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Medicaid Planning: Protecting Your Clients

Medicaid Planning: Protecting Your Clients. Long Term Health Care Planning. Cost of Care (see p. 1 handout) Forms of Payment ( see p. 1 handout) Personal Funds Long Term Care Insurance (see pp. 10-11 handout) Medicaid. Medicaid Qualification - Exemptions. Personal Exemptions

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Medicaid Planning: Protecting Your Clients

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  1. Medicaid Planning: Protecting Your Clients

  2. Long Term Health Care Planning • Cost of Care (see p. 1 handout) • Forms of Payment (see p. 1 handout) • Personal Funds • Long Term Care Insurance (see pp. 10-11 handout) • Medicaid

  3. Medicaid Qualification - Exemptions • Personal Exemptions • $14,250 of Assets, $50 income for resident • $113,640 of Assets, $2,841 income for community spouse • Retirement accounts in payment status • Prepaid Funeral • Prepaid Burial • Home in certain circumstances • Automobile in certain circumstances (see pp. 2-4 handout)

  4. Medicaid Qualification - Spousal Rules Community Spouse – Contribution to Care for Spouse on Medicaid: • 25% of Excess Income AND • Possibly some of excess resources; OR • Stubborn spouse/Spousal Refusal • County retains right to file support claim against community spouse if spousal refusal exercised – however, from a financial perspective, it is still very cost-effective for community spouse (see pp. 4-5 handout)

  5. Supplemental Needs Trust • If spouse enters nursing home and then transfers assets to community spouse (“exempt” transfers), what happens if community spouse later predeceases the “institutionalized spouse?” • Very important for community spouse to update his/her Will to plan for this outcome to avoid all assets passing outright to institutionalized spouse and having to be spent down • Spouse must also update beneficiary designations • Right of election – NYS law: applies in Medicaid context (see p. 11 handout)

  6. The Myths and Truths of “Problem” Assets • IRAs/401(k)s (see handout pp. 8,12-13) • Life Insurance (see p. 8 handout) • Annuities (see pp. 8-9 handout)

  7. Medicaid Qualification – Transfers • 5 Year Lookback Period • No penalty imposed for spousal transfers or transfers to a disabled child of any age • Caregiver considerations – Caregiver Child Exemption for Transfer of Residence (2 year residency requirement immediately preceding nursing home); Personal Care Contract – compensation versus love and affection • Transfer Penalty - In Monroe County, 1 month for each $9,363 (2012 penalty rate) transferred (see pp. 5-7 handout)

  8. Advance Planning • Irrevocable Medicaid Trust • Grantor retains right to income, but no access to principal • Principal can be paid to beneficiaries other than Grantor(s), in emergency situations • Subject to look back period • Maintain step-up in basis on death • Maintain enhanced STAR/Vets Exemptions if residence transferred to trust • Retained Life Estate – parent’s home • Popular alternative to Trust; greater risks; possible Estate Recovery law changes to re-surface in future; if house is sold, owner of life estate must receive share of proceeds .

  9. “Crisis Planning” • Without advance planning, if client enters a nursing home and is not married, what are planning options? • Gift/Note planning (protects nearly one-half of client’s assets through “crisis” plan – very detailed plan that requires analysis of income, assets, prior gifting, etc.) • Review testamentary plan; review Power of Attorney gifting provisions (see pp. 9-10 handout)

  10. Power of Attorney • Permits appointment of one or more persons as agents to handle most legal and financial transactions on principal’s behalf • September 1, 2009 new rules took effect, with additional Technical Corrections implemented September 12, 2010. • Statutory Gifts Rider required for gifting and Medicaid Planning • Two witnesses required for SGR • Agent Signature required • Existing Powers of Attorney grandfathered

  11. Medicaid – Estate Recovery • In many (not all) circumstances, upon the death of a person on Medicaid, the County has a right as a priority creditor to recover from the decedent’s estate for monies expended by Medicaid • County stands ahead of all other creditors, except funeral expenses • Does not apply to NYS Partnership Policies • Right of recovery currently limited to probate estate – (for now) – this may change (see p. 11 handout)

  12. Medicaid Qualification - Process • Complete documentation for 60 months • Review and approval • Annual recertification

  13. Conclusion • Ensure the proper documents are in place • Ensure the plan is current • Ensure proper title and beneficiary designation • Plan prospectively to maximize opportunities

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