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special needs trusts for seniors

Special Needs Trusts and How They Can Benefit Seniors

Special Needs Trusts and How They Can Benefit Seniors

by Michael B. Bridges; Dobson, Jones, Ball, Phillips & Bridges, P.A., Attorneys at Law special needs trust is a trust created for an individual who has special needs. The primary reason for the special needs trust is to provide a fund of resources for the special needs individual while simultaneously allowing such person to continue to receive benefits available from government programs. If drafted effectively, the funds in the special needs trust will not be considered countable assets for the special needs individual regardless of the amount of assets held by the trust. Stated a bit differently, the Trust assets will not dis-qualify him or her from receiving government benefits, typically Supplemental Security Income (SSI) or Medicaid.

As with all trusts, a special needs trust has three parties, the creator of the trust, often referred to as the grantor or settlor, the trustee, and the beneficiary. The trustee is the individual or entity that manages the assets held by the trust and makes distributions according to the terms of the trust. The beneficiary is an individual that may be entitled to a distribution from the trust.

Distributions from special needs trust must be within the discretion of the trustee. However, distributions by the trustee can be made for a variety of items, including medical treatment, medical equipment, special aids, education, computers, travel expenses, vacations, funeral and burial expenses. In most cases, it is not advisable for the trust to make distributions of cash to the beneficiary or to make distributions on behalf of the beneficiary for the beneficiary’s shelter or clothing.

In general, there are two types of special needs trusts, the first party special needs trust and the third party special needs trust. These trusts are distinguished by who owns or contributes the assets to the trusts.

The first type is the first party special needs trust. With this trust, the person with special needs contributes his or her assets to the trust. Usually, these funds come from past savings, an inheritance or an accident settlement.

A first party special needs trust has a payback requirement. Upon the death of the special needs individual, any remaining assets in the trust must be paid back to the government for its expenses incurred on behalf of the special needs individual. It is quite unusual for the government to receive full reimbursement, so the first party special needs trust remains a “good deal” for the special needs individual. The first party special needs trust also has an age requirement. The special needs beneficiary must be under age sixty-five when the trust is established. The first party special needs trust must also be irrevocable.

A third party special needs trust is funded with the assets of someone other than the person with special needs.Usually, it is funded by a parent, grandparent or other relative. The third party special needs trust does not have a payback or age requirement. Therefore, upon the death of the special needs trust beneficiary, any remaining funds can be distributed to anyone or a charity. There is no reimbursement requirement to pay anything back to the government.

Accordingly, the third party special needs trust has considerable advantages over the first party special needs trust. If a parent has a child with special needs, it is better to establish the special needs trust with the parent’s assets during life or at death before the funds belong to the special needs individual to avoid the payback and age requirements.

How do special needs trusts benefit seniors? Many seniors have a child or grandchild that has special needs. A senior can provide for that child or grandchild through a properly drafted special needs trust as part of their overall estate plan. They can augment the special person’s resources and help him or her reach their maximum potential.

A senior can also create a testamentary special needs trust for his or her spouse through a Will. The trust can provide for the surviving spouse even if the spouse is receiving Medicaid benefits in a nursing home. A senior can protect and provide for their spouse most effectively in a difficult time.

Finally, a special needs trust can even assist a senior in qualifying for long term care through Medicaid’s nursing home program. If structured properly, the senior may be able to transfer assets to a special needs trust for the sole benefit of the special needs individual without incurring a penalty. This is an important exception to the transfer for assets penalty.

Each family is different and each special needs individual has his or her own unique desires and abilities. If you are interested in finding out whether a special needs trust should be part of your estate plan, I recommend meeting with an attorney experienced and qualified in drafting special needs trusts.

caregiving at home

In-Home Care: Helping Loved Ones Age in Place

In-Home Care: Helping Loved Ones Age in Place

5 steps for keeping older family members comfortable and safe, in their home or yours

In-Home Care: Helping Loved Ones Age in Place. Family caregiving is a key component to making that wish a reality. The 2020 Caregiving in the U.S. report from AARP and the National Alliance for Caregiving found that 43 percent of family caregivers are looking after people who live in their own home, and 40 percent share a residence with the care recipient.

Helping a loved one age in place may mean anything from stopping by a parent’s home to check in every few days to assisting a spouse or partner with tasks such as bathing and meal prep, as well as activities including medication management and administering injections. Whatever level of care you provide, these tips can help you help your loved one remain at home for as long, and as comfortably, as possible.

Develop a plan

Planning for both the short and long term is important. You need to stay on top of the daily stuff, the doctor appointments and prescription refills while thinking through the what-ifs of your relative’s age and condition.

You can’t anticipate every scenario, but being forward-thinking now will help you respond more quickly and effectively in an emergency. And don’t go it alone. Reach out to form a larger team of family, friends and others who can help you.

  • Determine tasks and find consensus. Ask team members what they’re willing to do to contribute to the individual’s care. Even if they live far away, they can handle jobs such as paying bills, ordering prescriptions and scheduling medical appointments. Work with them on a plan.
  • Be honest with yourself. What are you prepared to do? If you are uncomfortable with hands-on caregiving tasks, such as helping a family member bathe, ask if another team member can step in, or discuss whether money is available to hire a professional.
  • Summarize the plan in writing. A written record will ensure that everyone on your team, including your loved one, is on the same page, thus avoiding misunderstandings. Remember, of course, that the plan will likely evolve; update it as time passes.

Make adaptations for safety’s sake

If the person you’re caring for has difficulty getting around or has compromised vision or hearing, you’ll need to consider ways to make the home less hazardous.

Consider consulting a professional, such as an occupational therapist, geriatric care manager or aging-in-place specialist, who can assess the home and make recommendations. Be alert to changing needs over time.

  • Make simple fixes for fall prevention. Some basic, low-cost changes include removing trip hazards like throw rugs, making sure the home is well lit (use automatic night-lights) and installing items such as adjustable shower seats, grab bars and handrails.
  • Fine-tune the plan to account for dementia. Dementia brings with it particular worries about wandering and self-injury, but there are many ways to reduce risks. Examples include installing remote door locks, disabling the stove when it’s not in use and keeping the water heater temperature to 120 degrees Fahrenheit or less.
  • Modify more extensively if necessary. When physical limitations are more severe, you may need to hire a contractor to make structural changes, such as installing wheelchair ramps, creating adjustable countertops and widening doorways.

Manage health care needs

Caring for an aging or chronically ill relative can mean performing some basic medical tasks and keeping track of a confusing mix of medications for a range of ailments. The key is to stay organized and know how to get the help you need.

  • Stay on top of meds. Create and maintain an updated medication list with the name, dosage, prescribing doctor and other relevant information — a handy document to bring to medical appointments.
  • Be ready to handle medical tasks. In the aftermath of a loved one’s hospitalization, many family caregivers find themselves performing challenging tasks at home, such as injecting medicines and inserting catheters. Get detailed instructions and even a demonstration of how to do necessary procedures before you leave the hospital.
  • Set up home health services. Medicare will cover certain in-home services deemed medically necessary, including part-time or intermittent skilled nursing care, or physical, occupational or speech therapy. A patient who is considered homebound, or who is unable to make an office visit, may qualify for these services on an ongoing basis.

Maintain a healthy lifestyle

Caregiving can become all-consuming, especially if you are sharing a home with the person you’re caring for. You may find yourself playing nurse, life coach, nutritionist and social director.

All of these roles are important for maintaining your loved one’s mental and physical health. Just don’t neglect your own.

  • Address social needs. Isolation and loneliness are associated with poorer health; helping your family member and yourself avoid them is a key part of caregiving. You could find a community arts program for seniors, invite friends and relatives to visit, or go out to eat together.
  • Manage nutrition. Be conscious of any dietary restrictions, and encourage your loved one to maintain a balanced diet and avoid processed foods. Look into home-delivered meal programs, and be sure the person drinks plenty of fluids, as dehydration can cause fainting, headaches and more conditions.
  • Encourage exercise. Staying mobile can help older people maintain strength, balance, energy and brain health, among other things. Your loved one’s abilities will vary, and you should check any exercise regimen with a doctor, but the routine might include activities like walking, seated yoga, swimming or lifting small weights.
  • Establish boundaries. Everyone needs a level of privacy, especially if the person you’re tending to lives with you and your spouse or partner. Ideally, you should have some separation between living areas and be able to schedule time together as a couple.

Get help

Depending on the severity of your loved one’s problems, you may need a bit of assistance — or a whole lot of it.

Rely on your team for help with some caregiving tasks and to fill in so you can take breaks. Don’t feel guilty: Your own health — and the quality of your caregiving — will suffer if you try to do everything and don’t take time for yourself.

  • Ask friends and family members for help. Plenty of people in your life will be happy, or at least willing, to lend a hand if you ask. Maybe someone could pick up a prescription for you on the next trip to a nearby shopping center, or a neighbor could stop by with dinner once a week.
  • Farm out some household jobs. Consider paying for relatively small services that will relieve your burden, such as a weekly housecleaning, yard care or grocery delivery. If you live apart from your loved one, you could do the same for your home.
  • Hire in-home care. You can go through an agency or hire a caregiver directly, but either way, be sure to check references and background, and monitor performance carefully. Cautionary tales abound. It’s smart to rely on word of mouth. Ask fellow caregivers for recommendations.
  • Watch your mental health. As a caregiver, you are at a higher risk for stress and depression. If either grows serious, seek help from a mental health professional. And consider reaching out to other caregivers for support and advice.

Americans want to age in place, In-Home Care: Helping Loved Ones Age in Place

A 2021 survey of U.S. adults by the Associated Press-NORC Center for Public Affairs Research found that a large majority want to receive care in their own home if they need it. The desire is particularly acute among middle-aged and older adults.

  • Respondents ages 18 to 29: 63 percent
  • 30-44: 79 percent
  • 45-59: 81 percent
  • 60+: 80 percent

Source: “Long-Term Care in America: Americans Want to Age at Home,” AP-NORC

Read more related articles at:

How to Determine a Senior Needs Help at Home

Aging in Place: Growing Older at Home

Also, read one of our previous Blogs at:

Helping Elderly Parents to Live Safely at Home

Click here to check out our On Demand Video about Estate Planning.

LTC Insurance

Long-Term Care Insurance – To Buy or Not to Buy?

Long-Term Care Insurance – To Buy or Not to Buy?

Should you buy long-term care insurance or save up to self-insure? There are many trade-offs to consider. And, surprise: It doesn’t have to be one or the other. Your strategy over the years can change, depending on your needs and your finances.

Insurance companies offer many different long-term care products with various bells and whistles (such as LTC with life insurance or annuities), so it is important to determine what you would like to cover and what you can afford to pay on premiums. Since you have no idea of what the future holds for you, and there are many variables and unknowns — such as if and when you will need care or how much the insurance company may raise the premiums in the long term — this decision comes down to what makes you sleep well at night.

You will also need to make sure you qualify for long-term care, as some pre-existing conditions may prevent you from being insurable. (For example, you might be denied if you already need help bathing or dressing or you have Alzheimer’s or certain cancers.) You can also potentially get a discounted premium if you and your spouse choose to purchase policies together. Long-term care costs and increases in premiums can also vary by state.

For the majority of people, buying a long-term care policy is all about care at home, according to a study by Boston College. The study puts the lifetime risk of needing nursing home care at 44% and 58% for 65 or older men and women, respectively. Also, the study concluded that nursing home stays are shorter than previously believed: 10 months for the typical single man and 16 months for a woman.

If you decide you want to go ahead with a policy, there are several considerations, such as:

How many years should you insure for? What are the advantages and disadvantages to insuring for longer and shorter periods?

According to the Society of Actuaries’ studies on long-term care insurance claims, the average time for claims that last longer than a year ranged from 3½ to four years in 2014. Usually, two to four years is a good ballpark; three years is about average. The longer the benefit period the policy offers and the higher the policy benefit amount, the higher the cost to the policy buyer. So, it is a trade-off between accumulating and using the benefits and not using them at all. Essentially, the longer the benefit period that the LTC policy offers, the higher the risk the client might end up paying thousands of dollars in premiums and getting nothing in return.

Many insurance companies increase premiums, and you have no idea if or when this may happen. You might be paying $3,000 annually for a policy for 15 years and the insurance company decides to raise your premium to $5,000. If you decide this is too costly after 15 years and cancel the policy, you have already paid $45,000 to the insurance company and have not used the benefit. However, like other insurance such as homeowners, you may be paying for peace of mind but never have to claim on it.

Clients who cannot afford to self-insure currently because they do not have enough assets accumulated may be able to buy a LTC policy during their earlier years. As time progresses, there may be a point where their assets can support a long-term care event — and at this point, they can terminate their policy or modify it for less coverage. Keep in mind when a single person goes into LTC their expenses may move laterally (if you go into care you will probably sell your house and car and no longer travel), but with a couple, when one goes into care and the other doesn’t, the other spouse still has their usual living expenses, so you are faced with increased costs.

Is this a cash plan (indemnity) or a reimbursement plan?

A cash plan has more flexibility, because you are paid a cash benefit equaling the entire daily benefit, vs. being reimbursed for actual expenses. A reimbursement policy will only pay the full daily benefit when the actual cost of care is greater than or equal to the daily benefit.

If you do go into care and come out, does the policy reset, or do the benefits paid reduce the benefit available for the next occurrence?

Some policies have a restoration of benefits rider, which increases the total amount of care your policy will cover. If you go into care and recover, the benefit will reset to the maximum amount as if you never used it. So, if your lifetime benefit was $300,000 and you went into care and used $150,000, once you come off the claim for a certain period of time (usually 180 days) the benefit resets to the original $300,000.

Are there any policies with compound interest available, and if so, what do they cost?

Compound interest policies have better inflation protection but may have higher premiums. Some policies have a 5% simple interest, vs. others with a 3% compound interest. Depending on the policy and the rate, simple interest may be a better option over the long term as the breakeven point may not occur until later. Inflation is compounded, but if the LTC policy uses simple interest, at a certain point inflation overcomes the simple interest and the policy pays for less than the actual costs.

Does the policy have a waiting period?

The shorter the period, the more expensive the rider. You will be responsible for any costs during the waiting period.

LTC usually turns into a less-than-ideal investment at some point. The decision to buy is very individualized, and if you happen to use it early, it can be a good investment, because you have paid less premiums upfront and are using the benefits. The longer you take to use a policy, the lower the return on the policy. If you end up using the policy in the first five to 10 years, this can be very advantageous. However, the longer you take to use the benefits, the more sense it may make to just put money aside yourself if you can afford to self-insure. Of course, there is no way of knowing if and when an event will happen.

Read more related articles here:

Should I buy long-term care insurance?

Who Needs Long-Term Care Insurance?

Also, read one of our previous Blogs at:

What Is Long-Term Care?

Click here to check out our On Demand Video about Estate Planning.

medicare increases

Medicare Premiums to Increase Dramatically in 2022

Medicare Premiums to Increase Dramatically in 2022

Medicare premiums are rising sharply next year, cutting into the large Social Security cost-of-living increase. The basic monthly premium will jump 15.5 percent, or $21.60, from $148.50 to $170.10 a month.

The Centers for Medicare and Medicaid Services (CMS) announced the premium and other Medicare cost increases on November 12, 2021. The steep hike is attributed to increasing health care costs and uncertainty over Medicare’s outlay for an expensive new drug that was recently approved to treat Alzheimer’s disease. Because most recipients have their Medicare premium deducted from their Social Security check, the upswing in Medicare premiums means that the Social Security cost-of-living increase of 5.9 percent, which was the largest in 39 years, will be smaller for most people.

While the majority of beneficiaries will pay the added amount, a “hold harmless” rule prevents Medicare recipients’ premiums from increasing more than Social Security benefits. This “hold harmless” provision does not apply to Medicare beneficiaries who are enrolled in Medicare but not yet receiving Social Security, new Medicare beneficiaries, seniors earning more than $91,000 a year, and “dual eligibles” who get both Medicare and Medicaid benefits.

Meanwhile, the Part B deductible will rise $30, from $203 to $233 in 2022, while the Part A deductible will go up by $72, to $1,556. For beneficiaries receiving skilled care in a nursing home, Medicare’s coinsurance for days 21-100 will increase from $185.50 to $194.50. Medicare coverage ends after day 100.

Here are all the new Medicare payment figures:

  • Part B premium: $170.10 (was $148.50)
  • Part B deductible: $233 (was $203)
  • Part A deductible: $1,556 (was $1,484)
  • Co-payment for hospital stay days 61-90: $389/day (was $371)
  • Co-payment for hospital stay days 91 and beyond: $778/day (was $742)
  • Skilled nursing facility co-payment, days 21-100: $194.50/day (was $185.50)

Your “Medigap” policy may cover some of these costs.

Premiums for higher-income beneficiaries ($91,000 and above) are as follows:

  • Individuals with annual incomes between $91,000 and $114,000 and married couples with annual incomes between $182,000 and $228,000 will pay a monthly premium of $238.10.
  • Individuals with annual incomes between $114,000 and $142,000 and married couples with annual incomes between $228,000 and $2846,000 will pay a monthly premium of $340.20.
  • Individuals with annual incomes between $142,000 and $170,000 and married couples with annual incomes between $284,000 and $340,000 will pay a monthly premium of $442.30.
  • Individuals with annual incomes above $170,000 and less than $500,000 and married couples with annual incomes above $340,000 and less than $750,000 will pay a monthly premium of $544.30.
  • Individuals with annual incomes above $500,000 and married couples with annual incomes above $750,000 will pay a monthly premium of $578.30.

Rates differ for beneficiaries who are married but file a separate tax return from their spouse. Those with incomes greater than $91,000 and less than $409,000 will pay a monthly premium of $544.30. Those with incomes greater than $409,000 will pay a monthly premium of $578.30.

The Social Security Administration uses the income reported two years ago to determine a Part B beneficiary’s premium. This means that the income reported on a beneficiary’s 2020 tax return is used to determine whether the beneficiary must pay a higher monthly Part B premium in 2022. Income is calculated by taking a beneficiary’s adjusted gross income and adding back in some normally excluded income, such as tax-exempt interest, U.S. savings bond interest used to pay tuition, and certain income from foreign sources. This is called modified adjusted gross income (MAGI). If your MAGI decreased significantly in the past two years, you may request that information from more recent years be used to calculate the premium. You can also request to reverse a surcharge if your income changes.

Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. CMS estimates that the Medicare Advantage average monthly premium will be lower in 2022, from an average of $21 in 2021 to $19 in 2022.

For Medicare’s press release announcing the new premium, co-payment and deductible amounts for 2022, click here.

Read more related articles at:

Medicare Part B Premium Jumps Dramatically for 2022

Medicare Part B Premium Increase for 2022 Largest Ever

Also, read one of our previous Blogs at:

Can I Appeal More Expensive Medicare Premiums?

Click here to check out our On Demand Video about Estate Planning.

 

What It Means to Need ‘Nursing Home Level of Care’ for Medicaid Eligibility

What It Means to Need ‘Nursing Home Level of Care’ for Medicaid Eligibility

When applying for Medicaid’s long-term care coverage, in addition to the strict income and asset limits, you must demonstrate that you need a level of care typically provided in a nursing home.

Whether you are applying for nursing home coverage or through a Medicaid waiver program for coverage at home, you must meet the level-of-care requirement set by the state. Each state has its own criteria for determining if you meet the mandated level of care, and the criteria is not always clear.

The state looks at an applicant’s functional, medical, and cognitive abilities to determine if care in a nursing home is called for. In general, you must be unable to care for yourself or pose a danger to yourself without outside help. The following are the factors usually considered when making a level-of-care determination:

  • You need help with two or more “activities of daily living” (such as bathing, dressing, eating, moving, and going to the bathroom).
  • You need frequent medical care, such as assistance with medication, injections, IVs, or other medical treatment.
  • Your cognitive ability is impaired by Alzheimer’s disease or another form of dementia, you have trouble making decisions on your own, or you are unable to process information.
  • You have behavior problems, such as wandering away from home or aggressiveness.

When assessing a Medicaid applicant, the state will conduct the evaluation. The state may require a doctor’s diagnosis, but it will also likely require the applicant to answer a series of questions about his or her ability to perform activities of daily living as well the applicant’s mental abilities and behavior problems and the applicant’s family’s ability to provide support.

To apply for Medicaid, contact your local Medicaid office. Your elder law attorney can help you navigate the Medicaid application process, which is not easy.

Read more related articles at:

What is Nursing Home Level of Care & Its Importance to Medicaid Eligibility

What Defines “Nursing Home Level of Care” & Why it Matters

Also, read one of our previous Blogs at:

Protect Your Estate from Nursing Home Costs

Click here to check out our On Demand Video about Estate Planning.

HCPOA

Who Makes Health Care Decisions If You Can’t?

Who Makes Health Care Decisions If You Can’t?

Being able to make health care decisions for ourselves is so important to us, but what happens if you become incapacitated and are unable to voice your opinion?  If you don’t have a health care proxy or guardian in place, state law chooses who can make those decisions.

In an emergency, medical providers can take measures to keep us alive, but once the emergency has passed, the medical providers will look for someone to make the important medical decisions. If you are unable to make your own health care decisions, either temporarily or permanently, and you have nothing in place to allow someone else to make those decisions for you, then most state laws dictate who has the right to act on your behalf.

The list of surrogates who can make medical decisions for you usually goes in order of priority, starting with your spouse and adult children. Parents, siblings, grandchildren, and close friends may also be surrogates. These may not be the people you want making decisions for you, and not having your wishes spelled out can cause dissension among your family and confusion for medical professionals.

A few states (Massachusetts, Missouri, Nebraska, and New Jersey) do not have laws dictating who can act in an incapacitated person’s place. In those states, your family may have to go to court to get a guardian appointed. Even in states with surrogate laws, family members on the surrogate list may disagree over treatment and end up in court, asking the court to appoint a guardian. Guardianship is a legal relationship between a competent adult (the “guardian”) and a person who because of incapacity is no longer able to take care of his or her own affairs (the “ward”). The guardian can be authorized to make legal, financial, and health care decisions for the ward. The guardianship process is expensive, time consuming and very restrictive, so it is almost always a last resort.

The best way to avoid the state choosing who acts for you or the difficulty of guardianship is to have a health care proxy (or health care power of attorney) in place. A health care proxy is a document that allows you to appoint someone you trust to act as your agent for medical decisions. By executing a health care proxy, you are authorizing your agent to carry out your wishes. Doctors and other medical professionals will defer to the person named in the document to act on your behalf.

Contact your attorney to draw up a health care proxy.

Nursing Home Charges

Does Voluntary Payment of Past-due Nursing Home Charges Violate Federal Law?

Does Voluntary Payment of Past-due Nursing Home Charges Violate Federal Law?

Does Voluntary Payment of Past-due Nursing home Charges Violate Federal Law? Federal law prohibits a nursing home from requiring that past-due expenses be paid as a condition for a resident to be admitted to or continue to stay at a facility. But what if someone volunteers such payment?

This issue was recently litigated in the Commonwealth of Kentucky Court of Appeals. In this case, Erma was in a nursing home and filed for Medicaid benefits about 6 months after her arrival. Erma’s application was approved and Medicaid paid 3-months retroactive benefits to the nursing home. During her private-pay tenure, Erma had accrued a balance of about $35,000.

Erma’s daughter, Christy, executed a promissory note to the nursing home that promised to pay for this balance. Christy made one payment under the note and then defaulted. The nursing home filed suit against her for payment. Christy argued that the nursing home could have sought payment from Medicaid.

The trial court ruled in favor of the nursing home and Christy appealed. We now have this case out of the appeals court. In her appellate brief, Christy raised new arguments. The appeals court allowed the introduction of new arguments, under the palpable error review rule. “A palpable error which affects the substantial rights of a party may be considered by the court on motion for a new trial or by an appellate court on appeal, even though insufficiently raised or preserved for review, and appropriate relief may be granted upon a determination that manifest injustice has resulted from the error.”

Christy’s new argument was that the promissory note was illegal under the Nursing Home Reform Act and other federal regulations. Such laws state that a nursing home cannot require a third-party guarantee of payment as a condition for a resident to be admitted to or continue to reside in a nursing home. Christy claimed that the nursing home’s bookkeeping department brought her in to sign the promissory note but she testified that she signed it voluntarily.

Interestingly, while other states have precedent that allows a voluntary payment of the past due amounts owed without incurring a violation of federal statutes, Kentucky had no precedent on the matter before the instant ruling. Other states’ precedents ruled that if the federal government had intended on forbidding third-party guarantee payments, they would have explicitly done so. However, the federal laws do not ban the payments in their entirety, but only if the payments are a condition on the resident staying at the nursing home. The Kentucky appeals court here jumped on the bandwagon with other states and ruled in favor of the nursing home. Christy executed the promissory note voluntarily so it wasn’t predicated as a condition before Erma was allowed to stay at the facility. As a result, Christy was on the hook for the amount of the note.

Read more related article at:

How Does Nursing Home Billing Work?

Nursing Home Costs and Ways to Pay

Also, Read one of our previous Blogs at:

Protect Your Estate from Nursing Home Costs

Click here to check out our On Demand Video about Estate Planning.

Long Term Care

What Is Long-Term Care?

What Is Long-Term Care?

Long-term care involves a variety of services designed to meet a person’s health or personal care needs during a short or long period of time. These services help people live as independently and safely as possible when they can no longer perform everyday activities on their own.

Long-term care is provided in different places by different caregivers, depending on a person’s needs. Most long-term care is provided at home by unpaid family members and friends. It can also be given in a facility such as a nursing home or in the community, for example, in an adult day care center.

The most common type of long-term care is personal care—help with everyday activities, also called “activities of daily living.” These activities include bathing, dressing, grooming, using the toilet, eating, and moving around—for example, getting out of bed and into a chair.

Long-term care also includes community services such as meals, adult day care, and transportation services. These services may be provided free or for a fee.

People often need long-term care when they have a serious, ongoing health condition or disability. The need for long-term care can arise suddenly, such as after a heart attack or stroke. Most often, however, it develops gradually, as people get older and frailer or as an illness or disability gets worse.

What Are the Different Types of Home-Based Long-Term Care Services?

Home-based long-term care includes health, personal, and support services to help people stay at home and live as independently as possible. Most long-term care is provided either in the home of the person receiving services or at a family member’s home. In-home services may be short-term—for someone who is recovering from an operation, for example—or long-term, for people who need ongoing help.

Most home-based services involve personal care, such as help with bathing, dressing, and taking medications, and supervision to make sure a person is safe. Unpaid family members, partners, friends, and neighbors provide most of this type of care.

Are you a long-distance caregiver? See When It’s Time to Leave Home.

Home-based long-term care services can also be provided by paid caregivers, including caregivers found informally, and healthcare professionals such as nurses, home health care aides, therapists, and homemakers, who are hired through home health care agencies. These services include: home health care, homemaker services, friendly visitor/companion services, and emergency response systems.

Home Health Care

Home health care involves part-time medical services ordered by a physician for a specific condition. These services may include nursing care to help a person recover from surgery, an accident, or illness. Home health care may also include physical, occupational, or speech therapy and temporary home health aide services. These services are provided by home health care agencies approved by Medicare, a government insurance program for people over age 65.

Homemaker and Personal Care Services

Home health agencies offer homemaker and personal care services that can be purchased without a physician’s order. Homemaker services include help with meal preparation and household chores. Personal care includes help with bathing and dressing. Agencies do not have to be approved by Medicare to provide these kinds of services.

Find a Medicare-certified home health agency in your area.

Friendly Visitor and Senior Companion Services

Friendly visitor/companion services are usually staffed by volunteers who regularly pay short visits (less than 2 hours) to someone who is frail or living alone. You can also purchase these services from home health agencies.

Senior Transportation Services

Transportation services help people get to and from medical appointments, shopping centers, and other places in the community. Some senior housing complexes and community groups offer transportation services. Many public transit agencies have services for people with disabilities. Some services are free. Others charge a fee.

Learn more about transportation services from Eldercare Locator.

Emergency Medical Alert Systems

Emergency response systems automatically respond to medical and other emergencies via electronic monitors. The user wears a necklace or bracelet with a button to push in an emergency. Pushing the button summons emergency help to the home. This type of service is especially useful for people who live alone or are at risk of falling. A monthly fee is charged.

Long-Term Care Planning

You can never know for sure if you will need long-term care. Maybe you will never need it. But an unexpected accident, illness, or injury can change your needs, sometimes suddenly. The best time to think about long-term care is before you need it.

Planning for the possibility of long-term care gives you time to learn about services in your community and what they cost. It also allows you to make important decisions while you are still able.

People with Alzheimer’s disease or other cognitive impairment should begin planning for long-term care as soon as possible.

Learn more about advance care planning.

Aging in place infographic icon- click through for full text
Read and share this infographic to get tips on how to make home safe and accessible while aging in place.

Making Decisions About Long-Term Care

Begin by thinking about what would happen if you became seriously ill or disabled. Talk with your family, friends, and lawyer about who would provide care if you needed help for a long time. Read about how to prepare healthcare advance directives.

You might delay or prevent the need for long-term care by staying healthy and independent. Talk to your doctor about your medical and family history and lifestyle. He or she may suggest actions you can take to improve your health.

Healthy eating, regular physical activity, not smoking, and limited drinking of alcohol can help you stay healthy. So can an active social life, a safe home, and regular health care.

Making Housing Decisions: Aging in Place

In thinking about long-term care, it is important to consider where you will live as you age and how your place of residence can best support your needs if you can no longer fully care for yourself.

Most people prefer to stay in their own home for as long as possible. Learn about services, products, and resources that can help older adults stay in their homes.

Making Financial Decisions for Long-Term Care

Long-term care can be expensive. Americans spend billions of dollars a year on various services. How people pay for long-term care depends on their financial situation and the kinds of services they use. Often, they rely on a variety of payment sources, including:

  • Personal funds, including pensions, savings, and income from stocks
  • Government health insurance programs, such as Medicaid (Medicare does not cover long-term care but may cover some costs of short-term care in a nursing home after a hospital stay.)
  • Private financing options, such as long-term care insurance
  • Veterans’ benefits
  • Services through the Older Americans Act

To find home-based services, contact Eldercare Locator at 1-800-677-1116 or visit https://eldercare.acl.gov. You can also call your local Area Agency on Aging, Aging and Disability Resource Center, department of human services or aging, or a social service agency.

Read more about getting help to stay at home.

Learn more about long-term care outside of the home.

Learn more about paying for care.

For More Information About Long-Term Care

LongTermCare.gov
202-619-0724
[email protected]
https://longtermcare.acl.gov/

Eldercare Locator
800-677-1116 (toll-free)
[email protected] 
https://eldercare.acl.gov

National Association of Area Agencies on Aging
202-872-0888
[email protected]
www.n4a.org

This content is provided by the NIH National Institute on Aging (NIA). NIA scientists and other experts review this content to ensure it is accurate and up to date.

Long-Term Care Insurance: What to Know

5 Things You Should Know About Long-Term Care Insurance

Also, read one of our previous blogs at:

Do I Need Long-Term Care and Why?

Click here to check out our On Demand Video about Estate Planning.

Elder Law

Elder Law Can Be Scary, But It Doesn’t Have To Be!

Elder Law Can Be Scary, But It Doesn’t Have To Be!

Aging is something we all must go through. As our bodies and minds decline, so do our decision-making powers. Unfortunately, some of us can become incapacitated and no longer be able to make decisions for ourselves. This is a difficult situation for both us, and our loved ones. There may come a time when you need an Elder Law Attorney.

Elder law is another aspect of estate planning, focusing primarily on the needs of families and individuals as they age. Issues of aging include senior housing and home care, long-term (or nursing home) care, guardianships and health care documents, Medicare, and Medicaid.

Planning to protect your nest egg for when, not if, a long-term care event strikes your family may make all the difference in the world when it comes to your ability to leave a Legacy. With a dedicated team and trusted legal counsel, Legacy Planning Law Group knows that the best way to help our clients is to understand their planning needs.

Click here for more information from our website about Elder Law:

https://www.legacyplanninglawgroup.com/elder-law/

Here is also an article that explains elder Law in detail:

What Is Elder Law?

We are here to help you with all your Elder Law needs. We are compassionate, understanding, and empathetic to your needs because we know what it is like to go through this process.

If you are in need of an Elder Law Attorney, or if you are ready to plan for your future, we would love the opportunity to help.

Call us at 904-880-5554 or Book a call here:

https://www.legacyplanninglawgroup.com/book-a-call/

Where you can choose a day and time that is convenient for you.

Also, read one of our previous blogs here:

5 SMART TIPS FOR HIRING AN ELDER LAW ATTORNEY

Don’t wait until it is too late, and it is harder for your loved ones to now give you the loving care you gave them.

Be proactive, plan ahead. Aging is inevitable, why not do it intelligently and gracefully.

 

medicaid trust

How Medicaid Planning Trusts Protect Assets and Homes from Estate Recovery

How Medicaid Planning Trusts Protect Assets and Homes from Estate Recovery

Last updated: January 04, 2021

What are Medicaid Asset Protection Trusts (MAPT)?

Medicaid Asset Protection Trusts (MAPT) can be a valuable planning strategy to meet Medicaid’s asset limit when an applicant has excess assets. Simply stated, these trusts protect a Medicaid applicant’s assets from being counted for eligibility purposes. This type of trust enables someone who would otherwise be ineligible for Medicaid to become Medicaid eligible and receive the care they require be at home or in a nursing home. Assets in this type of trust are no longer considered owned by the Medicaid applicant. MAPTs also protect assets for one’s children and other relatives, which is a win-win for Medicaid applicants and their families. Medicaid Asset Protection Trusts are also referred to as Medicaid Planning Trusts, Medicaid Trusts, or less formally, Home Protection Trusts.

It is important to understand that there are many different types of trusts and not all of them are Medicaid compliant. For instance, family trusts, commonly called revocable living trusts, are different from MAPTs. Generally, family trusts are not adequate in protecting money and assets from Medicaid because the language of the trust makes it revocable (meaning the trust can be cancelled or altered) or allows for money in the trust to be used for the Medicaid applicant’s long-term care costs. Therefore, assets in this type of trust would have to be “spent down” to meet Medicaid’s asset limit in order for one to qualify for Medicaid.

This page is about Medicaid Asset Protection Trusts. There are several other types of trusts that are relevant to Medicaid eligibility, but will not be covered in this article. Irrevocable funeral trusts, also known as burial trusts, are used to protect small amounts of assets specifically for funeral and burial costs. There are also qualifying income trusts (or qualified income trusts, abbreviated as QITs). This is important to mention because one might find it easy to confuse MAPTs and QITs. While MAPTs protect one’s assets and allow one to meet the asset limit, QITs (also called Miller Trusts) allow one who is over the income limit to become income eligible for Medicaid purposes. Unfortunately, not all states allow QITs.

Did You Know? If you transfer your home to a Medicaid asset protection trust, you can reserve the right to live there for as long as you live.

Why Are Medicaid Asset Protection Trusts Important?

While each state runs its Medicaid program within federally set guidelines, there is “wiggle” room for each state to set its own rules within those larger guidelines. Generally speaking, the asset limit for eligibility purposes for an elderly individual applying for long-term care Medicaid is $2,000. However, this asset limit can be lower or higher depending on the state in which one resides. (For state specific asset limits, click here). While some higher value assets are usually considered exempt (uncountable), such as one’s primary residence, a vehicle, and wedding rings, too often applicants are still over the asset limit but still cannot afford their cost of care. Therefore, any assets that exceed the asset limit need to be “spent down” or a planning strategy, such as a Medicaid Asset Protection Trust, needs to be put into place to help the applicant qualify for the care they require. One can determine how much of their assets must be spent down to become Medicaid eligible using our Calculator.

How Do Medicaid Asset Protection Trusts Work?

To get a better grasp of Medicaid asset protection trusts, it’s important to understand the terminology associated with them. First, there is the individual who creates the MAPT. This person may be referred to by a number of names, including grantor, trustmaker, and settlor. The trustee is the manager of the trust and controls the assets in the trust. While neither trustmakers nor their spouses can be trustees, adult children and other relatives can be named as trustees. They must adhere to the rules set forth by the trust, which are very specific as to how the money can be used. For instance, there should be a strict prohibition of using trust funds on the trustee. There is also a beneficiary or beneficiaries, who is / are the person(s) who benefits from the trust after the trustmaker passes away. In order for the trust to be Medicaid exempt, the principal beneficiary must be someone other than the trustmaker. This is because if the trustmaker were also the beneficiary, he or she would have access to the assets, and Medicaid would consider them available to pay for his or her care and supports.

In addition, the trust must be irrevocable in order to be exempt from Medicaid’s asset limit. This means that the trust cannot be cancelled or changed. Once the assets are transferred into the trust, they no longer belong to the trustmaker, nor can the trustmaker regain ownership of them. If the assets are in a revocable (can be changed or terminated) trust, Medicaid considers the assets to still be owned by the Medicaid applicant. This is because the person who created the trust still has control over the assets held in the trust. Therefore, the assets are counted towards Medicaid’s asset limit.

   MAPTs cannot be used to shelter or reduce assets if the applicant is immediately applying for Medicaid.

Planning well in advance of needing long-term care Medicaid is the best course of action when considering a Medicaid Asset Protection Trust. This type of trust is not suitable for persons who need Medicaid immediately or within a short period of time. This is because MAPTs are a violation of Medicaid’s look back period if not set up prior to 5 years (2.5 years in California) before one applies for Medicaid. That said, there are other planning strategies for those who need Medicaid currently or in the near future.

Benefits of a Medicaid Asset Protection Trust

The assets in a Medicaid asset protection trust not only allow one to meet Medicaid’s asset limit without “spending down” assets, but the assets are also protected for the beneficiaries listed by the trustee. This means the assets are safe from Medicaid estate recovery. In simplified terms, when a Medicaid recipient passes away, the state in which the individual lived and received Medicaid benefits, attempts to collect reimbursement for which it paid for long-term care. This is done via the deceased’s estate. However, if one’s home and other assets are in a MAPT, the state cannot come after those assets. Learn more about Medicaid estate recovery.

Shortcomings of a Medicaid Asset Protection Trust

Planning well in advance of the need for Medicaid, if at all possible, is the best course of action. Medicaid asset protection trusts are ideal for persons who are healthy and don’t foresee needing Medicaid in the near future. This is because MAPTs violate Medicaid’s look back period. This is a period of 60-months in all states, with the exception of California, which only looks back 30-months. (New York is in the process of implementing a 30-month look back period for long-term home and community based services). During the look back period, Medicaid checks to ensure no assets were sold or given away for less than they are worth in order for one to meet the asset eligibility limit. For Medicaid purposes, the transfer of assets to a Medicaid asset protection trust is seen as a gift. Therefore, it violates the look back rule. This can result in a period of Medicaid ineligibility. Therefore, a MAPT should be created with the idea that Medicaid will not be needed for a minimum of 2.5 years in California and 5 years in the rest of the states.

In addition, once the assets have been transferred to a MAPT, the trustee no longer has control or access to them. They no longer are considered owned by the individual.

Given the fairly expensive fees associated with the creation of a Medicaid Asset Protection Trust ($2,000 – $12,000), they are typically not used for assets less than $100,000. Should a family need to reduce one’s assets to qualify for Medicaid in amounts less than $100,000 there are other approaches.

Gifting Assets vs. Creating a Medicaid Asset Protection Trust

While there is more flexibility with gifting assets and it does not require any legal work, it also violates Medicaid’s look back rule. As previously mentioned, this results in a period of Medicaid ineligibility as a penalty. Therefore, like with MAPTS, gifting should occur 5 years (2.5 years in California) in advance of the need for Medicaid. In addition, capital gains taxes are a common concern with gifting.

What Type of Assets can go in an Asset Protection Trust?

A number of different types of assets can be put into a Medicaid Asset Protection Trust, including one’s home. When a trustee places his or her home in a MAPT, he or she can continue to live in the home. In fact, it is even possible to sell the home and for the trust to buy another one. However, there is one exception to this rule. In Michigan, a home is considered a countable asset when placed in a MAPT. Stated differently, the home is non-exempt and is counted towards Medicaid’s asset limit.

Other assets that are placed in MAPTS include real estate other than one’s primary home, checking and savings accounts, stocks and bonds, mutual funds, and CDs. In most cases, transferring retirement accounts (401k’s and IRAs) is not recommended due to tax implications with cashing out the plans and transferring them to a MAPT.

If assets that produce income are placed in the trust, the trustmaker is able to collect the income. Said differently, the principal is protected by the trust and the trustmaker receives the income produced by the principal. However, Medicaid also has income limits, so it’s important that this income does not cause one to have income over the limit. As of 2021, most states have an income limit of $2,382 / month for a single senior applying for long-term care. (To see income requirements in the state in which one resides, click here). In the situation where a Medicaid applicant is in a nursing home, income produced by the principal generally goes to the nursing home to help pay the cost of care.

How Do Medicaid Asset Protection Trust Rules Change by State?

Medicaid Asset Protection Trust rules are not only complicated and tend to change frequently, they also differ based on the state in which one resides. As mentioned above, Michigan considers a home in a trust, even if it is irrevocable, a countable asset. California Medicaid (Medi-Cal), on the other hand, has very lax rules in regards to transferring a home to a trust. In CA, a home, even in a revocable trust, is exempt from Medicaid’s asset limit and is safe from estate recovery. This is very unusual. In most circumstances, revocable trusts do not keep assets safe from Medicaid’s asset limit and estate recovery. In addition, in CA, the state can only seek reimbursement of long-term care costs from those assets that go through probate (a legal process where a deceased person’s assets are distributed). If assets have been transferred to a revocable living trust, it is safe from estate recovery. This means it will avoid probate and estate recovery and the need for MAPTs are not as great in the state of CA as in other states.

Wisconsin also stands apart from the other states. In WI, trusts that are irrevocable can generally be altered or cancelled if all parties (trustmaker, trustee, and beneficiaries) are in agreement.

Is an Attorney Needed to Set up a Medicaid Asset Protection Trust?

It is imperative that a Medicaid Asset Protection Trust be set up correctly in order to ensure the assets transferred into the trust are exempt from Medicaid’s asset limit. As previously mentioned, the rules change frequently, as well as vary by state. This makes it important to have the trust created by someone who is familiar with the MAPT laws in one’s specific state. Also, remember that this type of trust needs to be created well in advance of the need for Medicaid, so as to not violate Medicaid’s look back rule. Incorrectly setting up a MAPT can inadvertently cause one to be ineligible for Medicaid, defeating the purpose of creating one. Therefore, an attorney should be used to set up a Medicaid Asset Protection Trust. Private Medicaid Planners often work with attorneys to keep costs low for their clients.

How Much Does it Cost to Create a Medicaid Asset Protection Trust?

The cost of creating a Medicaid Asset Protection Trust varies significantly from a low of $2,000 to a high of $12,000. While the price might seem high, in reality, a MAPT ends up saving persons money in the long run. This is because the nationwide average cost of nursing home care is over $7,750 / month, and a MAPT prevents one from having to pay out of pocket for nursing home expenses (and other long-term care costs).

When considering the cost, there are a lot of variables. First, some attorneys don’t strictly do MAPTS. Rather they do a package of sorts. This may include a pour-over will, powers of attorney, advance health care directive (living will), and HIPAA medical information releases, in addition to the MAPT. Cost can be impacted by if the client is single or married, the assets being transferred into the trust, and if a crisis plan is needed. In addition, price varies by geographic location, with the price in urban areas generally costlier than in rural areas. The experience of the attorney can also impact the cost.

Alternatives to a Medicaid Asset Protection Trust

In addition to Medicaid asset protection trusts, there are other planning strategies to help lower one’s countable assets. These may include funeral trusts and annuities. In addition, there are also strategies to help lower one’s income to become eligible for Medicaid.

Read more related articles here:

How to Use a Trust in Medicaid Planning

Benefit or Backfire: Navigating the Irrevocable Medicaid Trust

Also, read one of our previous Blogs at:

WHAT IS MEDICAID’S 5 YEAR LOOK BACK, AND HOW CAN IT AFFECT ME?

Click here to check out our On Demand Video about Estate Planning.

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