Medicaid FAQs
Many of my older clients are worried about the cost of nursing home care and how it will eat up all their savings. They are particularly concerned about losing their homes. Here are some answers to the most common questions. Remember that you can do a lot of things with an effective plan. The following is a very brief description of a very complex law. You cannot rely upon it as legal advice for any particular problem. It will however give you some guidance and a place to start.
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1. Will they take my home?
If you are married, the good news is that the healthy spouse referred to as the "community spouse" will be able to keep the home. Before you apply for Medicaid or usually in the first 30 days of application you will deed the house over to your community spouse. Gifts to your spouse are exempt, so it's often best to get the house out of your name.
If you are married or not, there are specific exemptions for a child that lives in your home and takes care of you, or for a disabled child. You may be able to protect your home that way.
If you are a widow or widower, the law wants your house to stand for your debts. Frequently you will have to sign a lien statement. Fight that. Tell them you want to go back to your home. Tell them your home is exempt by law and that you are not giving up on going back. Even if this is unlikely, Medicaid can not lien your house, if you have the subjective desire to go back home. Eventually though upon your death if the house is in your name alone, your estate will have to pay back the money the government gave you. Hopefully that will be less than the house is worth. With planning you can protect it, don't wait 'til it's too late.
2. What if I have income over the poverty limits?
New York is a "spend-down state." That means even if you make more money than the poverty level, if the nursing home costs more than what you have coming in, and if you are willing to pay what you can, the state will pick up the rest.
3. Does my spouse have to give up everything to pay my nursing home bills?
There is a complex scheme of countable and non-countable assets when figuring if you qualify for nursing home benefits. A spouse can keep the home, its furniture and fixtures, a car, a funeral trust for each of you of at least $8,000. Certain IRAs are included. All these are non-countable . But even more, he or she can keep $74,820 or more and all income up to $2,610.00 per month. So a cottage or stocks and bonds, life insurance, cash, CDs all can be saved for the community spouse. But planning requires that these be gifted over to your wife before you apply.
As for your income, the community spouse can take $2,610.00 a month(2008). If your combined income is less than $2,610.00 she can have your income and hers up to that amount. If you have $900 in a pension and $900 in social security, and she has $1,210.00 in income, she can keep all your money and not pay the nursing home a thing. If she has more, it puts her over the limit. The excess may be used for your care. However, the courts say that she can sign a refusal to support. She should not volunteer to pay for you. Usually, there will be some bargaining and frequently Medicaid will only demand 25 % of the excess. Remember that this takes planning. Get help and learn how to protect yourself and your spouse.
4. Will my kids have to pay my for my care?
No one but you is required to pay for your nursing home. On the other hand, I've had clients who were threatened with criminal welfare fraud for trying to hide their parents assets. You need good advice before you make any transfers, even if the transfer in your mind isn't a gift. There are things like selling your real estate for less than full value to your kids. The gift part of that is trouble. We frequently get real estate appraisals when we are making there kinds of sales. It is important to protect the children from welfare coming back at them.
5. How much can I give away without getting into trouble?
Gifting has just been made very difficult. The law adopted on February 8, 2006 presumes that if you give anything of value away before you go into a nursing home, you are trying to defraud your creditors. If gifting would work, everyone would give away their wealth the day before they go to a nursing home. The new rule is that is you give anything away for less than fair value at any time in the five years before you are in a nursing home and applying for medicaid nursing home benefits, you will be refused benefits. There are exceptions, but you need someone who knows to help you avoid these problems and maximize the governmental benefits.
Remember too that it now is a 60 month look back. If you apply for medicaid for nursing home care, you will have to show all your bank records for five years. Keep your records!
6. What’s this about a 36 month or 5 year look back?
The government wants to be able to look back at all your financial transactions to make sure you are not trying to avoid your debts. They feel that medicaid planning is a big abuse. So they adopted a rule that allows them to investigate you for 5 years for any gifts. Their statutes really have a lot of teeth and their ability to find out what you have done with your money is uncanny. Sometimes years later an IRS report triggers an investigation and you and your family are charged with welfare fraud. Life is too short to try to defraud the Department of Social Services. They are doing a great job in Jefferson County, but don’t cross them. Their staff attorneys are standing by to take you to court if need be. .
Since the law was adopted on February 8, 2006, all gifts after that date are covered. If the gift was made before the 8, the 36 month look back rule applies.
7. Can I use a medicaid trust to save everything for my kids?
Even if the medicaid trust is funded more than five years before you need to apply or if the gift has run the penalty period you can't use a trust to completely protect all your assets. The rule is that the only trust that can help is an irrevocable trust that says you can only receive income out of the trust. In other words you have to make it so neither you nor your trustee can have access to the principal. If it is tied up that tight, and you only have the use of the income, you can protect the principal for your beneficiaries. So far, I have not had a client that was so wealthy to be able to live on income alone, so the irrevocable trust is not one I have often recommended. Some clients have used this kind of trust to protect a portion of their estate for their heirs, or put a particular piece of property into the trust. There is a place for these, but they are expensive. I do on the other hand recommend other kinds of trusts for many purposes.
8. Where can I get information about nursing homes and home care in Northern New York?
You should contact the Office of the Aging. It is a state sponsored service for senior citizens and their families. They can give you a vast a variety of information on home care, housing grants, and nursing home care. Their number is 785-3191
9. I'm my mother's power of attorney. Can I use it to give away property to qualify her for Medicaid nursing home care?
The biggest problem is what does the power of attorney say. If it has the standard stuff it limits you to a $10,000 gift per person per year. You can give others $10,000 but no more. The statute says the gift can only be "what the agent deems is in the best interest of the principal..." So if you have money problems, you can't take from Mom. If you are using a plan to reduce the cost of nursing home care or the estate taxes that will be due at her death, you can make some gifts. Be careful, it's difficult if you don't treat the whole family as equals. Somebody might just sue.
On the other hand, if you have an expanded power of attorney, it can give you special powers to make larger gifts and in smarter ways. That's why you need an experienced attorney to help you plan for.
Give us a call at 782-3600 to make your appointment now or email me at evanslawfirm@verizon.net
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