Crisis Planning Attorneys Serving the Boston Area
Essentially, there are two types of long-term care planning—Pre-Planning and Crisis Planning. Most elder law attorneys incorporate both types of long-term care planning into their practice since each client’s unique set of circumstances determines whether Pre-Planning or Crisis Planning is appropriate. When a client does not need immediate long-term care services (or is even anticipating needing such services), then Pre-Planning is the right option. Pre-Planning may incorporate an irrevocable trust, and is generally very successful, so long as the five-year lookback period has passed. After the five-year lookback period has passed, all assets transferred into the trust will be protected, allowing Medicaid qualifications. Pre-Planning can take the form of long-term care insurance or a Medicaid compliant annuity.
But what if it is too late for Pre-Planning, and the only thing left is Crisis Planning? In this case, you need highly experienced Family Estate Planning Law Group attorneys in your corner. Crisis Planning is appropriate when a person is in need of immediate financial relief from long-term care services, which are either already being provided or need to be provided soon. Those who failed to engage in Pre-Planning may lave little choice but to now engage in Crisis Planning. Crisis Planning strategies will depend on the person’s assets, income, and marital status. Since a married couple is allowed to keep more countable assets than a single individual, the couple may have more Crisis Planning options available to them. Some Crisis Planning strategies could include single premium whole life insurance policies or funeral expense trusts, which can be used to spend-down the countable assets.
Medicaid Crisis Planning
Far too often, individuals fail to realize the value of Pre-Planning until they are facing the long-term care financial burden. Other times, change can come quickly, with no warning at all, in the form of a sudden illness or serious accident. When a person finds himself or herself in sudden need of nursing home care, it may be very difficult to qualify for Medicaid to cover that care when there are assets available. Medicaid requirements vary from state to state, yet they all share a common element—complexity. Each state specifies a maximum allowed income for individuals and couples to qualify for Medicaid. The applicant’s total assets may not exceed the Individual Resource Allowance—which tends to be quite low. In some cases, the Individual Resource Allowance can be as low as $2,000.
Medicaid Crisis Planning happens when, prior to filing a Medicaid nursing home application (and in the absence of any Pre-Planning), 40-50 percent of a person’s assets are given to loved ones, with the balance of the assets transferred to those loved ones. An annuity agreement or promissory note will be signed by the loved ones in favor of the individual needing nursing home care and applying for Medicaid. This note or annuity agreement must be in compliance with all requirements—the transfer is essentially a loan to be paid back during the time the individual is ineligible for Medicaid nursing home care.
Because a loan and a gift were made, the Medicaid application will be denied. Medicaid will then determine the period of ineligibility based on the total value of the gift. As an example, suppose the Medicaid applicant has $250,000 in resources and makes a gift of $125,000 to a loved one. Suppose nursing homes in the area where the Medicaid applicant lives cost approximately $9,000 per month. Divide the $125,000 gift by $9,000, and you get 13.8 months. This means the person is ineligible for Medicaid nursing home care for 13.8 months. The Medicaid applicant must pay out of pocket for nursing home expenses for 13.8 months, using the funds transferred via promissory note as well as Social Security or the individual’s pension. Once the 13.8-month period has expired, the Medicaid application is re-submitted—after being brought up to date—and the applicant will then be approved. This allows 40-50 percent of the Medicaid applicant’s savings to be protected.
This makes the implementation of a Medicaid Crisis Plan an extremely valuable tool in preventing the disposition of one’s entire life savings. Remember, engaging in Medicaid asset Pre-Planning gives you much more ability to shelter and protect virtually your entire life savings and assets from the cost of nursing home care, so while Pre-Planning is still a good option, Crisis Planning can be necessary. During Medicaid Crisis Planning, certain possessions, like your home and automobile, are exempt for the purpose of determining Medicaid eligibility. Since the Medicaid applicant’s spouse can only keep half the couple’s assets up to a Maximum Community Spouse Resource Allowance of $123,600. This means that under the spend-down guidelines, all but $2,000 (or whatever the state’s Individual Resource Allowance is) must be spent down for the applicant and half of that (approximately $61,800) remains for the spouse.
Myths Regarding Medicaid Crisis Planning
If the value of non-exempt assets exceeds the Maximum Community Spouse Resource Allowance, do not think you can simply give away the “excess” assets. If you do, you will violate the Transfer Penalty Rule, perhaps disqualifying you from receiving Medicaid for months, or even years, depending on the amount you gave away. Unfortunately, there are many erroneous beliefs regarding Medicaid Crisis Planning. First and foremost, it is never too late to preserve and protect your assets for Medicaid Crisis Planning. Far too often, seniors or their families rely on the advice of nursing home staff who tell them they must spend-down all their money before qualifying for Medicaid. The nursing home actually stands to gain the most from your unnecessary spending—which is why they rarely tell you to consult a qualified elder law attorney.
Individuals and their family members may also be told that the nursing home will take care of the Medicaid application. This is simply not true. The nursing home will require that all your savings be spent-down before they will complete your Medicaid application for “free.” Many individuals may also think they will never qualify for Medicaid as they have too much money/assets. It is impossible to make such a determination until you have spoken to a Family Estate Planning Law Group attorney. Every person should know the actual facts regarding Medicaid Crisis Planning prior to making these important decisions. Others believe they must “hide” their assets or engage in illegal acts. Again, nothing could be further from the truth. Your FEPLG attorney will properly disclose all planning strategies to Medicaid during the application process. Medicaid Crisis Planning is legal, and you have the right to take advantage of this type of planning.
Getting the Help You Need from Family Estate Planning Law Group
At FEPLG, we will shield assets and income, ensuring a married couple with a spouse left at home will be protected against impoverishment. For unmarried individuals, we will make sure there are “rainy day” funds to supplement their quality of life for the remainder of their life. Without careful planning, Medicaid could potentially require the sale of your home or record a lien on your home. Our attorneys are often successful in saving the home, preventing a forced sale or lien whenever possible. We deal with Pre-Planning as well as Crisis Planning, even when an elderly person is already in a nursing home or long-term care. Sometimes that person may be paying huge amounts—as much as $400 per day—privately, for nursing home care. We can help spend-down assets, stopping the private pay to the nursing home, protecting assets for the person’s benefit, and qualifying the person for Medicaid to pay the costs of the nursing home. Contact an experienced Family Estate Planning Law Group attorney today!