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How To Protect Your Assets From Medicare

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If you are fairly healthy at this point in your life and not expecting to receive long-term care for some time, you generally have three options:

  • Gifting before the five-year look back period – this is usually done with irrevocable asset protection trusts.
  • Purchasing financial products – due to the 2010 Pension Protection Act, many life insurance policies and annuities have long-term care insurance rides, which are generally much better than normal long-term care insurance .
  • Get your estate planning affairs in order – if you do not want to give your assets away or purchase any financial products, then you could/should make sure your heirs/family have a way to protect your assets through having a good estate plan, including creating a durable power of attorney with a good elder law attorney.
  • Whatever you look to do to protect your assets, you should definitely seek advice from a good elder law attorney. Do not look to a CPA, your friend, or even an estate planning attorney who does not practice elder law.

    Using Income Trusts To Protect Money From Medicaid

    The law requires applicants to meet strict income limits to qualify for Medicaid. Excess income makes some individuals ineligible for Medicaid. However, in some states an applicant can avoid income limits-related ineligibility by establishing Income Trusts known as Qualified Income Trusts . A Qualified Income Trust, also known as a Miller Trust, is an irrevocable trust where an applicant can transfer their excess income. While some states allow Medicaid applicants to spend down their income to eligible limits, others prohibit applicants from spending down their excess money for Medicaid purposes. In states with such prohibitions, individuals usually put their excess money in QIT to protect money from Medicaid while still qualifying for benefits.

    Basic Estate Planning: The Nursing Home Dilemma

    This fact sheet has an additional reference that can be ordered at no cost. The Ohio Shoppers Guide to Long-Term Care Insurance is an excellent bulletin produced by The Ohio Department of Insurance. A copy can be obtained free of charge by calling 1-800-686-1526 or 1-800-686-1578. The Ohio Department of Insurance also has additional free consumer guides on automobile and home insurance, and numerous other insurance publications that you can also order by calling the above toll-free number.

    The nursing home dilemma is of concern to all, but not totally different from other concerns. For instance, we are concerned about being sued because we might be liable for damages we cause in an automobile accident. Thus, most buy automobile liability insurance. We are also concerned about being disabled, loss of income, etc., but might or might not have insurance to cover those risks. Following are some things to consider concerning the nursing home dilemma and whether you should purchase long-term care insurance .

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    What Other Options Exist If We Want To Protect Our Assets From The Nursing Home

    If you do not want to lose control of your money five years before you get sick, we have more on Medicaid planning options on this webpage. The basic answer is that you can:

  • Purchase long-term care insurance or life insurance/annuity policies with long-term care benefits inside them. These options are generally more helpful than giving all of your money away as the law may change in the future.
  • Your basic estate planning. Make sure you have a good estate plan, such as creating a revocable living trust and a great durable power of attorney prepared by a Florida elder law attorney. These documents will allow your assets to be protected by a good elder law attorney, even in a crisis.
  • Look to VA benefits, although we generally would look to VA benefits to pay for in-home care or assisted living because the nursing home is so expensive. We have more information on VA pension benefits and irrevocable trusts here.
  • How Do I Create An Estate Plan

    Column: What can we do to protect Medicare and Social Security ...

    There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life’s contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

    This article is published by Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website

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    Know What Resources Are Exempt

    A common mistake when trying to qualify for Medicaid is spending down exempt assets. Not all resources are counted when determining your Medicaid eligibility, which is why its important to hire an elder law attorney. For example, a home with equity of $595,000 or less is exempt from a Medicaid spend down. That way, a spouse still living at home wont be forced to sell and move.

    Exempt and non-countable assets include:

    • Personal belongings and household goods
    • Burial spaces and related items
    • Up to $1,500 designated as a burial fund for you or your spouse
    • Irrevocable prepaid funeral contract

    S To Protecting Your Assets From Nursing Home Care Costs

    This is a must read if you or a loved one is worried about nursing home care costs and the government

    STEP 1: Give Monetary Gifts To Your Loved Ones Before You Get Sick

    Of course, theres no way to know with certainty if or when you will need nursing home care, but giving gifts to your family members well ahead of time helps protect the money from creditors seeking to collect after your death. In the case of Medicaid, any assets you transfer within the five years prior to entering a care facility are subject to seizure after your death. Transferring funds before you fall ill shelters your money and ensures your family members can legally keep the gifts they receive.

    STEP 2: Hire An Attorney To Draft A Life Estate For Your Real Estate

    Naming you as the life tenant and a loved one you trust as the remainderman, with future ownership interest in the property. As a life tenant, you retain the right to continue living in your home until your death. After your death, ownership in the property is transferred to your loved one, which prevents the state from making a claim against it. If you create a life estate and transfer real estate, youll incur no penalty if you enter a nursing home, provided the transfer occurred at least five years before your illness. If you enter a nursing home within that five-year window, however, you may incur a financial penalty for transferring property that would otherwise have been available for estate recovery.

    Tips & Warnings

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    Countable Assets For Medicaid

    When it comes to basic health care, Medicaid eligibility is based on your income. When it comes to long-term care in a nursing home, however, Medicaid also takes a close look at your assets. For the year 2021, you must have $2,000 or less in total countable assets and earn less than $2,382 per month in income.

    Not everything you own will necessarily count towards your Medicaid eligibility for long-term care. It is important to understand what does and does not count. Keep in mind that Medicaid programs are run by the state and each state may have criteria that vary from what is listed below.

    When Protecting Assets From Nursing Home Costs How Much Income Can I Make And Still Qualify For Medi

    How Medicare Advantage Plans Can Help You Live Your Best And Healthiest Life

    An individual over sixty-four with a net income less than about $2200 per month can qualify. One with over $2000 may also qualify depending on their nursing home costs. Income must be paid to the nursing home.

    A spouse of a person who is eligible for Medi-Cal is entitled to a monthly income not to exceed approximately $2960 per month.

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    How To Protect Assets From A Medicaid Spend Down

    Dont wait until youve spent down your entire life savings on nursing home care before calling an attorney.

    Our elder law attorney works hard to legally restructure your assets so you can qualify for assistance through Medicaid.

    Continue reading to learn how we can protect your assets from a Medicaid spend down.

    I Took Care Of You Now Return The Favor

    As a protection from nursing home costs, you could have your kids take care of you. Ive had clients come to my office with the child who is the candidate for this honor. Sometimes the child doesnt know this. They sit in front of my desk and let me explain asset protection strategies. When I get to the nursing home issue, the parent confidently pronounces if my son doesnt take care of me, then hell get nothing when Im gone. Then they look over at the child sitting next to them eyebrows raised. Isnt that right son? they say.

    Its important to consider: is the caretaker child in a position to help?

    Can you age in place?

    Here is an important thing to know: there may be a way to give the house or other assets to the child who is taking care of their parent at home. The issue arises when the parent has to go into a nursing home after the child has been taking care of the parent for a number of years. What many people do not realize is that they must document the proof of this arrangement before the years start to pass.

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    Charitable Giving Allows For Non

    For some individuals, the prospect of donating part of their assets tax-free to their favorite charity is a great way to support their favored causes. Additionally, charitable giving can be used as a strategy to reduce the number of assets available in your estate. Reducing the amount of your estate can have substantial tax-related benefits. In New York, when your estate reaches a certain value you could face taxes of 3-16%.

    Estate taxes can be substantial and result in a proportion of your estate being taken by the government, denying you the ability to designate an heir or a charity to receive it. Each year you are allowed to gift a certain amount, adjustable for inflation each year. Gifts can be used to reduce the overall value of your estate, although gifts to family members and gifts to charities are treated differently by the government and estate-related regulations.

    The tax code is complicated, and taking advantage of specific opportunities requires that you carefully align with the relevant tax rules and regulations. Working with an elder law attorney from Davidow, Davidow, Siegel & Stern ensures that all tax implications are taken into account and your intended gift results in what you intend for your estate.

    Should I Sell The House To My Children

    Top 5 Strategies for Protecting Your Money From Medicaid

    In some circumstances this will be an option. Although its unnecessary in this fact pattern. In Florida, houses valued at $560,000 can be exempt from being counted as a resource in the eyes of Medicaid if the applicant has an âintent to return homeâ. So, here, since the house is only worth $500,000, the Medicaid applicant will not need to sell their house in order to qualify for Medicaid. In fact, Medicaid only looks at the equity in the home â since the house has a$200,000 mortgage on it, Medicaid essentially only looks at the house as a$300,000 asset .

    In fact, paying off a mortgage is a very productive and valuable spend down strategy. If someone has $300,000 of equity in a house worth $500,000, they can then take $200,000 worth of cash and pay off their mortgage!

    But if the house was over the $560K limit, an option would be to sell the house to the children and then shelter the money using a number of Medicaid-planning strategies . Another option would be for the homeowner to obtain a reverse mortgage and then sheltering the excess cash.

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    Asset Protection Planning For Seniors Is Effective And Valuable

    The focus of asset protection for older persons is to secure and protect their assets from the high costs associated with long-term care, including nursing home care, in-home care, and assisted living expenses. Achieving this objective is possible through a variety of strategies, including the moving of cash, real estate, and other assets into an irrevocable trust.

    Asset protection planning is effective only if it is done proactively before you incur debts to a creditor, such as a healthcare provider or healthcare facility. Oftentimes, the assets transferred into the trust must be transferred into an irrevocable trust at least 5 years before the debt being incurred. This means that late planning can expose you to substantial losses and asset insecurity, but of course, we can always save something!

    Asset Protection Trusts: Help For Seniors

    How a trust can help seniors qualify for Medicaid and preserve assets

    An asset-protection trust can help seniors in need of constant nursing care pay the substantial costs of assisted living or skilled nursing facilities and at-home help. Average daily nursing home costs can exceed $297 and can be significantly higher in certain metropolitan areas, according to a 2021 Genworth survey.

    Medicare, the federal health care program for seniors aged 65 and above, only covers nursing home expenses when one enters a facility for short-term rehabilitation.Medicaid, a joint federal and state program, can cover the balance. But in order to qualify for the latter, a person’s total countable assetsincluding cash in bank accounts, plus investments such as mutual funds, stocks, and bondscan’t exceed $2,000 to $3,000, depending on the state.

    People often exhaust their life savings before Medicaid kicks in, making it difficult to leave an inheritance or to provide for surviving dependents. By shifting assets into an irrevocable trust, individuals may qualify for Medicaid, while preserving a portion of their wealth for their loved ones.

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    Can You Put Your House In Trust To Avoid Care Home Fees

    You cannot deliberately look to avoid care fees by gifting your property or putting a house in trust to avoid care home fees. This is known as deprivation of assets. If you do this, your local authority will come after you, and possibly the person that was given the transfer of assets to reclaim what is owed.

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    Why You Shouldnt Give Assets Away To Become Eligible For Medicaid

    Medicare Part B 2023

    If you think you can get around the Medicaid spend down requirement by giving away your property to your family before going into a nursing home, you should know that Medicaid is way ahead of you. There is a five-year look-back period for asset transfers when you are applying for Medicaid. If, within the five previous years, you have transferred an asset for less than its fair market value, your eligibility for Medicaid benefits could be delayed or denied when you need it most.

    If the prospect of needing a nursing home is in the distant future, you may be able to get around the look-back period by making your gifts outside of that five-year window. But that is a very risky proposition. An illness or injury could cause you to need care sooner than you expect, for one thing. But there are other reasons as well.

    If you transfer an asset, such as a house or financial account, to a family member, it becomes theirs to legally do with as they please, even if you have a verbal agreement that they will use the asset only for your benefit. You may think your child or grandchild would never sell your house out from under you or drain your bank accountand you might be right. If you are wrong though, there is little you can do about it.

    In short, there are a number of ways that giving away your assets to avoid paying them to the nursing home can go wrong. Fortunately, you have other options if you are trying to protect assets from nursing home costs.

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    Use Your Money Or House To Take Care Of Your Child Or Children

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    Asset Protection

    Option 3 on our list of the Top Ten Ways to Protect Your Money and Your House from Medicaid or a Nursing Home is using your money to take care of your kids. If you spend your money on your children, is the money you spent safe from a nursing home? The answer is, it depends. Is this an adult child? Is the child disabled? Did the child give up work opportunities to move in with you and help take care of you for the last ten years? These are important questions. If youre interested in saving your money or house from Mainecare or a nursing home, in some circumstances you can transfer it to a child or even a grandchild. If the child or grandchild is disabled, you could transfer money to a trust for the childs benefit. But what if the intended child recipient of your house or money is not disabled?

    As in many of the other asset protection techniques used to protect your money or house from a nursing home, a transfer-for-value rule may apply. There are qualifying factors, but in some circumstances, you can transfer money or a house to your child and it will be protected from Medicaid or a nursing home.

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