Hooper Law Office,LLC Estate Planning Blog

Monday, September 8, 2014

Can the nursing home kick me out if I run out of money?

If the nursing home takes Medicaid reimbursement they can't kick you out.  This is true even if they don't have a "Medicaid bed" available.  Only a minority of nursing homes refuse to take Medicaid, so in most cases, you will be able to stay in the same semi-private room you had when you were paying with your own money.  If you were in a private room they will move you to a semi-private room when you go on Medicaid, unless your family is able to pay the difference in cost, but you won't be out on the street.  Because it is possible that the nursing home you select doesn't take Medicaid reimbursement, it is always a good idea to check before you enter if there is any chance you will run out of money.

Monday, September 1, 2014

Do I get to choose my nursing home?

Your options for choosing a nursing home are best if you enter as a "private Pay."  This means you are initially paying with your own assets or with long term care insurance.  If you enter the nursing home on Medicaid you may have limited options.  Most nursing homes will have a limited number of "Medicaid beds."  If there are no Medicaid beds available locally you might wind up in a nursing home that is not in your community, and difficult for your loved ones to get to.  Obtaining accessible care is one of the reasons people get long term care insurance, even if the policy benefit is for a limited period of time.

Monday, August 25, 2014

How do I qualify for Medicaid?

To qualify for Medicaid, a person must meet two primary economic criteria.   The first criterion is income; a resident in a nursing home that is seeking to qualify for Medicaid is expected to contribute a portion of his or her income to the cost of care.  The Medicaid recipient is allowed to keep a small amount of their monthly income for personal needs.  Currently this amount is $45.  The balance of their monthly income is paid to the nursing home for cost of care.  Medicaid will pay the remaining cost.

For nursing home patients with spouses living at home, income is handled differently.  In Wisconsin, the spouse at home is not required to contribute any of his or her own income to the cost of care of the nursing home spouse.  Additionally, if the spouse at home has little or no income, he or she can take some income from the nursing home spouse to supplement their own income. 

The second economic criterion is assets.  A person residing in a nursing home must spend down their cash assets to a very low level.  The spend-down target for a single person is $2,000.  For married couples, the asset target is more complex.  The spouse that remains in the home is allowed to keep a larger percentage of the family's cash assets.   See your estate and Medicaid planning attorney for a review and complete explanation of these complex rules.

Monday, August 18, 2014

Will my Revocable Living Trust protect my assets from nursing home costs?

A revocable trust is an important part of any estate plan that is designed to protect your family's assets from nursing home costs, but by itself will not protect your assets.   Trusts are the preferred way to protect assets, but the types of trusts that are used for this purpose are irrevocable trusts that hold assets you have given away.  Because irrevocable trusts remove assets from your direct control it is not generally recommended that you transfer your assets to them until it is reasonably likely you will need this type of planning.  Unless you anticipate the need for nursing home care within the next eight to ten years, the preferred way to plan is to set up a revocable trust along with powers of attorney.  This provides that if you are unable to implement your own nursing home planning in the future, someone will be designated to do so for you.

Monday, August 11, 2014

Will the Nursing Home take my House?

Typically, for purposes of determining qualification, the Medicaid office will ignore the personal residence of a Medicaid applicant.  This is especially true for married couples.  You could be living in a house valued at $500,000 or more, and still qualify for Medicaid as long as the other criteria are met.

There is a lot of bad nursing home advice given, and much of that bad advice centers around the family home.  Often, couples are told that they should "give the house to the kids."  There are several problems with this advice:

1) After the divestment penalty period, the home may be protected from nursing home expenditures and estate recovery; however, it is now at risk from creditors of your children.  Divorcing spouses, business problems, or personal injury lawsuits can be a bigger risk than the nursing home.

2) You have converted an asset that is considered in determining Medicaid eligibility into a  transfer for which you will be penalized.  The penalty will be a certain number of months that the transferor is ineligible for Medicaid.  the number of months that a  person is ineligible is determined by dividing the value of house, less the value of any retained interest, known as a life estate, by the monthly amount that Medicaid pays nursing homes.  For instance, if the house less the value of the retained life estate was valued at $210,000 and the state paid $7,000 per month for Medicaid-qualified residents, then the penalty period would be $210,000 divided by $7,000.  That is 30 months of ineligibility for transferring an asset that would have been ignored by the Medicaid office had it not been transferred. 

Always talk to a qualified estate and Medicaid planning attorney prior to transferring the residence.  Transferring the house may be a viable and important transaction, but it is often a matter of timing.  Do it at the wrong time or under the wrong circumstances and you will be creating more problems than you are solving.

Monday, August 4, 2014

The guy at the barber shop said one of his customers gave all his assets to his kids; should I do the same thing?

It is amazing how much legal advice is dispensed in barber shops and beauty parlors.  What is not as amazing is how much of that advice is just plain wrong.  More than any other type of estate planning, a good long term care plan must be tailored to the individual family and the family's assets.  One size does not fit all.  It is true that sometimes it will work to have your assets controlled by your children, but this is a small minority of the time.  Unfortunately, most of the time the barber's advice is tragically wrong.

The key to proper estate planning is to keep as much control over your life and  your assets as possible.  Giving your assets to your children does not achieve that goal.  Not only are the assets out of your control, but they are also subject to all of your children's creditors, the stability of their marriages, their own health concerns, and their financial difficulties.  Good long term care planning protects your assets, whereas giving assets to your children subjects the assets to additional risk.  Assets should only be divested as part of a carefully crafted plan developed with the assistance of a qualified professional advisor.  A carefully designed custom plan will allow you to keep the greatest degree of control.

Monday, July 28, 2014

I have health problems: will I qualify for long term care insurance?

A common mistake that people make is assuming that, because they have a medical condition, they cannot get long term care insurance.  While it is true that some medical conditions will disqualify you for coverage, you cannot know for sure without working with a qualified long term care insurance professional.

Monday, July 21, 2014

Long term care insurance is expensive, isn't it?

Not necessarily.  Certainly there are people with existing health concerns that would find, because of their condition, that even the most basic long term care policy would be prohibitively expensive.  Also, if you get a quote on the Cadillac of long term care policies with all the bells and whistles built in, you might find that such a policy is rather pricey.  However, if you work with a trusted long term care insurance professional and design a long term care policy specifically for your needs, goals, and budget, you will likely find that, as long as you can qualify for the policy from a medical standpoint, you will be able to afford it.

Lastly, there are two important points to keep in mind when considering the cost of long term care insurance:  1) Always seek a quote from a competent insurance professional.  2) Keep in mind that the monthly cost of staying in a nursing home is typically larger than the annual cost of the long term care premium.  Once you realize the size of the risk that you are insuring against, the cost of the premium may seem less expensive.

Monday, July 14, 2014

Are all long term care policies the same?

No.  Policy features can differ and some insurance companies offer policy features that others do not.  In many respects, you can design your own policy.  Many policies are designed to pay costs for a limited time (typically three or four years) while others will pay costs for as long as a person lives.  Some policies will return the premiums paid if you do not use the insurance, and other policies are coupled with life insurance or annuities.  Some policies have "inflation riders" built in to ensure the payments keep up with the cost of care.  There are also policies that pay a small daily benefit and are designed simply to supplement income;  others are designed to pay the entire monthly cost.  Some policies will pay for in-home care while others may not.

Like estate planning, long term care insurance is a custom-fit tool.  Each policy must be designed for the particular needs of the client.  Typically there will be no cost associated with exploring your options.  Be wary of standard quotes from the newspaper or the internet; without a professional's participation, you cannot be sure of what you are getting.  Also, some insurance companies are stronger than others, so it is advised to choose a company that is likely to be there when you need them.

Monday, July 7, 2014

What is long term care insurance?

Long term care insurance (LTC) is designed to pay some or all of a policy holder's long term care needs.  Long term care insurance is typically used in conjunction with a person's health insurance.  As discussed earlier, long term care comes in several forms:  home health care, assisted living, community based residential facilities, and nursing homes are a few of the most recognized forms.

The decision about which form of long term care is utilized by the LTC policy holder creates a unique situation in which the policy holder's goals match those of the insurance company, albeit for different reasons.  The insurance company wants to save on the costs of the policies they have issued, and keeping customers out of nursing homes will advance that goal.  Meanwhile, the policy holder wants to stay out of the restrictive nursing home environment and would rather receive care at home or in an assisted living facility.  For this reason alone, long term care insurance is an excellent option when available. 

Federal Legislation has given states the authority to implement "partnership" programs that may provide dramatic additional incentives for long term care insurance holders.  Partnership LTC policies allow holders to protect additional assets up to the amount paid by the policy. 

Monday, June 30, 2014

I have Medicare: should I worry about nursing home costs?

Yes;  Medicare is a health insurance program for those people over the age of 65.  Medicare will not pay for custodial care in the nursing home, but it will pay for rehabilitative care in a nursing home setting.  To qualify for Medicare coverage, a patient's nursing home stay must have been preceded by a three-night, or longer, hospital stay.  Typically, Medicare will pay for the first 20 days in the nursing home for those patients receiving physical therapy or other rehabilitative treatment.  Medicare will then pay a portion of the next 80 days in a nursing home.  After 100 days, Medicare will, in virtually all cases, cease payment.  Medicare also have the ability to terminate coverage before the end of the 100-day period if the patient is not making progress towards rehabilitation and recovery. 

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