Medicaid Eligibility. Objectives. The Truth About Medicaid Planning. Hehr & Myers Co. L.P.A 1

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1 Hehr & Myers Co. L.P.A 1 Presented by: Richard A. Myers Jr. Richard A. Myers, Jr. & Associates Estate and Medicaid Planning Attorney Independence, Ohio Presented By: Richard A. Myers Jr. Attorney and Counselor at Law Member: Ohio State Bar, Wealth Counsel LLC., Eldercounsel, LLC & National Academy of Elderlaw Attorneys Objectives At the end of the program, the participants will be able to: 1. Understand the fundamentals of eligibility for a single person or a married person. 2. Understand the importance of commencing a Medicaid application process early in the admissions process to protect both the care community and the care recipient. 3. Receive a basis understanding of methods to preserve the savings of the care recipient during the spenddown process. All is not lost in the face of a Medicaid application. 4. Understand the difference between countable assets and exempt assets in the Medicaid application process.

2 Hehr & Myers Co. L.P.A 2 Complete Medicaid Plan Includes: Benefits Qualification Analysis & Plan Advised of expected assets protected Implementation of Plan (e.g., documents) Any needed Estate Planning documents: Durable Power of Attorney Healthcare Power of Attorney and Living Will Last Will & Testament Revocable Living Trust Attend Hearings AVERAGE ANNUAL COST OF NURSING HOME CARE How Do We Pay for Long Term HealthCare? Only Four Ways to Pay: Private Pay ( You Pay ) Long-Term Care Insurance Medicare (Limited - 20/80 days ) Medicaid (Federal/State Program) Veteran benefits

3 Hehr & Myers Co. L.P.A 3 Long-Term Care Insurance TIMING If you wait until you need it, you probably can t get it at an affordable price, so plan ahead. COVERAGE At least 5 years of benefits. Home-care coverage. Inflation protection. LTC INSURANCE Partnership Programs States adopt legislation allowing for the preservation of personal assets for owners of LTC Insurance In March of 2007, only 4 states had adopted a partnership legislation: New York, California, Connecticut and Indiana By 2014, only 8 states have not adopted laws Operates as a disregard from state medicaid recovery organizations LTC INSURANCE Ohio Partnership Program Adopted for September 1, 2007 coverage Covers policies issued after state approved plan amendments under 42 USC 1396p(b) Older policies can be adjusted to qualify Operates as a disregard from Ohio State Medicaid Recovery Disregard on property up to the dollar amount of benefits paid to or on behalf of the individual

4 Hehr & Myers Co. L.P.A 4 Medicaid Myths vs. Facts What can be done? (The Rules) How do we do it? (The Secrets) Top Four Medicaid Mistakes MEDICAID MYTH # 1: If my spouse or I go into a nursing home, the state will take my home away. Fact: Medicaid does not take your home away; proper planning can keep your home exempt. The home must be occupied by the spouse and have a value below $560,000. May require an Intent to return home letter MEDICAID MYTH # 2: If I give assets away, I have to wait 60 months to qualify for Medicaid. Fact: Medicaid looks back 60 months for transfers made without consideration (value). Transfers for value are permitted, without regard to the Look-Back period. Proper planning can maximize permitted transfers, and minimize penalties.

5 Hehr & Myers Co. L.P.A 5 MEDICAID MYTH # 3: If I am already in a nursing home, it is too late to shelter any assets. Fact: In most cases, one of the best times to shelter many assets begins when you are a resident of a nursing home for rehabilitation. MEDICAID MYTH # 4: Once I qualify for Medicaid, all my nursing home expenses are covered. Fact: Most Medicaid certified rooms are semiprivate. Nursing home charges for nonmedical needs are not covered. These items are often a person s measure of his or her QUALITY OF LIFE. (Newspapers, cable TV, hair care, clothes, cosmetics, optical, dental and the like). MEDICAID MYTH # 5: Chances are, I will never end up in a nursing home. Fact: 70% of those who reached age 65 in 2008 will spend some time in a nursing home during their lifetime. Over 40% for an extended stay. (US Dept. of Health and Human Services)

6 Hehr & Myers Co. L.P.A 6 MEDICAID MYTH # 6: Medicaid is only for the Poor. Fact: Without proper planning, 50% of the couples with one spouse in a nursing home reached the poverty level within 6 months. 70% of single persons reached the poverty level within 13 weeks. (U.S. Congressional Study) Basic Rules for Nursing Home Costs: Personal income allowance of $50/month Asset limit $2,000 in countable assets. This was just adjusted in 2016 PLUS - certain Exemptions Key Terms: Community / Institutional Spouse Look-Back Date Look-Back Period Penalty Period (Waiting Period)

7 Hehr & Myers Co. L.P.A 7 LOOK BACK PERIOD: extends back 60 months (5 years) from application date with respect to gifts and undercompensated transfers of assets, regardless of beneficiary. (Including charities) This period was formerly 36 months for transfers to individuals. Medicaid Penalty Period: A period in which a Medicaid Applicant is ineligible for benefits, based upon the value of the undercompensated transfer (i.e., gift ) during the Look Back period and the average private pay nursing home cost in Ohio. ($6,570/month) (This period is potentially UNLIMITED.) Congress s proposed planning Post-DRA Percentage of Assets Protected 100 Advance Planning 50 Crisis Planning Time (in Months) Before Application

8 Hehr & Myers Co. L.P.A 8 Reality of planning Post-DRA Percentage of Assets Protected 100 Advance Planning 50 Crisis Planning Time (in Months) Before Application RULE : Snap-shot date starts when married applicant resides in Nursing Home for 30 consecutrive days during the marriage. Asset allocation and spend-down requirements are established regarding applying for Medicaid. LOOK BACK PERIOD: extends back 60 months from application with respect to gifts or uncompensated transfers Medicaid Eligibility Single - $2,000 total countable assets Married Minimum of $24,180 in countable assets to community spouse and $2,000 to institutionalized spouse Married Maximum of $120,900 in countable assets to community spouse After the splitting the estate property

9 Hehr & Myers Co. L.P.A 9 Medicaid Eligibility Exempt Assets Residence Unlimited for community spouse (560K limit) Unlimited for minor or disabled child of applicant Unlimited for sibling of applicant in title for 1 year Care providing child for 2 years Intent to return home in writing Must list for sale with realtor for FMV (tax value) 6 months to sell within 10% of FMV Medicaid Eligibility Exempt Assets Vehicle One vehicle is exempt for communit spouse One vehicle necessary for transportation The more expensive vehicle is the exempt vehicle Prepaid irrevocable funeral arrangements and burial spaces. Can be purchased for extended family. Life insurance max. $1500 in face value Retirement plans: If it is income (payout status) it is not a resource If it is not income then it is a resource. Medicaid Eligibility Exempt Converted assets loose exempt status Attempt to sell exempt home Exempt becomes non-exempt Caution on TOD deeds to children/beneficiaries Income Community Spouse All of their income is exempt $2,018 minimum $3,023 maximum $50.00 month allowance

10 Hehr & Myers Co. L.P.A 10 Medicaid Eligibility Income cap New standard in all cases- $2,205 in income If gross income exceeds $2,205 the client is income ineligible for any benefits Cure is the use of a Qualified Income Trust Trust is established by the Applicant Must be irrevocable May only receive income Must require income to be used for care Must have a payback provision to Ohio Medicaid Transfers Proper vs. Improper Transfers Transfer for FMV or within allowed methods Care giver child exemption Transfers for less than FMV Gifts create a term of ineligibility based upon the state determined private pay rate. Current Private pay rate $6,570 Gifts are aggregated during the lookback period Two Approaches to Medicaid Planning ADVANCE PLANNING vs. CRISIS PLANNING Traditional Approach is to optimistically wait, hope for the best, and then react to the crisis. You Lose Control A better approach is to create plans well in advance of the crisis - when you are able tell us your goals. You Remain in Control

11 Hehr & Myers Co. L.P.A 11 The Top Mistakes Giving away assets too early. Make sure you take care of yourself first. Don t put your security at risk by putting it in the hands of your children without control! Poorly planned gifts can cause tax problems and Medicaid problems. The Top Mistakes Applying for Medicaid too early. Beware of well-meaning (but uninformed) friends or volunteers at the hospital or nursing home who will help you with the Medicaid qualification form. Applying for Medicaid too early can cost you many thousands of dollars by making you ineligible for much longer than necessary. The Top Mistakes Not getting professional help. Medicaid is a complicated field that most people deal with only once in their lives. It s foolish not to consult with people who focus on guiding clients through the process.

12 Hehr & Myers Co. L.P.A 12 half-loaf planning Individual with $100,000 at date of admission. No long term care/partnership program $100,000 Quality of life account $50,000 Pooled Trust Fund $50,000 $1,500 half-loaf planning Individual with $100,000 at date of admission. With long term care/partnership program $100,000 Quality of life account $98,000 $1,500 Promissory note for care Complete Medicaid Plan Includes: Medicaid Qualification Analysis & Plan Advised of expected assets protected Implementation of Plan (e.g., documents) Any needed Estate Planning documents: Durable Power of Attorney Healthcare Power of Attorney and Living Will Last Will & Testament Revocable Living Trust Attend Hearings Flat fees and not hourly

13 Hehr & Myers Co. L.P.A 13 Presented by: Richard A. Myers Jr. Richard A. Myers, Jr. & Associates Estate and Medicaid Planning Attorney Independence, Ohio