Decisions and the 5 year lookback

[mathjak107]

Quote:

Originally Posted by upset264 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

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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]

Quote:

Originally Posted by upset264 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.

[gerntz]

Something that can really help preserve the assets is for the nursing home person not Medicaid eligible to turnover all of their assets to a high tax bracket child regardless of the look back period. The nursing home person thus has no income outside SS. That child then pays all the nursing home person's medical costs - which includes the nursing home fees - and if those medical costs exceed the SS income such that the child can claim the nursing home parent as a dependent, then all those medical costs are a deduction for the child and thus this reduces the costs to the combined parent & child by 30/40/50%. We did this back in the .com bubble period for my mother-in-law & with the huge stock market rise, we were able to basically tread water wtih her assets for five years. Low LTCG rates at the time helped also.

[mathjak107]

of course a divorce or accident by the kids can put all those assets at risk .

[gerntz]

Life is nothing but risks. Each of us have to decide how to manage them.

[athena53]

Nothing is certain, but given that DH has health issues and he's 15 years older than I am, it's most likely he'll go first and that he won't linger for years in a nursing home, so that simplifies my decision-making if I focus on the most likely case. Remarriage is out of the question even if I find some good male companionship, unless he's fully able to fund his own LTC.

My concern is that, as more and more baby boomers age, the states are going to be overwhelmed with oldsters whose LTC plan was "spend down so Medicaid pays". My prediction is that care for these people will be cut to bare sustenance. No Wi-Fi, exercise classes, libraries, trips to museums, wine at dinner, etc. That's not what I want for my remaining years- even if I need assisted living I want to use my mind and my body to the extent they're still working. The plan is that when I'm 75, I move into something at the level of the Erickson communities near Des Moines, where DS lives. I hope they come to visit. I should be able to swing that, especially after selling the house.

And I suspect Erickson and their ilk don't take Medicaid. My plan to avoid relying on Medicaid is more selfishness rather than some other, nobler motivation.