Planning for Long Term Care Expenses

1. Planning for Long Term Care Expenses Presented by: Larry S. Hartley Board Certified Specialist in Elder Law by the North Carolina State Bar Certified Elder Law Attorney By the National Elder Law Foundation Strauss & Associates, P.A. 77 Central Avenue Suite F Asheville, NC 28801 (828) 258-0994 Founder: Andrew A. Strauss, Board Certified Specialist in Estate Planning and Probate Law by the NC State Bar

2. Larry S. Hartley Is associated with the law firm of Strauss & Associates, P.A., with offices in Asheville, NC and Hendersonville NC. Is a member of NAELA, the National Academy of Elder Law Attorneys Is a Certified Elder Law Attorney by the National Elder Law Foundation and Board Certified Specialist in Elder Law by the NC State Bar Admitted of the NC State Bar in 1996

3. We have an even chance of needing nursing home care before we die! The big question is: How will our care be paid for? Most people do not know the answer tothis question. This seminar will give you information to help you to create a plan that answers this question for yourself and your family.

4. Planning is the Solution Just as families with large taxable estates engage in estate planning to reduce estate taxes, those with smaller estates should also plan to reduce the costs of long term care needs. Families with estates both large or small also do estate planning to reduce the expenses associated with settling estates, and to protect their assets from creditors and predators.

5. There Is Money Available For: • Wartime veterans • Surviving spouses of wartime veterans The key is to qualify!

6. Extra Money for Veterans and Spouses A surviving spouse may be eligible for up to $1,094/month. Wartime veterans with spouses may be eligible for up to $2,019/month

7. Requirements for Extra Money Wartime Service (or widow of wartime Veteran) Medical expenses Based on household income and assets Assistance needed There are three classifications for Pension Basic Housebound Aid and Attendance

8. Service Requirements • Served at least 90 days (if before 1980) of actual duty • Served at least 2 years 1980 and after • Served at least one day during a war period during active duty • Other than dishonorable discharge

9. U. S. WAR PERIODS • World War I • World War II – Dec. 7, 1941 – Dec. 31, 1946 • Korean War – June 27, 1950 – Jan. 31, 1955 • Vietnam Conflict – Aug. 5, 1964 – May 7, 1975 (Feb. 28, 1961 – May 7, 1975 if in the country of Vietnam) • Gulf War – Aug. 2, 1990 – date to be set by law by Presidential Proclamation

10. Age And Medical Criteria • Over age 65 or 100% disabled • After medical expenses must have less income than pension benefit • Amount of pension will depend on medical needs of veteran or widow

11. Assets VA Does Not Count Residence Burial Policies/plans Small life insurance policies Personal property

12. Determining How Much Is Too Much • “About 80,000?” • There is no exact limit, but we will do an analysis for you! • When considering the transfer of assets we must also consider the effect on Medicaid eligibility

13. Yes Medicaid can pay the catastrophic cost of a long term stay in a nursing home. No, you do not have to spend your family’s whole inheritance on the nursing home first. It is a myth that you must spend all of your own money on the cost of a long term nursing home stay before you can qualify for Medicaid benefits. Say Yes to Medicaid Eligibility

14. If you end up eligible for Medicaid, you are not alone! About 70 % of nursing home residents will have some care paid for by Medicaid. The question is will you be able to leave a legacy to your family or favorite charity before you become eligible, or will all of your savings go to the nursing home?

15. Exempt Assets (a partial list) The Homesite (the principal residence): If the patient has an intent to return home, or if there is a community spouse or dependent relative in the home. For a single person this is limited to equity of up to $525,000 as of January 1, 2012 Life estates in the primary residence Tenancy-in-common ownership in real property (actually just non-available)

16. More Exempt Assets One licensed motor vehicle. (no limit on value) Personal effects and household goods including jewelry, furniture, appliances, artwork and other decorative items.

17. More Exempt Assets Life insurance cash values if the total face amount of all policies is $10,000 or less. This is a NC rule; most other states are limited to $1,500 face value of all policies. Prepaid funeral contract if it is irrevocable. Or up to $1,500 burial funds if no irrevocable funeral contract.

18. Spousal Protection Rules Community Spouse Resource Allowance (CSRA) If $22,728 or less of countable assets, then all are protected. (as of 01/01/2012) If between $22,728 to $227,280, one half is protected with a minimum of $21,912. If over $ 227,280 then $113,640 is protected.

19. What if there is no Community Spouse? Only $2,000 of otherwise countable assets are exempt. All Income goes to the nursing home as the institutionalized spouse’s “deductible” except for $30.00 per month personal needs allowance.

20. If there is a community spouse The Community Spouse Income Allowance will be calculated. The minimum is $1,839 (as of July 1, 2010) If shelter costs exceed $547 per month, subtract $547 from the shelter costs. The difference, up to $1,002 is added to the $1,839 for a total up to $2,841 (minus the community spouse’s income) is the community spouse income allowance that can be received from the institutionalized spouse’s income.

21. What is Estate Recovery? Estate Recovery is the next big concern for the family of a person receiving Medicaid benefits for long term care expenses. Estate recovery is the government efforts to recover its payments for long term care from your assets after your death.

22. Mistakes are very costly Medicaid eligibility planning is an area of concentration that is in short supply. This is not an area for do it yourselfers, any more than surgery on yourself would be considered wise to most people. Errors can cause years of Medicaid ineligibility, and also can cause gift tax liability in some cases.

23. Professional Planning usually costs less than 2 months cost of the average nursing home There are techniques to convert countable assets into non-countable assets without creating an ineligibility period at all. There are also techniques to increase the Community Spouse resource allowance. We can also help avoid estate recovery after the death of a Medicaid recipient.

24. Irrevocable Trusts:The Secret Weapon of Medicaid Planning These work best with time to spare. Irrevocable means grantor can not change it. Grantor can retain income rights. Grantor must relinquish rights to principal. Can be structured to avoid or at least delay gift taxes.

25. Let us handle the Medicaid Application When it comes time to actually apply for Medicaid benefits, we can be retained to represent you in front of the Department of Social Services. The legal fee for this application work is usually less than 2 months cost in the average nursing home.

26. THANK YOU FOR ATTENDING