By Monet Binder, Esq.
Although most people prefer not to think about the possibility of needing nursing-home care, statistics show that 70 percent of the adult population will need long-term care or some type of medical or healthcare services. How these services are paid for can become a primary concern for you or a loved one.
The combination of escalating medical and healthcare costs and the potential need for long-term care is one of the greatest risks facing seniors today, particularly someone with a chronic illness or serious injury.
Consider Heshy, a young at heart 85-year-old husband, father, grandfather, and great-grandfather. He has always been known to be full of life, frequently dancing at weddings, chaperoning, and playing ball with the children. Without warning, Heshy suffered a stroke and went from the hospital, to rehab, then into a nursing home because his wife was unable to care for him.
If you or a loved one needs to pay for an extended stay in a nursing home, it can be quite difficult or may even be impossible without the help of Medicaid. Since Medicaid is a means-tested program, in order to be eligible and qualify, a person’s income and assets must fall within certain financial limits. This is when protecting your money, home, income, and other assets becomes a real concern.
If you have the resources to pay for long-term care, you’re expected to cover the costs and pay your expenses until you are no longer able to, which can be financially devastating. At this point, if you qualify, Medicaid can step in and cover your medical and healthcare expenses for as long as they are needed.
Medicaid has strict rules of compliance and is a means-tested program. So, in other words, in order to qualify for the Medicaid program, essentially, you need to be financially impoverished. If you are fortunate enough to reside here in New York state, and you are single, you can keep up to $15,150 and still be eligible (as of 2018). If you are a married person needing nursing-home care, there are protections for your spouse, who does not need nursing-home care, and can live at home. In this situation, the well spouse has a maximum resource allowance of $123,600 (as of 2018). Certain types of resources are not counted, such as the equity value in your home in an amount up to $858,000, and one motor vehicle.
If you have resources above those limits, you may be told that you need to “spend down” your assets. This means you will be required to deplete most of what you own to pay for nursing-home care until you reach the poverty-level resource limits – in order for Medicaid to begin coverage.
Often, even if you do qualify for the Medicaid program and obtain coverage, Medicaid can seek to recover the amounts they paid for your cost of care. By way of example, after Leah’s husband passed away, she was living in their home until she fell and broke her hip. Forced to go into a nursing home, she remained there until she passed on. Medicaid then put a lien on her home in order to recover the sum of money spent for the cost of Leah’s nursing-home care.
There is an alternative. You can take steps in anticipation of the future need for long-term care and transfer assets in advance – to preserve your family’s resources while still qualifying for Medicaid. Keep in mind, Medicaid has strict rules of compliance, so it is important to contact an experienced elder law attorney for this type of planning. When done properly, it is most often the preferred strategy.
In addition to the income and asset restrictions imposed, when applying for nursing-home Medicaid you will be required to disclose all financial transactions, including gifts and transfers, for the previous five years. This length of time is commonly referred to as the “five-year look-back period” for transfers of assets. Any transfers of assets for less than their fair market value may prevent you from becoming eligible for Medicaid. Depending on the type and value of the asset transfer, you may be subject to a penalty period (time of ineligibility), which may even extend past the time when your assets have already been spent down.
The good news is that Medicaid rules don’t apply if your assets were transferred five years, or more, prior to the submission of your application. This is why it is best to plan in advance. There are legal solutions, including trusts, reallocation of assets, and asset transfer exceptions, a qualified elder law attorney can utilize to ensure Medicaid eligibility and help you preserve your assets, so you can pass them along to the people who matter most.
Many people have a false impression that elder law planning is not for them. They mistakenly believe they have too much money, income, or other assets to qualify for Medicaid assistance, or perhaps think that trust planning or reallocation of asset strategies are only for the wealthy.
The truth is that with effective planning, most people can be saved from financial devastation brought on by the costs of long-term care and receive the medical and healthcare services required as long as they need it.
Monet Binder, Esq., serves Brooklyn, Queens, and Long Island, dedicated to protecting families, their legacies, and values. All halachic documents are approved by the Bais Havaad Halacha Center in Lakewood, under the direction of Rabbi Dovid Grossman and the guidance of Harav Shmuel Kaminetsky, shlita, as well as other leading halachic authorities. To learn more about how a power of attorney can help you, you can send her an email at firstname.lastname@example.org or call 718-514-7575.
The information in this article is intended solely for your information. It does not constitute legal advice, and it should not be relied on without a discussion of your specific situation with an attorney.