LONG TERM CARE & MEDICAID PLANNING As our population continues to age, the need for medical services grows. This may include aides in the home, assisted living facilities or nursing home care. However, the cost of this type of care is growing faster than the need for it. With nursing homes charging in excess of $12,000 per month, a family may see their entire net worth spent on long term care costs.
If an individual does not have the means to privately pay or does not have long term care insurance, Medicaid, as the payor of last resort will cover certain medical costs. While a family can simply spend all assets and qualify for Medicaid, this provides no savings or protection of family assets for beneficiaries. Proper planning includes accelerating Medicaid qualification within the Medicaid rules. This first requires an understanding of commonly misinterpreted terms such as "look back period" and "period of ineligibility".
Transferring assets to beneficiaries to qualify for Medicaid is generally not permitted. However, understanding the effect of certain transfers on Medicaid eligibility can allow families to transfer assets to beneficiaries without adverse effect on Medicaid qualification. This may include exempt transfers, transfers outside the look back period, or transfers within the look back period creating a period of Medicaid ineligibility and retaining sufficient assets to privately pay during this period. This may also include utilizing existing resource and income exemptions that are commonly available. Even if an individual is in a nursing home, it is never too late to plan, but there are complex rules which must be addressed and contemplated before any gifting, transfers or planning can be done.
Pellittiere & Jonsson PLLC provides the necessary guidance to minimize the impact of potentially onerous long term care costs. The Medicaid system which provides financial assistance for certain medical costs is complicated and subject to strict rules and regulations. The failure to know and follow these rules may lead to dire consequences.
Proper implementation requires understanding of the following:
Long Term Care Insurance
Effect of coverage amounts, elimination periods and duration
New York partnership Insurance Policies
- Resource Exemption of $15,450
- New York partnership Insurance Policies - Income Allowance of $50 per month
- Spousal allowances:
* Resources up to $126,420
* Monthly income of $3,160.50
Transfer Rules - Permitted Transfers
- Look-Back Period - up to 5 years prior to Medicaid qualification
- Penalty Period - one month for every $11,692 gifted.
- Married Individuals utilizing exemptions and the Stubborn Spouse Rule
- Single Individuals utilizing a gifting and Promissory Note strategy
Use Of Trusts
- Supplemental Needs Trusts
- Third party SNT
- Self settled SNT
- Testamentary SNT
- Medicaid Trust
- Pooled Trusts