Ready To Guide You Through Medicaid Planning
Medicaid planning is a critical part of elder law. Eligibility for benefits is based in part on the amount of your assets and in part on the amount of your income. Unfortunately, Medicaid law is not intuitive. It requires an understanding of federal and state statutes, as well as complex regulations that often conflict with other laws. Too often, clients who try to deal with matters on their own learn they have made a mistake. Only then do they seek out a lawyer, hoping it is not too late to fix things and make the problem go away.
If you transfer assets during the five-year period before applying for Medicaid benefits and if those transfers were for “uncompensated value” (Medicaid’s way of referring to a gift), you may be subject to a penalty that results in a period of ineligibility for Medicaid benefits. The amount of the penalty depends on the amount of the gift. A common mistake is to make gifts to children and grandchildren, because the IRS permits annual gifts of up to $16,000 per person. Although the IRS does permit such gifts, Medicaid will disregard them, and you can be disqualified from Medicaid eligibility for a year or more, depending on the amount of the gifts and whether it qualifies for one of the few Medicaid exceptions.
Some transfers are exempt even if made during the five-year lookback period:
- The transfer of any assets to an adult child who is disabled by Social Security disability standards
- The transfer of a house to a “caregiver child” — one who has lived in the applicant’s house for two or more years and has provided care without which the applicant would have had to go into a nursing home at least two years earlier. This type of transfer is subject to severe restrictions.
- The transfer of a house to a sibling who has an ownership interest in the house and has lived there for at least a year before the submission of the Medicaid application
Qualification for Medicaid
To be eligible for Medicaid, individuals must also meet certain financial and nonfinancial eligibility criteria:
- Medicaid beneficiaries generally must be residents of the state in which they are receiving Medicaid.
- They must be either citizens of the United States or certain qualified noncitizens, such as lawful permanent residents.
- They must be certified by Medicaid as requiring long-term skilled nursing home care.
- Income from Social Security and pensions must not be more than $2,313 per month. There is a procedure for working around the income cap. It requires the establishment of a qualified income trust (QIT). QITs are described elsewhere on this website.
There is a limit on the value of assets. The limit depends on whether the applicant is married or in a domestic partnership.
- If the applicant is unmarried and not in a domestic partnership, his or her assets, other than exempt assets, must not be more than $2,000.
If the applicant is married or in a domestic partnership, Medicaid also limits the amount of assets the “community spouse” (the one who remains in the community) is permitted to retain:
- The community spouse can protect 50% of the marital savings, but not more than $126,420, plus any exempt assets. This is called the community spouse resource allowance, or CSRA. It increases each year by the same percentage as the increase in Social Security benefits.
- The marital home is exempt and is not counted.
- Household furniture and furnishings are exempt and not counted.
- One car is exempt and not counted.
Helping You Understand Your Options
Important to good Medicaid planning are six words: THINK AHEAD. PLAN AHEAD. ACT NOW! Asset transfers made within the five-year Medicaid look-back provision can upset well-conceived asset protection plans that are delayed in their implementation. The time to put a plan in place is before a crisis. Until you act on a plan, it is just an idea and will have no effect for five years. The sooner a plan is implemented, the sooner the five-year period begins to run.
At the law offices of Rudolph & Bloodgood, LLC, we offer you decades of elder law experience. Our attorneys handle Medicaid applications and planning. We know these can be intimidating and confusing issues, but our team can help you make sense of it all. We are happy to take the time to walk you through the process, step by step, to make sure everything is in order.
No one can learn about Medicaid overnight or by surfing the internet for a few hours. Not all lawyers are willing to put in the time to grasp the fundamentals and continue the learning process. Not all lawyers have the patience to work with senior citizens and their families until they truly understand the consequences of Medicaid planning. We can help remove the confusion and provide you with the level of comfort that you and your family deserve.
Parents almost always want to leave a legacy for their children. We are frequently asked, “Can you help so I don’t have to turn my house over to a nursing home?” If you address this issue early enough, we can usually develop a plan allowing you to transfer assets and still retain eligibility for Medicaid benefits. Using the Medicaid law and working within its guidelines, we can help you design a plan that will allow you to transfer the maximum possible percentage of your assets to your beneficiaries.
It’s A Family Affair
Because every case is different, how much you can transfer depends on your specific circumstances. The earlier you begin planning, the more options you will have. The transfer of assets is usually accompanied by a loss of control over those assets. Accordingly, we must discuss how much control you are willing to give up. Sometimes, through the use of trusts or other techniques, we can make transfers, but still allow you to retain a significant degree of control. This requires an understanding of the law and how to use it to your advantage.
Communications with our clients are held in strict confidence. Frequently, however, parents want their children to be with them when we discuss planning for the future so that the entire family can understand the issues that must be considered and the available choices. When the family is involved, we eliminate misunderstandings that can occur when the advice we give is relayed to a third party who does not have a chance to ask questions. When the parents finally decide on a plan, everyone understands it.
Most people do not realize that some asset transfers are exempt from the penalty provisions of the Medicaid regulations that prohibit transfers for “uncompensated value.” For example, even after you enter a nursing home, you may transfer any of your assets to:
- Your adult child who is blind or permanently disabled and receives Social Security benefits
- A trust for the sole benefit of someone who is under age 65 and permanently disabled (whether or not that person is your child)
You do not have to wait for the expiration of Medicaid’s five-year look-back period, and you can even make the transfer after you have entered a nursing home.
- You are permitted to transfer your home to your spouse or a child who is under age 21.
- You can even transfer your house to an adult child who has lived in your home for at least two years before you entered a nursing home, as long as you can establish that he/she provided you with care that allowed you to stay at home during that time. There are, however, strict guidelines about how a caregiver child can qualify to receive a transfer of the house of a Medicaid applicant.
These are just some of the transfers that are exempt from the Medicaid law. There is a great deal you can do if you seek the advice of someone who knows the law.
Get Legal Advice For Your Plan
Schedule your initial consultation with one of our attorneys by contacting us online or calling 866-635-8760. We have an office in Riverdale and a satellite office in Kinnelon. Both offices are handicap-accessible and have adequate off-street parking. We are available during regular business hours in Riverdale and by appointment in Kinnelon. Both offices are convenient to N.J. Route 23 and Route I-287.
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