from $2,000 to $5,000 monthly, it’s important to understand the strategies available to help cover these high costs. There are many paths available to offset these costs and the right path for you will determine on the unique circumstances of your past life, current situation, and future wishes.

Depending on what type of care your loved one needs, assisted living can be the most affordable solution when compared to a nursing home ($5,000 to $10,000 or more per month) or long-term in-home care. If closely monitored medical supervision is not necessary for your aging senior, assisted living might be the best financial choice.

The Various Strategies Available to Cover the Cost of Assisted Living

One payment strategy that has become popular is to use Medicaid. If your loved one does not have many financial assets and their income levels are low, this could be the right solution for them. Medicaid varies from state to state both in name and in eligibility requirements. Many states dictate that a senior is eligible if he or she has less than $2,000 in assets, or $3,000 if married.

If you are trying to help a senior with a creative financial strategy by gifting money and other assets to family members, known as “Medicaid spend-down”, the government has a five-year look-back rule regarding financial transactions. There are strict guidelines about Medicaid spend-down. If a senior is caught incorrectly spending down resources to qualify for Medicaid, the penalties are steep, including disqualification from receiving Medicaid for a lengthy period. Also, many states do not cover assisted living under Medicaid, but require the submission of an additional wavier. Be aware that Medicaid assisted living payments are only accepted by some communities and Medicaid beds are usually limited. There can be long waiting lists to enter into a Medicaid financed assisted living facility.

If your senior has a disability, he or she may qualify for Supplemental Security Income (SSI), which is a federally administered program. SSI is the government safety net for those destitute and wholly or partially disabled by illness or injury. SSI is a monthly payment which a senior can use to pay for assisted living. To qualify for SSI, contact the appropriate local Social Security office and provide financial documentation and a doctor certification to attest to your senior’s inability to work because of a medical disability.

If your loved one or their spouse is a Veteran, residential care could be paid for in a variety of situations with Veterans benefits. There is a set of benefits available to those with disabilities or service-related injuries, and there is also another set of benefits called Aid and Attendance, made available to any Veteran or surviving spouse who is both disabled and whose income is below a certain threshold. The Veterans Administration website outlines the complicated process to access benefits. It is extremely beneficial to work with an elder law attorney who knows the details of the programs and can assist with the application.

A life insurance policy can pay for your loved one’s assisted living. Often, seniors have a long-standing policy that was implemented to help family members upon their death, but a life insurance policy can provide financial support now. A process known as “accelerated” or “living” benefits is a “cash out” policy that can have your senior redeem 50 to 75 percent of the face value of the policy. Each amount is based on specific policy conditions as well as individual corporate rules. Some policies can only be cashed out if the policyholder is terminally ill while other companies are more flexible in cash outs. If your senior’s particular company does not allow the policy to be cashed, it can still be sold to a third-party company who usually affords the same 50 to 75 percent face value cash out. That company continues to pay the original premiums until their death, at which time the company redeems the full value of the policy. Finally, if your loved one’s policy is of lesser value, it may qualify for a life settlement option known as a “life assurance” benefit or conversion program, which allows the senior to convert between 15 and 50 percent of the policy value directly into long-term care payments.

Does your loved one have a long-term care insurance policy? It can pay for assisted living care. Policies vary, but once the determination and action is taken to collect on it, those monies can be paid directly to an assisted living facility or to the beneficiary who in turn pays the facility. It is wise to consult with an elder law attorney to help understand individual company requirements to optimize the process of collection.

An annuity can be used to pay for some or all of the senior’s assisted living. If your loved one invests a lump sum into an annuity, they will receive regular payments over a promised time period, usually the rest of their life. The annuity helps to stretch your senior’s budget and guarantee at least some money is coming in, even in the event they live longer than expected. Most annuities allow the beneficiary to continue to receive money regularly even if the purchase premium runs out. If your senior were to live a very long time, they would get more back than they put in and an added bonus is that annuities are oftentimes not fully counted as assets by Medicaid when applying for government assistance. The income is counted but not the value of the asset. It is imperative to seek the advice of an elder law attorney before opting into an annuity as they are complex financial products and a wrong decision could be disastrous.

Reverse mortgages are another strategy to pay for assisted living. If your loved one owns their home outright or has only a small mortgage on it, they can get cash value from their home equity in a lump sum or series of monthly payments. The bank will decide the valuation of the home based on multiple factors like the homes worth, interest rates and the applicant’s age. The borrower can stay in the house until death even if the loan balance exceeds the worth of the home. After death, the loan balance has to be repaid which usually means selling the home. Reverse mortgages were developed to help widows remain in their homes after the primary income earner passed away or if that spouse needed to move into assisted living, leaving the other spouse to reside in the long-time family home. Like annuities, a reverse mortgage is a complex financial product, and it is crucial to receive sound advice from a trusted professional and work with a reputable reverse mortgage company. If only one senior parent is living and they do not want a reverse mortgage, they might consider renting out their home and using a landlord to manage the property. The income from renting the house can be used to pay for assisted living expenses.

Lastly, it is possible to pay for assisted living with a bridge loan, which is a short-term loan of up to $50,000 explicitly designed to provide funds to move a loved one into an assisted living facility or continuing care retirement community. It is an unsecured (no collateral required) line of credit with the intent to finance the first few months of living expenses during the sale of the senior’s home, while the application for Veterans benefits is pending, or other actions that are taken that free up funds. Since the interest rates can range from 8.25 to 12.5 percent, this option is best as a short-term strategy. The other type of bridge loan is called the Capital Access Program. It is a lower interest lump sum loan secured by real estate or other assets that the company deems acceptable collateral. It is designed to help seniors come up with the large upfront entrance fee some senior assisted living facilities require. Both types of loans are based on the usual credit criteria: credit score, credit history, debt to income ratio, and more. The senior or an adult child can secure the loan, and up to six family members can cosign loan applications, allowing the risk to be shared among multiple family members.

If your loved one is healthy enough to successfully live in an assisted living facility, the monthly cost is likely a top factor when considering their options. These are some, but not all of the viable and creative ways to pay these costs. To fully explore the options available and what is best for your senior seek the advice of an experienced elder law attorney and make the best decision for your loved one. Contact our office today and schedule an appointment to discuss how we can help you with your planning and which strategy is best to help your senior pay for assisted living.

If you have questions or need guidance in your planning or planning for a loved one, please do not hesitate to contact our office at (513) 771-2444.

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