Medicaid Planning to Fund Long Term Care
If a loved one may need long term care, you’re probably wondering how you can afford it. New Jersey nursing homes average around $10,000 per month, and long term care in New York and most other states is also very expensive. Even if you’ve saved your whole life, long term care costs quickly could wipe out your nest egg, leaving your spouse impoverished and your heirs bereft. Fortunately, we usually find that Medicaid planning can help clients pay for long term care and still keep a marital home and some savings within the family.
To qualify for Medicaid, non-exempt assets (or in Medicaid parlance, “countable resources”) of you (and your spouse if you are married) must fall within modest Medicaid caps. You’ll also face limits on income and may need to use a qualified income trust if your income is too high. And you can’t just give all your money away – Medicaid looks at both spouses’ financial records for the past five years, and if either spouse has made gifts, Medicaid imposes a “penalty period” during which you’re ineligible for assistance. Furthermore, some legislators favor extending the Medicaid five year look back period even further.
Fortunately, Medicaid law includes provisions that allow you to preserve assets but still obtain Medicaid. However, Medicaid law is extremely complex and misunderstanding the rules or timing an application incorrectly can cost hundreds of thousands of dollars. Guidance from experienced Medicaid planners is essential.
Medicaid planning can keep savings within a family that otherwise would be lost to long term care costs. To start Medicaid planning, we listen to your concerns. After all, why should you devote a lot of time and effort to an exercise unless it is targeted to your individual needs. Our next step is to take what you tell us and develop a detailed analysis of your needs, goals and circumstances. This helps us determine which tools and techniques (trusts, life estates, exempt purchases, annuities, transfers, etc.) may aid us to reach your goals and how to fit them together. It’s like a puzzle, but one that requires in-depth knowledge of complex Medicaid laws. It also helps to enjoy learning what is important to each client.
We understand that Medicaid planning can be the difference between maintaining a spouse’s quality of life and the poor house. That’s why we don’t do one-size-fits-all plans. We listen to you and learn your goals so that we can design a comprehensive plan tailored to your situation. We then can work with you step-by-step to implement the plan and file the Medicaid application.
Power of Attorney
A power of attorney allows you to appoint someone to manage your financial affairs in case you lose mental capacity. However, it is too late to do power of attorney once you lose capacity so it is best to start early.
In New Jersey, to do Medicaid planning and protect assets from long term care costs, a power of attorney must contain special terms that generic forms often lack. The wrong power of attorney can cost you thousands of dollars in missed opportunities. We design powers of attorney that avoid these pitfalls and contain the right terms.
Qualified Income Trust / Miller Trust
In addition to resource limits, Medicaid has strict limits on how much income you can have. In 2015, applicants must have less than $2,199 in income. Applicants who have more income may still be able to qualify using a Miller trust.
A Word of Caution
Medicaid laws are exceedingly complex, and some unscrupulous Medicaid planners promise far more than can be delivered. Medicaid can pay for long term care in a nursing home, assisted living facility or in the community with home care aides, but only if you meet Medicaid’s strict and complex requirements. You should expect to pay some of your savings toward care, but we will help you qualify for Medicaid and reasonably limit your long term care expenditures. Do-it-yourself Medicaid planning inevitably leads to mistakes and can leave you being disqualified for Medicaid for a long time or losing a big chunk of your assets. For something this important, it pays to work with reputable lawyers experienced in Medicaid planning.