Decisions and the 5 year lookback

[imoldernu]

Without going into detail, I would suggest that anyone who cannot see the way clear to paying full nursing home costs for a spouse for an extended period... should do some extensive reading on the medicaid rules for your state. Should the patient be in the home for an extended period, @$75K to $90K per year, a nest egg may be quickly depleted.

Eligibility for help from medicaid varies widely by state, to the extent that choice of residence could be a factor. Ownership of a home rather than renting could also be a major factor. Additionally, the value of the home could also have a major effect on the long term assets of the surviving spouse. (Some states allow more than three times as much as others, when exempting assets from qualifying for the medicaid help. )

The amount that the spouse may exempt (and retain) also varies widely, when the approval for aid is involved.

The laws regarding "recovery" of Medicaid costs after death, also varies. Not all states require a lien on the home.

Add to all of this, the "five year lookback", and the entire subject becomes much more important, as the decisions that have to be made, cannot be retroactive.

We don't want, or expect bad things to happen, and it's easy to push hard decisions aside, but without a crystal ball, no one can predict health, for five years in the future.

The individual state laws are nuanced, and not always easy to find, or to interpolate. The Federal website is written in generalities, and gives no clue that the variances by state, could leave the healthy spouse with as much as hundreds of thousands of dollars more or less after the demise of the person receiving healthcare.

Thus, elderlaw... and the suggestion to obtain an elderlaw attorney. Most people who have gone through this with their parents or relatives have seen the ins and outs of the law, but usually only in the context of the state where they were involved.

At this point, it appears to me that some early research on the subject may be in order for those who see a potential need for the services, or maybe haven't settled on a permanent home location. The driving reason for looking now, is the five year lookback.

Am not an expert on this, but at this point, locked in to my original decision. Even if I were to find a potential better financial outcome, the time for change is past.

 

[Tadpole]

One of the things affecting my own planning is that I have never been able to determine how much of nursing home care will be deductible from taxes. When you withdraw twice your RMD to pay for nursing care your taxes really go up. So the amount that isn't taxed is important to planning. (Of course if they do away with the deduction for medical expenses entirely, it will be a mute point.) My state doesn't have income tax. That's a good thing. But it also isn't generous with Medicaid eligibility last time I looked.

 

[upset264]

And a lot more in some states

In Connecticut make that $153,300 a year based on the daily rate my father was paying in January before he passed away.

 

[pmac]

While this may not go over well, I have always found that "elder care planning" is simply a variation on welfare fraud.

It is essentially a method of deliberating transferring assets from parents to children outside of the "look back" (and often not outside of the lookback) so that the parent will be "impoverished" and therefore able to qualify for medicaid even though they transferred significant assets they could have used to pay for their own LTC. I believe the "look back" should be, and probably will be in the near future, 10 years to encourage the purchase of LTC insurance and minimize cases of intentional impoverishment.

Medicaid is intended to help the poorest members of society. It is not intended to be used by people who can and should pay for their own LTC, but attempt to shift those costs from themselves to the taxpayers in order to pass some assets onto their children.

 

[travelover]

While this may not go over well, I have always found that "elder care planning" is simply a variation on welfare fraud.
.......

I agree, to the extend it is done to preserve an inheritance. But seeing a spouse impoverished is pretty sad, especially if you are that spouse.

 

[upset264]

While this may not go over well, I have always found that "elder care planning" is simply a variation on welfare fraud.

It is essentially a method of deliberating transferring assets from parents to children outside of the "look back" (and often not outside of the lookback) so that the parent will be "impoverished" and therefore able to qualify for medicaid even though they transferred significant assets they could have used to pay for their own LTC. I believe the "look back" should be, and probably will be in the near future, 10 years to encourage the purchase of LTC insurance and minimize cases of intentional impoverishment.

Medicaid is intended to help the poorest members of society. It is not intended to be used by people who can and should pay for their own LTC, but attempt to shift those costs from themselves to the taxpayers in order to pass some assets onto their children.

If Medicaid planning is a variety of welfare fraud, then income tax planning must be a form of tax fraud. As they say, tax avoidance is legal, tax evasion is not. The same applies to Medicaid.

In all these matters there are winners and losers. But I wouldn't criticize anyone who takes the time and effort to learn what the laws are and arrange things to their best advantage. Having said that, neither of my parents were ever on Medicaid.

 

[LARS]

While this may not go over well, I have always found that "elder care planning" is simply a variation on welfare fraud.

It is essentially a method of deliberating transferring assets from parents to children outside of the "look back" (and often not outside of the lookback) so that the parent will be "impoverished" and therefore able to qualify for medicaid even though they transferred significant assets they could have used to pay for their own LTC. I believe the "look back" should be, and probably will be in the near future, 10 years to encourage the purchase of LTC insurance and minimize cases of intentional impoverishment.

Medicaid is intended to help the poorest members of society. It is not intended to be used by people who can and should pay for their own LTC, but attempt to shift those costs from themselves to the taxpayers in order to pass some assets onto their children.

I have three hoped for outcomes as relates to my own, and spouse's, death:

a) we die with our own teeth;
b) we die in our own bed; and,
c) we can hold our heads up high (metaphorically speaking) having paid our own way in this world.

Time will tell, but i am more than glad our parents each achieved these goals.

 

[Sarah in SC]

My FIL was on Medicaid after he'd exhausted his assets. His small pension check and SS covered all but a small portion of the monthly fee at the modest nursing home where he lived for nearly 7 years before passing away a few months ago.

I consulted several times with an elder law specialist attorney in his state of residence and was grateful for her experience. FIL received a small and unexpected inheritance, many years after the benefactor had passed, due to a lawsuit settlement. It was enough to upend his Medicaid eligibility, but not enough to cover a month of care. Having completed the annual eligibility forms for him for a number of years, I considered it money well spent to have the attorney advise us on an annuity that was payable to his spouse (MIL) to avoid his ownership of the inheritance.

Their home is worth perhaps $40,000, and Medicaid may one day claim half of it when MIL finally sells. This seems fair to me. These are the hard-working folks that programs like Medicaid are supposed to help. His standard of care from self-pay to gov't pay was unchanged, and they took good care of him all those years.

In my own situation, I would be unlikely to look at gifting or spending down assets for Medicaid eligibility, mostly because we have no children and thus no real desire to use our money for anything other than our own care. This also seems fair to me.

 

[SJ1_]

If Medicaid planning is a variety of welfare fraud, then income tax planning must be a form of tax fraud. As they say, tax avoidance is legal, tax evasion is not. The same applies to Medicaid.

In all these matters there are winners and losers. But I wouldn't criticize anyone who takes the time and effort to learn what the laws are and arrange things to their best advantage. Having said that, neither of my parents were ever on Medicaid.

+1 well said

 

[REWahoo]

I have three hoped for outcomes as relates to my own, and spouse's, death:

a) we die with our own teeth;
b) we die in our own bed; and,
c) we can hold our heads up high (metaphorically speaking) having paid our own way in this world.

Totally agree - although we've already partially failed on #1...

 

[Senator]

If you can go to a VA nursing home, the look back is only 12 months. Having a LTC policy that covers the entire amount if you are 100% dependent, would cost near as much as the home itself. Most policies that I looked at cover $100-$200 per day.

While this may not go over well, I have always found that "elder care planning" is simply a variation on welfare fraud.

It is absolutely not fraud. Imagine two people that go into a nursing home. One drank, smoked, and gambled all their money away. The other saved and loses it to the government.

If we want people to save, you need to encourage it, or at least not penalize it. Since I have no children to worry about, I am planning on strippers every night, right in the home, as I spend the last of my dollars.

 

[MBSC]

Having completed the annual eligibility forms for him for a number of years, I considered it money well spent to have the attorney advise us on an annuity that was payable to his spouse (MIL) to avoid his ownership of the inheritance.

I was going to ask if a Medicaid compliant annuity would be appropriate to help the healthy spouse. It sounds like the answer could be yes in certain situations.

Annuities and Medicaid Planning | ElderLawAnswers

As long as the (annuity) income is in the name of the community spouse, it's not a problem....She would continue to receive the annuity check each month for the rest of her life.

 

[LARS]

Totally agree - although we've already partially failed on #1...

Not to rub salt in the wound, but I am secure in #1 I think... never had a cavity! Wife, on the other hand, has to work at keeping her teeth in tip top shape...

 

[Sarah in SC]

I was going to ask if a Medicaid compliant annuity would be appropriate to help the healthy spouse. It sounds like the answer could be yes in certain situations.

Annuities and Medicaid Planning | ElderLawAnswers

Yes, that was exactly what was done in my in-law's case, though it was for a shorter period.

 

[clobber]

Can someone ELI5? (Explain it to me like I'm 5). I'm fairly young and don't quite understand the overall discussion here. Sure, I get the point of researching medicaid rules for nursing homes, but can you give me the general gist of the problems and surprises?

 

[JoeWras]

Can someone ELI5? (Explain it to me like I'm 5). I'm fairly young and don't quite understand the overall discussion here. Sure, I get the point of researching medicaid rules for nursing homes, but can you give me the general gist of the problems and surprises?

In general, what is being talked about is asset transfer in order to qualify for medicaid so that it pays nursing care.

An obvious example would be a large gift to your children, or some other asset transfer. (Gift taxes may apply here too, but that's another story.)

If you do this and a year later you appear "eligible" for medicaid based on your now net worth, well, maybe you are not. They'll look back and want to claw back what you transferred away, perhaps by delaying eligibility. You can end up in some serious limbo.

Even small gifts can be clawed back.

So, lawyers have other ways of protecting the assets. Books are written about that. I gave you a simple way to get into the issue. Pay your lawyer to find ways to avoid the issue.

 

[ivinsfan]

If you can go to a VA nursing home, the look back is only 12 months. Having a LTC policy that covers the entire amount if you are 100% dependent, would cost near as much as the home itself. Most policies that I looked at cover $100-$200 per day.


It is absolutely not fraud. Imagine two people that go into a nursing home. One drank, smoked, and gambled all their money away. The other saved and loses it to the government.

If we want people to save, you need to encourage it, or at least not penalize it. Since I have no children to worry about, I am planning on strippers every night, right in the home, as I spend the last of my dollars.

Is this new, the last time I looked up VA nursing home care in MN, there was no lookback period at all?

 

[JoeWras]

I got a real education about this issue with regard to Illinois rules when my dad got ill. "imoldernu" is right that each state has their own set of rules. My home state was different than Dad's, and that was my first set of confusion. Also, "senator" mentions the VA, and dad told us: "Just put me in the VA."

Whoops. Dad didn't understand the VA rules. Dad got VA health care, but not nursing care based on the percent of his disability. (The VA is a whole different set of byzantine rules!)

So the siblings and I were on the hook, managing Dad's assets. After briefly looking into some of the tricks, we decided to sweat it out based on actuarial tables like the one SSA provides. We also decided to self pay from dad's pension and our own funds should it come to that (but we figured dad would have to be in the top 10% of expectancy for that to happen.)

Ultimately, the money went down, but didn't run out.

This was our story. Everyone else will travel a different road. But it is wise to understand the issue.

 

[Senator]

Is this new, the last time I looked up VA nursing home care in MN, there was no lookback period at all?

In ~2001 it was a 1 year look back.

 

[youbet]

I was going to ask if a Medicaid compliant annuity would be appropriate to help the healthy spouse. It sounds like the answer could be yes in certain situations.

Annuities and Medicaid Planning | ElderLawAnswers

Great link! The Q and A's are very informative and thought provoking.

 

[mathjak107]

If Medicaid planning is a variety of welfare fraud, then income tax planning must be a form of tax fraud. As they say, tax avoidance is legal, tax evasion is not. The same applies to Medicaid.

In all these matters there are winners and losers. But I wouldn't criticize anyone who takes the time and effort to learn what the laws are and arrange things to their best advantage. Having said that, neither of my parents were ever on Medicaid.

our tax system is based on the fact that your fair share of taxes is what ever you can legally figure out you have to pay using the tools and laws available to you .

all the states give us tools and methods to reduce our exposure to long term care . if the states did not want you to protect assets and use medicaid it is very easy to stop . just close the doors on the tools and methods .

but as the now famous judge in Connecticut stated " it is not in the states interest to have the state filled with impoverished stay at home spouses because we have a bad system in place .

impoverishing the stay at home spouse will only increase the burdeon on the state to then support two people instead of 1 .

so with that , he denied medicaids recovery claim and ordered mrs jones and medicaid to reach a price for the long term care that will not upset mrs jones's lifestyle .

ny and florida now adopted similar stances and our elder law attorney said he has not one medicaid law suite . he only has negotiation cases .

we have a ny partnership plan where we buy 3 years coverage and ny agrees to not only protect all assets 100% but a big problem is that typically moving assets still leaves the stay at home spouse with an income issue .

once medicaid picks up the bill they are bound by the income limitations which in some states can be well below your cost of living .

all well and good you preserved a million bucks in assets but now try living off it . you can't , they will take the income .

our partnership protects the income of the stay at home spouse too .

so ny actually puts us on a special version of medicaid when the insurance runs out that pays the bills , protects 100% of the assets and protects the income . it is a version called extended medicare and it was created just to go along with the state partnership plans . it actually encourages you to use medicaid when the insurance runs out .

 

[imoldernu]

While there are literally thousands and thousands of posts regarding asset allocation, and investment strategies, very little has been written to cover this major planning factor... the importance of which is in the fact that action is required before the fact. There is no way to go back five years.

Lest the thought is to deal with the situation when it happens, this is one case where that won't work. The time for homework is now.

Consider

1.3 million elderly Americans live in nursing homes. 70 percent rely on Medicaid to pay bills that average $83,000 a year. No doubt most people would prefer to avoid living in a nursing home. But the fact is that many elderly Americans get to a point where they need long-term continuous care.Dec 20, 2012

1.3 Million Americans live in nursing homes

Now, think... permanent disability, such as a paralysis or a broken hip, that may require care over a long, and probably forever period.

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We live in an area with a relatively low cost for nursing home care. Should either DW or I be required to go to the nursing home for five years, with no extraordinary extra care, the cost (at today's rates) would be $450,000.

You can find out the current average costs in your own area... by using this calculator, which identifies the state and locale within that state, and allow you to estimate the cost based on the length of time spent in that type of home... ie. single bed, private room etc.

Long-Term Care Calculator - Compare Costs of Nursing Homes, Assisted Living, Home Health Aid By State - AARP

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If you have enough money to pay this, without affecting your own well being or that of your heirs, the right thing to do is to pay the full amount, however, if you choose to take advantage of your legal rights, and to participate in some of the advantages that your taxes pay for, taking the time to plan in advance may easily pay back much of the money you have worked to save.

The main point is, the time to do this planning is now. If a catastrophic accident, a fall from a bike that leaves paralysis, a debilitating disease or any other incident that requires long term nursing home care... if it happens tomorrow, it will be too late to protect against the five year lookback.

At the very least... go back to the original elderlaw link... and bookmark it for reference. The Q and A covers much more than nursing home costs. The five year lookback started yesterday.
http://www.elderlawanswers.com/questions-and-answers

And here's another Q &A site for legal questions based on the individual State laws.

https://answers.justia.com/questions/answered/elder-law

 

[gerntz]

If Medicaid planning is a variety of welfare fraud, then income tax planning must be a form of tax fraud. As they say, tax avoidance is legal, tax evasion is not. The same applies to Medicaid.

In all these matters there are winners and losers. But I wouldn't criticize anyone who takes the time and effort to learn what the laws are and arrange things to their best advantage. Having said that, neither of my parents were ever on Medicaid.

Yes. But transferring assets within the defined look back period is fraud.

 

[mathjak107]

there are legal ways of preserving up to 1/2 the assets utilizing a method of loans within the 5 year period

 

[gerntz]

One thing I saw done that was upheld at the time, say 7-10 years ago, was for an elder couple to make a contract with their child to provide non-medical care for the couple in return for their estate - housing, food, transportation, etc.. This went on for a couple of years till the couple required nursing home care. Medicaid ried to claim the assets, but the contract was ruled valid.