MEDICAID PLANNING Over the past 20 years, the term “Medicaid Planning” has come into vogue. Medicaid planning had evolved primarily into a process whereby a person who was already in/or about to enter a nursing home, deliberately divested himself or herself of assets in order to qualify for Medical Assistance sooner, and not spend all of their assets on their long term care needs. The primary strategy for past Medicaid Planning was through gifting. The most common gifting technique was called “half-a-loaf” gifting, which essentially allowed a person to gift half of their net worth away, even after they entered a nursing home, and kept the remaining half to pay the nursing home. The half that was gifted away created a period of time that Medicaid would not pay for care. The half of the net worth kept would be used to pay for the nursing care during the period of time Medicaid would not pay. The idea was that the kept assets would be exhausted by the expiration of the time period Medicaid would not pay. The Deficit Reduction Act of 2005 dramatically curtailed the opportunities to do Medicaid Planning, particularly for those who were about to enter a nursing home. It was specifically designed to eliminate “half a loaf” gifting strategies. It also extended the “look back” period from three to five years. Medicaid Planning is still appropriate in many instances, especially when a child cared for their parent in the parent’s home for two years or more prior to the parent’s admission to a nursing home, where any child of the person in a nursing home is disabled, or where the person in the nursing home owns his or her residence with one or more siblings. You should consult an attorney licensed in your state to discuss whether Medicaid Planning is appropriate in your situation. This is an area where you could consider looking for an attorney that has experience in applying for, and obtaining, medical assistance benefits, for clients in a nursing home. There are some opportunities to do Medicaid Planning using immediate annuities, even after the Deficit Reduction Act. This is particularly true in cases where there is one spouse in a nursing home and one spouse still living at home. Since the income of the spouse in the nursing home is presumed to go to the nursing home to help pay for care, in the appropriate circumstances, immediate annuities can be used to boost the monthly income of the spouse who remains at home and is trying to make ends meet. This allows the assets of the couple to be used to supplement income rather than pay the nursing home. In some states immediate annuities may be appropriate for a single person who is in a nursing home. These annuities must strictly comply with the Medicaid requirements of your state, and you should consult an attorney licensed in your state, and one which who has experience in these matters, before purchasing such an annuity. This information is not intended to provide legal advice. You should consult an attorney prior to acting on any information contained within. |
