Living Trust for Medicaid?

[ChrisC]

In all fairness to the lawyer putting on the workshop, he spent maybe 5 minutes of 90 minutes going over this. And, I imagine that just about every other estate lawyer would offer something similar since some people want this. Obviously, if you want to make money you offer what people want.

Right now, I'm struggling with what we want with a Trust and whether we need one at all.

I think you shouldn't be just considering shielding assets for Medicaid purposes, but determine whether the trust serves other purposes. We have trusts, but there isn't any Medicaid protection provisions in them because we don't intend to rely on Medicaid for any purposes. Our trusts are designed to make it easier for handing off our estates to a surviving spouse and later children/heirs, and provide for creditor and divorce protection for our children. My MIL created an irrevocable trust in the last few months of her life, but this was primarily designed for a special needs child (my BIL with MS) and to qualify her for VA benefits -- but she passed away before we could even apply for VA benefits for home and attendance benefits as a surviving spouse of a WWII era veteran. And if MIL needed LTC in a skilled nursing facility we were going to private pay for that from our own resources.

Many folks who get on this Medicaid protection, asset sheltering band wagon, have the tail wagging the dog. Determine what type of care you might need, what type of burden you might place on your loved ones, and go from there -- doesn't sound like a good plan to rely on Medicaid coverage as an initial step.

 

[travelover]

Re admission to a nursing home on Medicaid, we found that if a resident has to go to the hospital, they are considered to be vacating the nursing home. Then they (or loved ones) need to find a new nursing home if there are no beds open at the previous place, once they are well enough to leave the hospital. Once on Medicaid, it would seem to be even more difficult to get a "new" admission.

 

[Mr._Graybeard]

Except for highly expensive and exclusive private pay facilities, in many locations skilled nursing facilities accept both private pay and Medicaid recipients so there is little, if any, difference in patient care. In places that we have looked for family members in NYC, Northern Virginia, and North Carolina, the only difference in such facilities for patient care between private pay and Medicaid recipents is whether you have a private room or shared room.

I think you're in for a rude awakening when you start looking at skilled nursing facilities. Even the better rated ones I've seen (that provide a priority to private pay residents) don't provide the optimal care you'd want for loved ones or yourself.

I can't speak to your experience with skilled care resources. Having studied LTC availability in my area within the last decade, I know of one top-notch nursing home that I would look to first if DW or I required it. My father and mother were both there for rehab over the last 20 years, so I've seen the staff at work up close. I'm confident in their quality of care.

Their literature says they accept Medicaid, but the reality is, you'd better have enough money to pay your way for several years if it looks like you're going to be a long-term resident. There are no shared rooms.

It's common practice here for skilled care facilities to ask how you're going to pay before you're admitted.

Up the road is a dump of a place where the plebeians go who can't afford better. Last summer a resident was fatally injured there in an electrical fire that burned the bed.

 

[tinlizzy]

We recently had a desperate post from a daughter whose parents could not access the funds they needed to buy into a CCRC because they had put everything, including the house, into a trust in the attempt to protect their assets from Medicaid. The children were scrambling to try to try to break the trust so the parents could move to where they wanted. The initial lawyer said it could not be broken.

I think I now understand how the parents got themselves into this situation....

This is exactly what I thought of.

It makes me wonder if these lawyers have business interests in particular nursing homes in their area and are all but assuring future patients.

 

[Ginny]

This is medicare fraud and it does not work.

 

[athena53]

I think you shouldn't be just considering shielding assets for Medicaid purposes, but determine whether the trust serves other purposes. We have trusts, but there isn't any Medicaid protection provisions in them because we don't intend to rely on Medicaid for any purposes. Our trusts are designed to make it easier for handing off our estates to a surviving spouse and later children/heirs, and provide for creditor and divorce protection for our children.

I'm in the same position- I have a Revocable Trust, which provides no Medicaid shelter, but that wasn't my intent. I set it up when DH was alive- all the assets were in my name (he was 15 years older and I was the one who liked managing investments) and it provided for my brother to take over as Trustee if I died first, taking care of DH and then managing the remainder for DS. DS is honest, thrifty, married to a wonderful young woman, but little interest in investing. I'm also a bit concerned that a large % of anything I leave may go to their church. My brother is a CPA and also a devout Christian but has managed to balance giving (I'm sure he tithes at the very least) with enjoying what he has. There's only so much I can do from beyond the grave but I'm hoping my brother can give DS enough perspective that he and DDIL use the bulk of what they inherit for a secure retirement.

DH died in late 2016 and I know I've got to get the darn thing updated even though it clearly set out how things would go if he predeceased me- we knew that was the likely scenario. I just hate to spend the money!

 

[Walt34]

Except for highly expensive and exclusive private pay facilities, in many locations skilled nursing facilities accept both private pay and Medicaid recipients so there is little, if any, difference in patient care.

That was our experience with FIL as well. He had to have the assets to pay for a given amount of time (I think it was one year) but after that was exhausted they would have accepted Medicaid. However, this varies by nursing home and some will eject the patient to a Medicaid facility if/when assets are exhausted. In FIL's case, he passed before all assets were exhausted so the issue never came up. So you have to check with the individual nursing home since the policies on that do vary widely.

As far as it affecting care, understand that the people doing the hands-on care almost certainly are unaware whether a given patient is private pay or Medicaid, and they don't care. There is, I hope, a special place in Heaven for those folks though. At least the ones we saw.

Re shielding assets from Medicaid, the elder law attorney in MD where FIL was located did begin to implement a plan to shield half of his assets. It involved DW (who had POA) putting half of his assets into a separate account in her name, in effect "gifting" that amount to herself. Then, if FIL ran out of money, there was a 1-month penalty in receiving Medicaid benefits because of the five-year lookback BUT (I think, this was complicated and five years ago) if FIL paid for the month half of the month's penalty was either written off or forgiven. It also involved setting up a trust and making the account POD to the trust if DW got run over by that mad bus driver so her siblings would still get the funds.

Like I said, it's complicated and I never did fully understand it. He passed away before any of this happened so it became an academic exercise anyway.

Bear in mind that this was in MD. While Medicaid is a federal program, it is administered by the individual states and the rules can and do vary.

Initially both DW and I were uncomfortable with this idea for the same reasons that some others are. Then we concluded that we didn't write the rules and it was no different than arranging one's affairs so as to lower taxes or to get an ACA subsidy as so many others do.

 

[MRG]

Snip

Bear in mind that this was in MD. While Medicaid is a federal program, it is administered by the individual states and the rules can and do vary.

Initially both DW and I were uncomfortable with this idea for the same reasons that some others are. Then we concluded that we didn't write the rules and it was no different than arranging one's affairs so as to lower taxes or to get an ACA subsidy as so many others do.

Great point.

When my DM was in a home in FL, probably 10 years ago an elder care attorney pointed out some bizzare law there. Mom had dementia and needed long term care, dad was healthy. At that time she was allowed to sign off joint assets and in her case she would be indigent and Medicaid would kick in.

They moved back to be closer to my sister and that wasn't an option.

 

[ChrisC]

I can't speak to your experience with skilled care resources. Having studied LTC availability in my area within the last decade, I know of one top-notch nursing home that I would look to first if DW or I required it. My father and mother were both there for rehab over the last 20 years, so I've seen the staff at work up close. I'm confident in their quality of care.

Their literature says they accept Medicaid, but the reality is, you'd better have enough money to pay your way for several years if it looks like you're going to be a long-term resident. There are no shared rooms.

It's common practice here for skilled care facilities to ask how you're going to pay before you're admitted.

Up the road is a dump of a place where the plebeians go who can't afford better. Last summer a resident was fatally injured there in an electrical fire that burned the bed.

Well, we might have different standards in assessing what is suitable for ourselves or our loved ones. What you describe as 'top-notch" might be sub-optimal to me, or conversely, what you describe as a "dump" might be adequate to me. But in my view, no skilled nursing facility that serves a large group of people and structured along institutional lines will be adequate for my wife and myself, especially given the level of care that we can afford now. Top-notch to me is home care, period, in your own home or in a care home with fewer than 6 residents.

 

[Teacher Terry]

I was the guardian for a good friend of mine when her husband died. She had alzhemer's and I put her in a home that would take Medicaid and could not kick her out once her $ was depleted. It took a little over a year for that to happen. I know someone in TX that got an attorney to shelter a large amount of his assets when his wife went into a home. When he died they went to his daughter. This I think is wrong even if it is legal.

 

[athena53]

I know someone in TX that got an attorney to shelter a large amount of his assets when his wife went into a home. When he died they went to his daughter. This I think is wrong even if it is legal.

"Filial responsibility laws". Yeah, those can be scary. If my Ex hadn't died 11 years ago I'd have been very nervous for my son. The Ex was living on public funds for years before he died of multiple organ failure brought on by decades of alcohol abuse. It probably wouldn't have been a concern, though- my Ex never even paid child support and had no assets that he could have hidden from Medicaid even if that had been his intent.

 

[Walt34]

I know someone in TX that got an attorney to shelter a large amount of his assets when his wife went into a home. When he died they went to his daughter. This I think is wrong even if it is legal.

I think PA is another state where they are allowed to go after the grown children's assets, although my understanding is that in practice they rarely do.

 

[MRG]

I think PA is another state where they are allowed to go after the grown children's assets, although my understanding is that in practice they rarely do.

Yes! That was a big fear we had.

My DF had been gifting large sums to his church and well it just got stupid. While PA seldom do, they have.

 

[Bestwifeever]

...I know someone in TX that got an attorney to shelter a large amount of his assets when his wife went into a home. When he died they went to his daughter. This I think is wrong even if it is legal.

Do you mean the sheltered assets went to his daughter, or do you mean the state of Texas went to his daughter to recover the costs of the mother's care? I thought you meant the former, that the sheltered assets didn't go to pay for the care but went to the daughter?

PS if the sheltered assets went to the daughter instead of toward the mother's care, I have no problem with the state trying to get to get repaid for the care the mother received from the state, especially after the father passed away.

 

[Luck_Club]

working tax law isn't unethical

Ethically, I have somewhat of a problem with people shielding (hiding?) assets to qualify for government benefits. I mean if you have the money, why have taxpayers pay for it?

Many on this board "manage" their withdrawal strategies to maximize gov't subsides all the time.

Magic SS claiming time
Magic Roth Conversion formula
staying under ACA subsidies

Hypocrisy at its best!

I smell porky with this one...getting government out of the subsidy (charity) business would solve all these problems.

 

[Teacher Terry]

BWE: no the $ went to the daughter when the dad died. It was perfectly legal and I like my friend a lot but sometimes what is legal is not moral if you ask me. Each state is different. They sought the advice of an attorney and followed his advice when the mom went into a home.

 

[Scuba]

Many on this board "manage" their withdrawal strategies to maximize gov't subsides all the time.



Magic SS claiming time

Magic Roth Conversion formula

staying under ACA subsidies



Hypocrisy at its best!



I smell porky with this one...getting government out of the subsidy (charity) business would solve all these problems.

I have to agree that I don’t understand why several people think it’s wrong to shield assets to qualify for Medicaid, but are ok with all of the other things you mentioned. Philosophically I see no difference between reducing income to qualify for ACA subsidies when one has the resources to pay for unsubsidized insurance and shielding assets so that one can get Medicaid to subsidize LTC costs.

 

[audreyh1]

Many on this board "manage" their withdrawal strategies to maximize gov't subsides all the time.

Magic SS claiming time
Magic Roth Conversion formula
staying under ACA subsidies

Hypocrisy at its best!

I smell porky with this one...getting government out of the subsidy (charity) business would solve all these problems.

What does when to claim SS or deciding if and when to do Roth conversions have anything to do with government subsidies?

Unless you think anything someone does to reduce their taxes such as itemizing deductions is getting a government subsidy?

BTW - I find it rather troll-like to throw something provocative out there and then warn that you smell porky. Are you trying to get the thread shut down or trying to prevent others from arguing because they’ll be afraid of shutting the thread down?

 

[marko]

Hiding one's assets in order to access Medicaid (nursing home care) is SOP here in Mass. Lawyers advertise under the "Elder Care" euphemism.

IIRC 97% of all nursing homes in Mass are paid by Medicaid and there is no difference in care whether you self pay or via Medicaid.

In fact, last year I self paid for my brother's nursing home care and they had a hard time figuring out how to bill me as it was so unusual. His therapists urged me to find a way to get him on Medicaid as the therapies were so much better than what he was getting via BCBS

 

[joeea]

IIRC 97% of all nursing homes in Mass are paid by Medicaid and there is no difference in care whether you self pay or via Medicaid.

The difference is in which facilities will let you enter without being able to pay.

Once you are in, virtually all will let you stay should you run out of money and require Medicaid. But many won't accept Medicaid initially.

 

[jim584672]

Life Estate Deeds are big in NY. Basically gives your house title to a trust, but you have a right to reside in the home until death. At death the house title transfers to the named person in the trust. Since you don't own the house any more it is not subject to estate recovery.

 

[marko]

The difference is in which facilities will let you enter without being able to pay.

Once you are in, virtually all will let you stay should you run out of money and require Medicaid. But many won't accept Medicaid initially.

What I was trying to say is that 97% of nursing homes in Mass accept Medicaid patients upon entry.
Almost everyone in a nursing home here is paid by Medicaid (called MassHealth) either through need or via legal "elder strategies" and, as I learned, the benefits and quality of care are identical (perhaps by law?) to the few who self pay.

 

[Lstansbury]

+1 about LTC policy inhome care coverage. Paying for a MassMutual policy since age 57. Btw, there are many nursing homes that don't take Medicaid, ever, at least in my state. Private pay doesn't always equal great care, but it seriously helps. Some care quality stats can be found at nursing home.gov website that CMS populates with good data. Truly, the scariest scenario is Alzheimer's, dementia and pressure ulcer wound care. Anything else can usually be managed by skilled home care visits. Urinary incontinence is the big problem that causes the pressure ulcers, so keep those kegel exercises up people!

 

[pmac]

It is important to understand that Medicaid, unlike SS claiming dates, ACA qualifications and Roth conversion tables, is a government program only intended to provide a last ditch safety net for only the poorest of the poor. There are many, many people who genuinely have no or very limited assets and who desperately need the services that medicaid provides. Further, medicaid already places a significant and increasing burden on taxpayers. The tangible consequence of that burden is that lawmakers are looking to cut medicaid benefits which inevitably results in decreased quality of care for medicaid recipients.

Medicaid was never intended to provide benefits for individuals for those capable of paying for their own care. The entire purpose of the lookback is to avoid schemes, legal or otherwise, to prevent persons from transferring assets in order to place the burden of their care on the taxpayers, instead of using their own assets to pay for their own care. While medicaid eligibility rules differ from state to state, all states allow for the retention of assets, including a house, by a spouse.

Frankly, I believe the lookback period should be substantially longer that 5 years to prevent some the schemes that are being used to essentially shift the cost of care from individually who are financially capable of paying their own way to other taxpayers.

 

[pb4uski]

Many on this board "manage" their withdrawal strategies to maximize gov't subsides all the time.

Magic SS claiming time
Magic Roth Conversion formula
staying under ACA subsidies

Hypocrisy at its best!

I smell porky with this one...getting government out of the subsidy (charity) business would solve all these problems.

All of the above are just managing the timing of when income is recognized... claim SS at 62 vs FRA vs 70, do Roth conversions while your tax rate is lower or avoid tax-deferred withdrawals or conversions to stay within ACA limits... but they are all just accelerating or delaying income.

The Medicaid LTC game is much different... it is establishing trusts, moving/retitling assets to the trust, gifting your assets many years before you'll need nursing home care, etc.

Also, the magnitude of the benefits are a lot different... if over 5 years you Roth convert $250k at 10% rather than 22% you have saved $30k in taxes... if you get 5 years worth of nursing home coverage paid for by taxpayers then that is $175k +/-.... pretty significant difference IMO. Ditto for ACA subsidies... and for SS timing in theory minimal cost since it is supposed to be designed to be actuarially neutral.