The Need For Medicaid Planning
By Kim Boyer
As Baby Boomers reach retirement age, more will be thinking about long-term care and planning ahead. For many families, this can mean trying to qualify for Medicaid to pay for the cost of long-term care. People are living longer and often suffer longer from debilitating diseases, therefore requiring more long-term care than ever before.
Need for Medicaid Planning. If you need heart bypass surgery, you will be covered by Medicare. If you develop Alzheimer’s disease, it is not covered. Long-term care is expensive and can easily drain a family of all of their assets, creating problems for family security. People often wait until disaster strikes before consulting an elder law attorney. By then, their options may be limited. In Nevada, we have the opportunity to petition the court for a division of income and assets to protect assets for the benefit of the well spouse. If there is time to plan ahead, more options are available.
Case Study of Division of Assets and Income. Ben’s wife has advanced Alzheimer’s and must go into a nursing home. He’s afraid that their entire life savings will be gone if he has to pay the nursing home $7,000 per month, and that he won’t be able to pay the monthly bills.
The couple has $117,000 in savings, a house and a car. His social security check is $1,984, and her social security check is $942. Their house and car are exempt. Without a court order, the state will total all of the countable assets and Ben would only be able to keep half of the assets. Also, he would only be able to keep his income, and none of his wife’s income.
It’s possible he will get to keep everything – all of the assets, all of the income and the house – and still have Medicaid pay his wife’s nursing home costs. Nevada law allows him to seek an increase in the amount of assets and income he can keep, by petitioning the court to increase the assets and income, with what is called a Petition for Division of Assets and Income and for Support. The Court can then set aside to Ben the federal maximums for 2014: assets of up to $117,240, and income of up to $2,931 per month.
Options for Planning Ahead. For people who are planning ahead, assets can be placed into proper irrevocable trusts, knowing that this creates a five-year ineligibility period. Families can also consider purchasing insurance products, which can be a solid planning tool for those who are healthy enough to qualify. Long-term care insurance is a great option, but many people choose not to purchase it because the premiums are so high. Another product is a combination of life insurance and long-term care insurance. For example, you can take $100,000 and purchase a product that will provide up to $300,000 in long-term care benefits if needed, yet retain a death benefit of at least $100,000. The product can be placed into an irrevocable trust to provide further asset protection. If the funds are not used for long-term care, they will go to the named beneficiaries.
Disclaimer: Information provided as a service of Kim Boyer, Certified Elder Law Attorney, updated as of 05/01/14. It does not constitute legal advice. For specific questions you should consult a qualified attorney.