Four Myths About Medicaid’s Long-Term Care Coverage

Four Myths About Medicaid’s Long-Term Care Coverage
Written By:
ElderCare Matters Partner
Ronald A. Fatoullah, Esq., CELA
Ronald Fatoullah & Associates
Great Neck , New York
An ElderCare Matters Partner

Long-term care is not cheap. The cost of employing a home care attendant in the New York City area ranges from $15 to $25 an hour and a nursing home bed runs from approximately $12,000 to $15,000 per month. Finding the right solution to help pay for long-term care is critical. While Medicare gets most of the news coverage, Medicaid still remains a mystery to many individuals. The fact is that Medicaid is the largest source for funding nursing home care. However, there are many myths about exactly who qualifies for Medicaid and what coverage it provides. Here are four myths followed by the real story.

Myth #1: Medicare will cover my nursing home expenses.

While Medicare does provide some coverage for nursing home expenses, the coverage is quite limited and is not long-term. Medicare covers only up to 100 days of “skilled nursing care” per spell of illness, of which only 80 days are fully covered. The patient must start paying a copayment of $148 per day (as of 2013) from the 21st to the 100th day unless he or she has supplemental insurance that will cover the copayment. To qualify for Medicare, the patient must enter a Medicare-approved “skilled nursing facility” or nursing home within 30 days of a hospital stay that lasted at least three days, and the care in the nursing home must be for the same condition.

Myth #2: You need to be poor to qualify for Medicaid.

Medicaid helps needy individuals pay for long-term care, but you do not need to be completely destitute to qualify. Generally, as of 2013, an individual is allowed to have up to $14,400 in assets and up to $820 in monthly income to qualify for Medicaid. In addition, retirement accounts of any amount in payout status are exempt in New York State. However, eligibility for Medicaid is not that cut and dried and often depends on the facts of each case. The rules vary depending on whether an individual is looking for “Community Medicaid”, which covers home care costs, or “Institutional Medicaid”, which covers nursing home costs. Eligibility is also different when the applicant has a spouse. Potential applicants or caregivers are strongly encouraged to explore with an elder law attorney the possibility of qualifying for Medicaid in order to help defray the cost of long-term care.

Myth #3: A prenuptial agreement will protect my assets from being counted if my spouse needs Medicaid.

A prenuptial agreement only works to keep property separate in the event of death or divorce. It does not keep property separate for purposes of Medicaid eligibility. However, a “sick spouse” may still be eligible for Medicaid even if the “well spouse” has assets. A “well spouse” should explore the eligibility rules with an elder law attorney.

Myth #4: I can give away up to $14,000 a year under Medicaid rules.

The rule that allows gifting up to $14,000 per year ($13,000 last year) is an Internal Revenue Service (IRS) rule, NOT a Medicaid rule. The IRS allows an individual to gift up to $14,000 a year without incurring any gift tax liability. However, under Medicaid rules, a gift of $14,000 or any other significant amount will trigger a penalty period. This means that for approximately every $11,000 gifted within the 5 year period before a nursing home Medicaid application is filed, Medicaid will not cover the applicant for one month. It is important to note that there is no penalty period on transfers of assets for community-based Medicaid eligibility.

Dispelling the above myths should encourage individuals or their caregivers to explore Medicaid as an option to paying for long-term care. Medicaid is definitely a viable alternative for many of us and is commonly used. However, the rules are complex and it is critical to consult with your elder law attorney to ensure no stone is left unturned.

If you need help with this or other elder care / senior care legal matters, you can find thousands of Elder Care Professionals from across America on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.


Caregiver Agreements: Making the Pathway of Caregiving a Two-Way Street

Caregiver Agreements:
Making the Pathway of Caregiving a Two-Way Street

Written By:

An ElderCare Matters Partner
James J. Ruggiero, Jr., Esq.
Ruggiero Law Offices, LLC
Paoli, Pennsylvania
An ElderCare Matters Partner

Family caregivers play a major role in maximizing the health and quality of life individuals with acute and chronic illness in the United States. Recipients of care depend on family caregivers for assistance with daily activities, managing complex care, navigating the overwhelming health and health insurance systems and communicating with health care professionals. Family caregivers provide valuable care out of love and often necessity but the role of caregiver is an extremely demanding job. According to the National Alliance for Caregiving, 37% of caregivers spend more than 40 hours a week providing care and another 30% spend 20-39 hours assisting with needs. Caregivers cope with physical, emotional, spiritual and financial challenges brought about by the demands of the job and the need to reduce or forgo employment to care for a loved one. These challenges affect the caregiver’s health and quality of life as well as the recipients.

Long-term caregiving has significant financial consequences for caregivers, particularly for women. Caregivers face the loss of their own income, loss of employer-based benefits, shrinking of saving to pay for caregiving costs and a threat to their retirement income due to fewer contributions to retirement vehicles. One way to compensate an adult child willing to devote so much of his or her time to caring for an ailing or aging family member is through a caregiver agreement. The agreement is essentially an employment contract between the caregiver and the recipient of care. The family member and the caregiver stipulate to a caregiver’s tasks, the hours spent caregiving and financial compensation. Often it is hard to accept that a caregiver may want or need to be compensated for services rendered because love doesn’t pay the mortgage or for groceries but by having a binding legal contract in effect can protect both parties down the road.

Here are five important ways a caregiver agreement can help your family.

Caregivers get paid for the job they do

It offers a great way to support the person for their time and effort in caring. This may be a caregiver’s sole source of income or a second job. How much to pay a caregiver is up to the family. A good place to start is to look at how much a home health agency would charge. Current rates in Chester County PA are $18-25 per hour. These rates often come with minimum requirements and vary based on needs and time etc. After research and discussion, set a salary and establish a schedule for payment.

Define the caregiver relationship

A detailed caregiver agreement sets boundaries. It makes clear the extent of the services being provided and the amount of money the caregiver is getting paid. 

Keep peace among family members

Having a caregiver agreement in place helps minimize the conflict between family members over the handling of care. The existence of a contract helps elevate the validity of the arrangement and value the services provided by the caregiver. 

Clear the way for Medicaid

With regard to Medicaid eligibility, payments made to a caregiver under contract can reduce the care recipient’s countable assets, which in turn may accelerate Medicaid eligibility. Absent an agreement in writing, the money a recipient pays a caregiver may be deemed a gift by Medicaid. This triggering event may cause a period of delay where recipient may not qualify due to the current 5 year Medicaid look-back period. At the time of Medicaid application, Medicaid will total all payments made to caregiver for the past 60 months and divide that by the average monthly cost of a semi-private room at a nursing home in the state. This quotient is the penalty period which equals the number of months Medicaid will not pay for nursing home care. The monetary and emotional cost to the family for the delay in Medicaid far outweighs the time and cost to properly execute a caregiver agreement.

Keep care and money in the family

Many recipients find comfort in having care from a devoted family member over a stranger and the money the family pays for care stays in the family.

Caregiving is a journey. The journey changes daily, weekly monthly and yearly.

The caregiver agreement sets the stage for the journey and makes the pathway to caregiving a two-way street. It fosters open communication amongst caregiver, recipient and family members. It begins a relationship with an elder law attorney and may also be an opportunity to review, update or prepare legal documents including Authorization to Release Health Care Information, Health Care Power of Attorney, Living Will, General Durable Power of Attorney, Will and Trust(s). It paves the way for Medicaid planning, if necessary. The elder law attorney initiates the formation of a support team for the caregiver which includes professionals such as a financial advisor, banker, CPA, trust officer, insurance agent and local resources such as department of aging, religious organizations, hospitals and support groups.

With the understanding of the caregiver role, organization of legal documents and establishment of a support team, the caregiver relationship is on track for success.

Having a detailed, written caregiver agreement allows a caregiver to be Compassionate; Alert to current needs; Resourceful and Energetic in their care for a loved one.

If you need help with this or other elder care / senior care legal matters, you can find thousands of Elder Care Professionals from across America on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.

You can also find Elder Law Attorneys on ElderLawAttorneys.us and Estate Planning Attorneys on EstatePlanningAttorneys.us – 2 additional websites sponsored exclusively by the national ElderCare Matters Alliance.


Elder Law For Care Givers

Elder Law For Care Givers

Written by:

ElderCare Matters Partner
Don L. Rosenberg, Attorney and Counselor
The Center for Elder Law
Troy, Michigan
An ElderCare Matters Partner

Caregiving for someone with Alzheimer’s, a related dementia, or a physical illness is one of the most difficult jobs in the world. In addition to making sure that your loved one is safe and their daily needs are met, you are also faced with the fact that there are many financial and legal issues that must be addressed.  As if that were not enough, you also are trying provide the best quality of care at the least cost to the family.   Caregiving is expensive and stressful.  Hopefully, this article can provide some insight to the wisdom of consulting an elder law attorney as soon as one can.  An elder law attorney can provide the navigation one needs when confronted with the various complex laws to ensure the greatest quality of care at the least cost. 

Elder law is not just for senior citizens who are no longer independent or who are about to enter a nursing home. Elder law is for anyone who is middle aged and beyond — and sometimes even younger.  One may say Elder Law is for anyone who wants to be old one day.

There are now more than 5 million people in the United States living with Alzheimer’s and is now the 6th leading cause of death.  This is a 10% increase from 5 years ago, and clearly supports the long forecasted dementia epidemic.  One in eight persons age 65 and over have Alzheimer’s disease and nearly half of all persons over the age of 85 have Alzheimer’s.  Every 68 seconds someone develops Alzheimer’s disease; by mid-century someone will develop Alzheimer’s every 33 seconds. (Alzheimer’s Association Report, 2012 Alzheimer’s Disease Facts and Figures) In addition to the dementia epidemic there are the many millions of people that are afflicted with illness that also need care.  The fact is that for many, one day you are living a normal life and the next minute you are a caregiver.  

You are not alone. There are over 50 million caregivers in this county.  Studies show that 12 million people in this country need long term care. Twenty-one percent of American adults provide free caregiving for loved ones.   Fifty-nine percent of these caregivers either work outside the home, or have worked outside the home, while providing care. It has been estimated that the value of free services given by caregivers is in excess of $320 billion a year.  Additionally, as a result of caregivers, businesses are also effected by the caregiving epidemic.  Specifically, over 60% of caregivers work and dedicate on average 18 hours per week to provide care.  Family caregivers account for 73% of early departures and late arrivals in the workplace.  Caregiving by an employee costs the average employer $2,100 per employee or for all employers as much as $33 billion annually.  (Met Life Caregiving Cost Study Productivity Losses to USBusiness July 2006 and Caregiving in the U.S. by National Alliance for Caregiving in Collaboration w. AARP, 2005.) These services are provided by family members without regard to cost because of the love and respect they have for their loved ones. (Alzheimer’s Association Report, 2010 Alzheimer’s Disease Facts and Figures) 

These statistics only represent the economic cost of caregiving.  It does not even address the emotional and physical toll on caregivers.  The fact is that 70% of all caregivers over the age of 70 die first. (Alzheimer’s Association Report, 2010 Alzheimer’s Disease Facts and Figures)  People generally do not think about the health of the caregiver or plan for the unthinkable – the caregiver having health problems or passing away before their loved one with dementia.  It is for this reason that one must approach each situation from the worst case scenario.  The only way one can prudently plan is to plan for the worst and hope for the best.  The time to look down the road and make major decisions regarding your health and the health of your loved ones is now. 

It is important to understand the difference between an elder law attorney and an estate planning attorney. Estate planning attorneys are typically concerned with what happens to your estate upon your death and deal with disability when a person is no longer able to participate in their own decisions.  On the other hand elder law attorneys in addition to having estate planning expertise also can ensure that your affairs can be managed in the event of your disability, or even if you are competent and not disable to allow someone to become involved in your medical and financial affairs to the extent that you would want them to, as well as once you pass away.

Specifically, an experienced elder law attorney also has an special expertise in Medicaid, Veterans and Special Needs Planning and will address the following tough questions like: 

     Who will make my medical decisions when I am no longer able to make them? 

     If I am unable to care for myself, how can I achieve the greatest quality of care without bankrupting me or my family? 

     Who will be able to talk to my doctors and the hospital when I require guidance even though I am able to make my own medical decisions? 

     Who will make my end of life decisions? 

     What happens if I get sick, and is there a way I can stay in my home or in some least restrictive setting other than a nursing home and receive financial assistance. 

     What happens if I get sick and cannot stay in my home anymore, and how am I going to pay for this care? 

It should be obvious that for caregivers of loved ones with Alzheimer’s and related dementia or any health issue that information regarding Medicaid and estate planning is a necessity.

If you need help with this or other Elder Care Matters, you can find thousands of Elder Care Professionals on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.


Illinois Elder Law Attorney Provides Families with a Summary of Medicaid Facts & Myths on ElderCareMatters.com

MEDICAID FACTS & MYTHS

Written By:

ElderCare Matters Partner
Attorney James C. Siebert
The Law Office of James C. Siebert & Associates
Arlington Heights, Illinois
An ElderCare Matters Partner

MEDICAID FACTS

      • Proper Medicaid planning allows your loved one to qualify for Medicaid and preserve their life savings.
      • Through proper planning, money can be set aside to be used by the nursing home resident to purchase items not covered by Medicaid, such as clothing, barber or beauty salon services, perhaps a big screen television.
      • Proper planning allows you to use assets to protect a disabled or special needs child’s future, while still qualifying you for Medicaid.
      • Proper planning may allow you to qualify for Medicaid while still leaving an inheritance for your children and grandchildren.
      • A Medicaid patient receives the same level of care as a private pay patient in any nursing home that accepts Medicaid.
      • It is almost never too late to do effective Medicaid planning, but the earlier it is done the more options are available.
      • While Medicaid is a “spend down” program, with proper planning using various strategies and techniques, it is possible to keep certain assets and transfer or gift other assets without disqualification for Medicaid.
      • Medicaid limits the transferring of assets for less than fair market value, so don’t transfer or gift your property without proper legal advice to avoid Medicaid disqualification.
      • Medicaid rules are constantly changing, and the rules that applied to your family members or friends in the past may not apply to you now or in the future.

MEDICAID MYTHS

      • I have to spend all my money before I will qualify for Medicaid. False.While Medicaid is a “spend down” program, you don’t have to be destitute, or leave your spouse destitute, to qualify for Medicaid.
      • You need to plan years in advance to do effective Medicaid Planning. False. It is almost never too late to do effective Medicaid planning.
      • You can gift up to $13,000.00 a year without affecting your Medicaid. False. The $13,000.00 is the amount you can gift without taxes under Tax code, it is NOT an allowable transfer under Medicaid.
      • I put my child on my bank accounts as a joint tenant years ago so at least half is protected from Medicaid. False. Generally, non-real property assets such as bank accounts and brokerage accounts held in joint tenancy with a child are considered 100% assets of the Medicaid applicant, unless you can show that the child provided deposits of the child’s funds into the account.
      • My assets are in my living trust and therefore are not considered for Medicaid. False. Assets held in your revocable trust are considered your assets for purposes of Medicaid eligibility.
      • I can only spend down my assets on medical and nursing home bills. False. While some nursing homes would have you believe this, with the assistance of an Elder Law Attorney the money can be spent down in ways of greater benefit to the applicant, applicant’s spouse or family.
      • I can hide my assets and qualify for Medicaid. False. Intentional misrepresentation on a Medicaid Application is a crime and can result in criminal liability for both you and the person to whom the asset is transferred. Proper Medicaid planning uses the provisions of the law itself to achieve the applicant’s goals and everything is fully disclosed as part of the application.

If you need help with this or other Elder Care Matters, you can find thousands of Elder Care Professionals on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.


Life Transition Plan – Everyone should create one!

Everyone should create a Life Transition Plan!

ElderCare Matters Partner
Sheri Samotin, President

LifeBridge Solutions, LLC
Marina Del Rey, California & Naples, Florida
An ElderCare Matters Partner

What is a Life Transition Plan and why is it important?

A Life Transition Plan is a user’s guide to the end of your life that is laid out and specified by you in advance.  It is a “road map”, a compilation of all the important information that those whom you have chosen to step into your shoes will need to do their “jobs”.  A Life Transition Plan should include not only the obvious – assets, liabilities, income, expenses, important documents – and the like, but it must also address your wishes and decisions about things that may well occur when you can no longer contribute to the conversation.

Why do I need a Life Transition Plan if I already have a Last Will & Testament?

Older Adults should not just prepare a will, file it with their attorney and then conclude that they have done everything needed to get their final affairs in order.  They need to prepare a detailed Life Transition Plan while they are alive and well.

A Life Transition Plan should be updated regularly.  In fact, I recommend that you update your Life Transition Plan at least every six months and more often than this if you are experiencing rapidly deteriorating health or if you need to add new information – like a new home health care worker’s contract.

Once I have my Life Transition Plan established, whom should I share it with?

A Life Transition Plan should be shared with your adult children and/or with your care givers.  If you are not comfortable sharing this document , at least be sure that  someone knows that the information exists and  provide instructions as to how to access your Life Transition Plan when the need arises (sort of like an “In Case of Emergency, Break Glass” instruction).

Where can I get more information about making a Life Transition Plan?

You can find detailed information about Life Transition Plans, including the essential elements that should be included in every Life Transition Plan in my new book, Facing the Finish: A Road Map for Aging Parents and Adult Children.

If you need help with other Elder Care Matters, you can find thousands of Elder Care Professionals on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.


Tips to Manage Caregiver Stress

Tips to Manage Caregiver Stress

Written by:

An ElderCare Matters Partner
Robert Stelletello
Owner of Right at Home Oak Park / Chicago
An ElderCare Matters Partner

It starts with your Father needing help monitoring his daily medications. Not too much later he needs regular at-home care. If you are a primary family caregiver, you understand the tough sacrifices and joys of helping your elderly loved one with daily routines such as bathing, dressing and eating, or making medical and financial decisions.

Yet, without realizing it, your efforts to comfort and support your loved one may be eroding your own health by contributing to elevated risk of high blood pressure, stroke, diabetes and anxiety. Stress from caring for an aging loved one also can increase the likelihood of headaches, disrupt your sleep and cause depression. To help, try the following caregiver stress relievers:

  • Focus on what you can do, not what you can’t. Don’t give in to guilt. Feeling guilty is normal, but understand that no one is a “perfect” caregiver. You’re doing the best you can at any given time. Your house does not have to be perfect, no one will care if you eat leftovers three days in a row and you don’t have to feel guilty about asking for help.
  • Get connected. Organizations such as the Red Cross and the Alzheimer’s Association offer classes on caregiving, and local hospitals may offer classes designed for families of those suffering from the disease your loved one is facing.
  • Join a support group. A support group can be a great source for encouragement and advice from others in similar situations. It can also be a good place to make new friends.
  • Seek social support. Make an effort to stay emotionally connected with family and friends. Set aside time each week for socializing, even if it’s just a walk with a friend. Whenever possible, make plans that get you out of the house. Many caregivers share that maintaining a strong support system is key to managing the stress associated with caregiving.
  • See your doctor. Get recommended immunizations and screenings. Make sure to tell your doctor that you’re a caregiver. Don’t hesitate to mention any concerns or symptoms you have. Ask your doctor about ways to support your own health.
  • Refresh your own health. Exercise at the gym or take a brisk walk a few times a week. Be sure you maintain good nutrition and get sufficient sleep.
  • Recruit help. Enlist the support of family members, friends and neighbors who can lend caregiving help. Also, seek regular breaks through respite care offered by a professional in-home care service such as Right at Home.
  • Stay connected. Keep up your own family connections and friendships. Having a close friend or clergyman who you can share your thoughts and emotions with is crucial as you work through the unknowns and challenges of caring for another person.
  • Continue with your own life. To maintain balance, it’s important to stay active with your own interests, hobbies and social groups. Don’t skip the fun events or forgo your normal faith and community activities.

Relieving stress regularly before health issues arise – safeguards your loved one’s care and preserves your relationship with them – one shared meal, one doctor’s report and one fond memory at a time.

If you need help with this or other Elder Care Matters, you can find thousands of Elder Care Professionals on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.


Medicaid Planning For Married Couples

Medicaid Planning For Married Couples

Written By:

An ElderCare Matters Partner
Attorney James J. Ruggiero, Jr.
Ruggiero Law Offices, LLC
Paoli, Pennsylvania  19301
An ElderCare Matters Partner

Sometimes married couples find themselves in a position where one spouse is in need of skilled care and the other spouse is still well and plans to continue to reside in the family home. Under these circumstances, it is common for the couple to make a series of transfers to move assets out of the ill spouse’s names and into the name of the community spouse (with the assistance of an elder law attorney) for the purposes of qualifying for Medicaid. In order to remain Medicaid-qualified, the ill spouse must continue to keep an extremely small number of assets in his or her own name. An issue can arise when the well spouse fails to update his or her estate plan; if everything is left to the ill spouse, and the well spouse predeceases him or her, all of those assets that were transferred will go back into the name of the ill spouse and they will no longer qualify for Medicaid benefits. Working with a skilled elder law attorney is essential when a spouse needs skilled care; transfers must be made properly within the bounds of the complex and lengthy set of Medicaid rules.

What most people know is that Medicaid is a “needs-based” program, and in order to qualify, an individual must have very few assets in his or her own name (usually no more than $2,400.00). What people may not know is that for married couples, the well spouse who will continue to live in the community also faces a limitation on the assets he or she may have in his or her own name. This amount is known as the “Community Spouse Resource Allowance” (CSRA). In general, the community spouse can keep one-half of the couple’s total assets that are countable for Medicaid purposes, with a minimum of $23,448.00 and up to a maximum of $117,240.00 (for 2014). The community spouse is also entitled to keep a certain level of income, the Monthly Maintenance Needs Allowance (MMNA), which also has a floor and a ceiling. The community spouse is also afforded the ability to keep certain resources that would otherwise be considered “countable” if they were in the Medicaid applicant spouse’s name.

The CSRA and the MMNA are at the base of Medicaid planning for married couples. However, we routinely not only help families keep the family home, qualify for Medicaid, and ensure that Medicaid qualified individuals remain qualified regardless of any change in circumstance; but through the use of planning techniques and transfers all permitted under Federal and state Medicaid rules, we can potentially help the community spouse protect resources beyond the Community Spouse Resource Allowance.

For instance, Medicaid annuities offer one planning option for spouses whose resources exceed the CSRA. The use of a Medicaid qualified annuity can permit the community spouse’s resources to be reduced, while still permitting that spouse to make use of those assets for his or her benefit by turning the assets into a stream of income. As with all Medicaid planning, it is extremely important to get legal advice from a knowledgeable elder law attorney before engaging in any kind of Medicaid planning, including the purchase of an annuity. To be considered a “Medicaid qualified” annuity, the annuity must follow certain rules, otherwise the individual may be disqualified from receiving Medicaid benefits. And all transfers must be done within the boundaries of the intricate Federal and state scheme of rules and regulations governing Medicaid eligibility.

Having a loved one in need of skilled care is a challenging experience for any family. The thought of a spouse or family member entering a nursing home can bring worry and anxiety; and these emotions are sometimes compounded with the worry of how the family will afford the necessary care. There are certain protections under the Medicaid laws that will allow spouses the ability to keep some assets for their own benefit and living expenses while a spouse is receiving Medicaid payment for his or her skilled care needs. Consulting with an experienced elder law can bring comfort and piece of mind throughout a difficult process, and afford the family the ability to conserve as many assets as possible. Taking the time and expending the costs to plan now will pay off in spades later on. Although it may seem difficult to take action in these circumstances, we can’t stress enough that the earlier the planning begins, the more beneficial it will be.

If you need help with this or other Elder Care Matters, you can find thousands of Elder Care Professionals on ElderCareMatters.com – America’s National Directory of Elder Care / Senior Care Resources for Families.


Planning for Medicaid Qualification

Is it Unpatriotic to Plan for Medicaid Qualification?
by

smakuakane
Scott A. Makuakane, Esq., CFP
An ElderCare Matters Partner & the Hawaii State Coordinator for ElderCareMatters.com

Some people question whether Medicaid planning might be unpatriotic. After all, Medicaid is a “welfare” benefit funded by our tax dollars. Is it “wrong” to put yourself in the position to have the taxpayers pay for your long-term care? Let us begin by considering what it means to be a taxpayer.

Everyone knows that it is immoral and illegal (and unpatriotic) to cheat on your income taxes. But does that mean that any of us has an obligation to pay more taxes than the law requires? Of course not. The Internal Revenue Code allows us to take various kinds of deductions when we file our annual income tax returns. As long as we deduct no more than the law allows, we are engaging in the noble practice of tax avoidance. However, if we knowingly take a tax deduction in an amount or of a kind that we are not entitled to take, the terminology changes to tax evasion. For tax avoidance, a person is praised, for tax evasion, a person goes to jail.

In the 1916 U.S. Supreme Court case of Bullen v. Wisconsin, Justice Oliver Wendell Holmes wrote that “when the law draws a line, a case is on one side of it or the other, and if on the safe side is none the worse legally that a party has availed himself to the full of what the law permits. When an act is condemned as an evasion, what is meant is that it is on the wrong side of the line.” Taking economic advantage of what our law allows—staying on the “safe” side of the line—is both legal and patriotic.

Justice Louis Brandeis, whose tenure on the U.S. Supreme Court overlapped that of Justice Holmes, famously stated this same principle another way:

I live in Alexandria, Virginia. Near the Supreme Court chambers is a toll bridge across the Potomac. When in a rush, I pay the dollar toll and get home early. However, I usually drive outside the downtown section of the city and cross the Potomac on a free bridge. If I went over the toll bridge and through the barrier without paying the toll, I would be committing tax evasion. If, however, I drive the extra mile and drive outside the city of Washington to the free bridge, I am using a legitimate, logical and suitable method of tax avoidance. For my tax evasion, I should be punished. For my tax avoidance, I should be commended. The tragedy of life today is that so few people know that the free bridge even exists.

Knowing the alternatives that are available to you is the essence of wise planning. You cannot make a choice that you do not know you have. So if paying for long-term care is an issue for your family, learn all you can about Medicaid qualification so you can plan your and family’s financial future wisely. Availing yourself of a benefit that the law allows and intends cannot be unpatriotic.


ESTATE PLANNING FOR THE BLENDED FAMILY – This Week’s Article on ElderCareMatters.com

ESTATE PLANNING FOR THE BLENDED FAMILY
by Attorney George P. Guertin
An ElderCare Matters Partner

An ElderCare Matters Partner

Little attention has been paid to the estate planning issues confronting blended families. A blended family or step family is often comprised of children who are natural to only one parent, as well as children that are natural to both parents. Blended families face many issues that the traditional “nuclear” family does not face. These issues include disinheriting ex-spouses, protecting children from the previous marriage, providing for the new spouse, providing for the children of the new marriage, and minimizing estate taxation.

Without proper legal planning, your ex-spouse, as surviving parent/Guardian, would likely be appointed by the Probate Court to manage the inheritance you leave to your children. That’s right, your ex-spouse… managing your money. To make matters worse; what if your children later predeceased your ex-spouse, and were single and childless at that time? Who would inherit your assets then? That is right… your ex-spouse, as the next-of-kin of your children, would inherit your money. This can be avoided through the use of a Will that has provisions to set up a Testamentary Trust for the benefit of your children after you pass.

A Testamentary Trust is a Trust that is created by a Will and only operative after you pass away and the Will is admitted to probate. You can name someone you trust to be the Trustee of this Trust, who will make disbursements to your children for their health, education, and support. In your Will you can also specifically disinherit your ex-spouse to make sure under no circumstances are they to get anything from your estate. Furthermore, in your Last Will and Testament or a Trust you can make provisions to protect your new spouse.

In the absence of a Prenuptial Agreement to maintain separate assets, most spouses in blended families tend to blend (combine) their wealth. However, if you predecease your new spouse, then you may forever disinherit your own children of your share of such blended wealth! Thereafter, upon the death of your new spouse, your assets may be inherited by your stepchildren, or even by your new spouse’s next spouse and their children. A Will with Trust provisions or a Revocable Living Trust can prevent this problem.

Regardless of whether children are reared in a traditional nuclear family or in a blended family, great care should be given to protect any inheritance both for them, and from them. For starters, wealth representing a lifetime of your hard work and thrift can be squandered in very short order. Dollars earned just spend differently than dollars inherited! In addition to good old fashioned squandering, an inheritance can quickly vanish through divorce, lawsuits and bankruptcies.

Aside from disinheriting your own children, blending your wealth with your new spouse may unnecessarily enrich the IRS. How? The Internal Revenue Code provides an exemption to each taxpayer for purposes of sheltering a certain dollar value from estate taxes, with marginal rates reaching nearly 50%. However, this is a “use it or lose it” exemption, and you lose it when title to your blended assets vests in your new spouse upon your death. In addition to disinheriting your own children, this mistake alone can trigger hundreds of thousands of dollars in unnecessary estate taxes. Why unnecessarily enrich the Internal Revenue Service?

Proper planning can control where your assets go, and how they are used when they get there. This is especially important when planning for blended families and their unique needs. Although blended families face unique issues, these obstacles can be overcome through proper planning.

If you need help with this or other Elder Care Matters, you can find thousands of Elder Care Professionals on ElderCareMatters.comAmerica’s National Directory of Elder Care / Senior Care Resources for Families.


MEDICAID MYTHS : A Grain of Truth, but Mostly Myth – This Week’s Article on ElderCareMatters.com

MEDICAID MYTHS: A Grain of Truth, but Mostly Myth

ElderCare Matters, Michigan
Don L. Rosenberg, Attorney and Counselor
Troy, Michigan
Michigan State Coordinator, ElderCareMatters.com

1. Myth: “I have to give away everything I own to get Medicaid.”

The Truth: Basically, a person is permitted to own some property, and still be eligible for Medicaid. The trick comes in knowing what is “countable” and what is “non-countable” under the Medicaid rules. For a married couple or single person in Michigan this includes, for example, equity in one home up to $500,000, with certain exceptions to the equity limitation. Whether you are married or not, certain types of prepaid burial contracts are non-countable. There are many other types of “non-countable property,” such as extensive funeral and burial space planning and some types of annuities. The bottom line is, you don’t need to be completely without assets to be Medicaid eligible.

2. Myth: “I can’t give anything away and get Medicaid.”

The Truth: In some cases, the Medicaid rules provide that a person can be disqualified for giving away property. However, a lot depends on what is given away, to whom, and when. So again, it’s complicated and it changes all the time. Some asset transfers are penalized under the Medicaid rules and some are not. For instance, transfers: to a blind or disabled child, to a caretaker child, between spouses and for the sole benefit of a spouse are allowed transfers under Medicaid law.

3. Myth: “I have to wait 5 years after giving anything away, to get Medicaid.”

The Truth: The disqualification isn’t always 5 years long and sometimes there is no disqualification at all. True, there is a 5-year “lookback” for some asset transfers under the Medicaid rules. This means that the Medicaid agency will look back at all transfers of property, including sales for less than market value. However, the rules penalizing transfers do not apply to all transfers. See #2 above.

4. Myth: “I can keep all our marital property and my inherited property when my spouse gets Medicaid.”

The Truth: When a married person applies for Medicaid, assets in either or both spouse’s name are considered by the Medicaid agency. However, some assets won’t be “countable” and you may keep some as an asset allowance if your spouse enters a nursing home. In fact, there are very special techniques only available to a well community spouse that can protect all of a married couples assets, including the family cottage. See #1 above.

5. Myth: “If I put my property into my spouse’s name, I will be eligible for Medicaid.”

The Truth: Assets are counted, regardless of which spouse’s name they are in. However, the healthy spouse will be given several months to re-title assets from the name of the spouse in the nursing home, into the name of the healthy spouse. The Medicaid agency explains these rules when the nursing home spouse gets into the Medicaid program.

6. Myth: “Medicare will cover my nursing home bill.”

The Truth: Medicare only covers a small amount of the nursing home care provided in this country. Many older people are surprised to learn this. In general, there are 20 days of full coverage if you go into the nursing home after at least three days in the hospital, and are receiving skilled care (not intermediate level care). Then, if you still need skilled care, you can get up to 80 days of partial coverage from Medicare. After that, you will either pay out-of-pocket, or get Medicaid, unless you have private long-term care insurance.

7. Myth: “If I enter a nursing home as a private pay resident, I must use up my assets before I can get Medicaid.”

The Truth: You are not required to use your assets to private pay for the nursing home care. However, some nursing homes might try to make you believe that you do have to do this. They are paid less under the Medicaid program than they collect from private pay patients. Some people seek advice from an elder law attorney to find out how they can become Medicaid eligible before having spent a significant part of all of their assets on the private pay rate.

8. Myth: “I can only ‘spend-down’ my assets on medical or nursing home bills.”

The Truth: See # 7 above. Nursing homes may tell you that you have to spend your savings on the private pay rate, before applying for Medicaid, but this is not true. In fact, it’s against the law for them to tell you this!

9. Myth: “My power-of-attorney automatically has the power to take property out of my name, if I ever need Medicaid.”

The Truth: Your best tool to be able to plan for Medicaid eligibility, should you ever need it, is to sign a general, durable power of attorney that includes a “gifting” power. Your agent under the power of attorney will only be able to re-title your assets if your power of attorney contains a “power to make gifts.” Most powers of attorney don’t contain this, so you might want to ask your attorney to add it. The court procedures to transfer assets without a “gifting power” can be expensive and time-consuming, and may not allow the type of asset protection that many people would like to accomplish.

Without a “gifting power” your agent is generally limited to spending your money on your bills and selling your assets to generate cash, to pay your bills. A “gifting power” is recommended for people who want to become eligible for Medicaid and not be limited to the “non-countable” assets allowed under that program.

One more word about the “gifting power.” You should require your agent under your power of attorney to consult with an attorney experienced in Medicaid law before making any asset transfers.

10. Myth: “All property transfers will cause me to be disqualified from Medicaid.”

The Truth: Not all transfers of property will cause a person to become ineligible for Medicaid. See #2.

11. Myth: “My income may have to be used to pay my spouse’s nursing home bill.”

The Truth: This is not true in Michigan or the majority of states.

12. Myth: “All of my spouse’s income must be used to pay the bill if my spouse is on Medicaid in a nursing home.”

The Truth: The law allows you to keep a portion of your spouse’s income if your income is below certain limits. In addition to this allowance, you may be entitled to a greater allowance if the cost of maintaining your home exceeds a certain amount or if a state hearing officer or a judge orders a greater allowance.

13. Myth: “I can hide my assets and get eligible for Medicaid.”

The Truth: Intentional misrepresentation in a Medicaid application is a crime and can be costly. The IRS shares any information concerning income or assets you have with the county department of social services. You or whoever applied may have to pay Medicaid back to avoid prosecution.

14. Myth: “Medicaid rules that applied to my neighbor when he went in a nursing home will also apply to me.”

The Truth: Medicaid rules change, and change often, so don’t count on the law that applied to your neighbor still applying to you. Also, there may have been facts about your neighbor’s situation that you just don’t know. It’s best to have your situation analyzed by a competent elder law attorney.

15. Myth: “Medicaid will take my home.”

The Truth: Yes. It is true Michigan now has an Estate Recovery law but with proper planning by an expert attorney the home can still be saved. Estate Recovery means that people who receive Medicaid benefits for nursing home level care can be subject to repaying the state for the costs of their care after they die. Typically, that means a claim against the home of the Medicaid beneficiary.

The Estate Recovery law is full of traps for those that do not have the foresight to plan ahead with an experienced elder law and estate planning attorney.


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