Estate Planning: Medicaid and Long Term Nursing Home Care
Medicaid law is detailed and it is impossible to outline all of the complicated rules and regulations. Contact Hilbrich Law Firm with your specific questions regarding Medicaid and long term nursing home care. That being said, below we summarize some very basic information. Please keep in mind that every situation is different and certain personal circumstances can change the entire picture. Also, the law is amended often. Families can sometimes deplete almost all of their assets for long-term care, so Medicaid planning is important. Effective Medicaid planning achieves Medicaid eligibility for an elderly relative while transferring a portion of his or her remaining assets to family members.
Medicaid rules differ greatly for single people and married couples who are over 65 years of age. Both groups must endure an evaluation of their total resources to determine whether they are eligible for Medicaid. If your monthly income and the total amount of your resources (bank accounts, stock, IRA, life insurance, etc.) fall below the allowable levels, then you may be eligible to receive Medicaid assistance.
Single people do not have as many options as married couples in the way assets are used in anticipation of a pending Medicaid situation, and there are fewer opportunities for Medicaid planning. A single person's resources may not exceed $1,500 to be eligible for Medicaid.
For married couples where one spouse enters a nursing home, certain assets are not counted as resources. The most common exempt assets are the couple's home, one vehicle, pre-paid funeral trusts, household goods, and personal effects. The spouse living at home (the "community spouse") is allowed to keep one-half of the couple's non-exempt assets up to a maximum of $109,560 for 2011. The spouse entering a nursing home must spend down his or her half of the assets in allowable ways in order to be eligible for Medicaid. There are a number of ways to spend down this half that will benefit the community spouse. Such spend down should not be undertaken without advice from our attorneys as spending down incorrectly will result in hefty penalties levied against the spouse in the nursing home.
Many of the rules governing Medicaid assistance were changed when the Deficit Reduction Act went into effect on February 8, 2006 and November 1, 2009. Because of these new laws, the State of Indiana will now be able to make a claim in the estate of the community spouse upon their death for any benefits paid on behalf of the deceased nursing home spouse.
The rules allow for a "shift" of income from the nursing home spouse to the community spouse so that the community spouse's total monthly income does not fall below a certain level ($1,823 as of July 1, 2011).
There can be penalties for transfers of assets or gifts made within the last five (5) years, whether or not these gifts were made in order to become eligible for Medicaid. The penalty is in the form of a certain number of months of ineligibility, during which time the family would have to pay for the person's nursing home care.
After Medicaid eligibility is established, it is often recommended that the community spouse prepare and execute a new Will, providing for the nursing home spouse through a Special Needs Trust, and sign and record a Deed transferring ownership of any real estate to the community spouse only.
Timing is critical in the Medicaid process to avoid paying nursing home expenses unnecessarily. Early planning with an attorney before nursing care is necessary allows the best chance for fair treatment by the government. While no actual planning can be accomplished until nursing home care is being provided for your loved one, Medicaid is complex. Consulting with an attorney as soon as you believe nursing home care is a possibility for your loved one is critical to avoiding penalties.
Indiana participates in a program for Long Term Care Insurance available in only four (4) out of the 50 states. If you are still relatively healthy and can obtain this insurance, it can protect your assets, depending upon the amount of insurance you take out. Your health and age will be factors in the cost of this insurance. You must be absolutely certain that the policy you purchase has been approved by the Indiana Department of Insurance as a qualified long term care policy. There are approximately ten (10) companies that sell these approved policies.
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