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Medicaid Income Limits: Will Medicaid Take My Home?

Medicaid Income Limits: Will Medicaid Take My Home?

by | Mar 17, 2022 | Asset Protection, Long-Term Care, Medicaid

Many people worry about what will happen if their spouse needs to go to the nursing home. Will Medicaid take the home where so many of their memories were made? What about their car? Investment accounts? Their life savings? While it’s true that Medicaid income and asset limits are strict, with proper planning and an understanding of Medicaid eligibility requirements, most couples can avoid losing their hard-earned assets to the nursing home.

In Alabama, the average cost of nursing home care is $6,459/month—and this number is expected to increase to $11,648 by the year 2038. Medicaid will pay the cost of long-term care for those who meet income and asset eligibility requirements. If you are married, in order to qualify for Medicaid, the individual who needs nursing home care cannot have monthly income in excess of $2,523, and cannot own assets valuing more than $2,000. The spouse who doesn’t need nursing home care—known as the “community spouse”—can keep one half of their assets, valuing no more than $137,400.

Fortunately, for married couples, Medicaid does not include the marital home towards the asset limit. The community spouse can continue to live there. However, if they eventually need long-term nursing care, Medicaid will put a lien on the house for the amount of money they pay for your care, and your children may not be able to inherit the home.

That being said, you have worked a lifetime to accumulate your wealth and assets, and passing them down to your children and grandchildren is important. There are some strategies that can help you comply with Medicaid income limits, without making costly mistakes that could disqualify you:

1. Asset Protection Trusts. These trusts, when drafted and funded properly, transfer the ownership of assets from you to the trust. This means they are protected from Medicaid, and other creditors and predators. However, keep in mind that Medicaid will look back 5-years from the date of application—any assets transferred during that period can incur penalties.

2. Income Trusts. Qualified or Pooled Income Trusts can hold income in excess of the $2,323/month limit imposed by Medicaid.

3. Medicaid Compliant Annuities or Promissory Notes. This can be helpful to offset the cost of nursing home care if a penalty period is inflicted. While planning ahead is obviously a better choice, if you find yourself in a crisis where nursing home care becomes necessary on short notice, this strategy can save you and your heirs money.

4. Spend Down Assets in Compliance with the Look-Back Period. The following purchases and investments will not violate the 60-month look-back period:

a. Pay off accrued debt
b. Purchase medical devices, like wheelchairs, dentures, eyeglasses and hearing aids, etc.
c. Home modifications and renovations
d. Vehicle repairs
e. Create a formal life care agreement with the help of an attorney
f. Pre-pay for your funeral

To qualify for Medicaid, it’s imperative that you avoid certain mistakes—and some of them are not so obvious. Working with a qualified elder law attorney who understands Medicaid income limits and eligibility requirements, as well as how to structure a trust to protect your assets while increasing your chances of qualifying for Medicaid, is so important.

Attorney Bill Miller of Miller Estate and Elder Law is an experienced elder law attorney, with offices in Birmingham and Anniston, AL. Gain access to his free 20-minute webinar about Medicaid qualification by following the link below, or contact us via the website today.

https://millerestateandelderlaw.com/medicaid-qualification-webinar

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256-472-1900

bill@millerestateandelderlaw.com

My Spouse Needs to go to the Nursing Home…Now What?

My Spouse Needs to go to the Nursing Home…Now What?

by | Mar 6, 2022 | Asset Protection, Elder Care Planning, Elder Law, Long-Term Care, Nursing Home

You’ve been married to your spouse for decades. Lately, you’ve noticed that they are losing the ability to look after themselves. You realize that they may soon need nursing home care. You know this requires a lot of planning. Are you prepared?

When a spouse needs nursing home care, most people find that they are ill-prepared for the expenses associated with it. Paying out-of-pocket is expensive. After all, you’ve worked a lifetime to purchase your home and build your nest egg you should be able to pass those down to your children and grandchildren…not lose them to the nursing home. Your other options are to apply for Medicaid, or use long-term care insurance. Sadly, long-term care insurance is often overlooked until it’s too late to get it, leaving Medicaid as the only option. However, Medicaid eligibility can be tricky, and most people wonder how their assets might be impacted.

What Happens to My Income?

If your spouse has to go to a nursing home, all of their income will go to the nursing home.  You can keep all of your income but in many cases that is not going to be enough.  Without proper long-term care planning and a loss of your spouse’s income, your life savings could be drained in a matter of months if you have to pay out-of-pocket. Becoming eligible for Medicaid is challenging, with inhibitive income and asset limitations that may leave your spouse unqualified to receive these benefits. As the spouse who is not going to apply for Medicaid (also known as a “community spouse”), your income will not be factored in to eligibility. However, your spouse’s monthly income (which cannot exceed ~$2,523 per month ) will be used to determine Medicaid eligibility, and to pay for care, if approved. This leaves you at home with just one income to cover all of your expenses.

What About My Other Assets?

The other consideration when determining Medicaid eligibility is the assets that are owned by you and your spouse, regardless of whose name they are held in. The Medicaid applicant cannot own assets valued over $2,000 to qualify, not including your primary home or car. You, as the community spouse, can keep half of your assets, up to a maximum of $137,400.

You might also wonder which assets are included—and which are excluded—in the Medicaid application process. Typically, liquid assets, like bank accounts, insurance policies valued over $1,500, stocks and bonds, mutual funds, and second homes and cars, are considered countable assets. It should be noted that your home and one car are not included. This is because the community spouse would continue to reside in and otherwise utilize these assets. Additional assets that are exempt from Medicaid include personal effects, burial plots, and life insurance policies valued under $1,500.

So, What Are My Options?

If your spouse needs nursing home care now, and you are faced with either having to pay out-of-pocket or qualify for Medicaid, you still have some options. You may be tempted to spend down or transfer your assets, but Medicaid will look back 5-years from your application date to ensure you did not give away money to become eligible. Medicaid qualification is a confusing area of law, so it is best to plan with an elder care attorney who can take the guesswork out of applying for Medicaid and help you to avoid common mistakes that may cause penalties and delays in approval.

If you expect your spouse will need nursing care in the not-so-distant future, it’s best to start planning immediately. This is also a good time to consult with an elder law attorney about best practices for maximizing retention of assets and nursing home care provisions for your spouse. Your elder law attorney may suggest actions like:

  • Paying down existing bills: Medical bills, car loans, credit cards, etc.
  • Home improvements: Repairing plumbing and heating systems, fixing the landscaping, purchasing household goods and furnishings, and making structural modifications.
  • Funeral trusts: Purchase a pre paid funeral plan which in not countable and while takes care of an inevitable expense.

At this point, you’ve probably determined that paying for long-term nursing home care can be complicated at best, with so many variances and challenges depending on your unique circumstances. Proper planning should be implemented sooner rather than later to prevent costly and stressful consequences. Miller Estate and Elder Law can help you strategize in order to yield optimum benefits for you, your spouse, and—ultimately—your entire family.

Watch our FREE webinar to learn more about Medicaid eligibility and how to get your spouse qualified for the care they need, without sacrificing your life savings.

https://millerestateandelderlaw.com/medicaid-qualification-webinar

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256-472-1900

bill@millerestateandelderlaw.com

Probate Property: Which Assets Must Go to Probate Court?

Probate Property: Which Assets Must Go to Probate Court?

by | Feb 20, 2022 | Avoiding Probate, Elder Law, Probate

You’ve probably heard horror stories about the nightmare that is probate court. Undoubtedly, friends and neighbors have had to undergo the probate process…and chances are, they don’t have many good things to say about it.

Let us first say, probate isn’t quite as bad as it gets made out to be (though it certainly CAN be for the ill-prepared). Probate is the legal process that authenticates your will in order to properly facilitate the allocation of your assets to your beneficiaries. Upon death, the estate administration process begins, drawing together all the necessary documentation for the distribution and management of your assets, which the probate court then oversees. The most common document utilized is a will.

If an individual passes away without a will—also known as dying ‘intestate’—the estate administration process becomes much more complicated, and a time-consuming, costly probate process is almost inevitable.

Being proactive and drafting a will, as well as understanding which assets must go through probate, can make the probate process much easier, or bypass it altogether.

Which Assets Need to Be Probated?

Whether or not your assets end up in probate is dependent upon how your estate plan is set up. Essentially, any property that does not have a designated beneficiary, or is not set up to pass by operation of law, will inevitably be deemed probate property, and settled in probate court. Some examples of circumstances that lead to probate include:

  • When an individual dies without a will. Without a will present, the estate becomes dependent upon the laws of intestacy, leaving the probate court to adjudicate who will inherit the deceased’s assets.
  • When a person passes away as the single-named owner of titled assets. These assets include items like real estate, investment and bank accounts, vehicles, personal property, collectibles, safety deposit box contents, and other solely titled assets of the deceased.
  • When property does not have a title. If the deceased does not have the compulsory paperwork for assets in their ownership, and the property isn’t clearly named in the will with the deceased’s wishes, the assets become probate property.
  • When the beneficiary predeceases the testator. If your will hasn’t been updated before your named beneficiary passes away, their inheritance will be settled in probate.

Actions You Can Take Now To Avoid Your Assets Being Probated in the Future

As you can see, there are many factors that could land your estate in probate court; however, there are some things you can do now to make a more ironclad estate plan that is specifically designed to keep your assets out of probate, or at least simplify the probate process.

  • Ensure your will is detailed. While having a will isn’t enough to avoid probate (all wills must go through probate), when a will clearly defines your wishes, it simplifies the process, and makes authorization to distribute your property much less laborious.
  • Establish a living trust. A living trust prevents probate because the trust takes ownership of the assets placed within it and, upon your passing, a named trustee will distribute your estate as stipulated in the trust – without the need/input of the probate court.
  • Title property jointly. Property owned in joint ownership with right of survivorship automatically passes the property to the surviving owner(s), without probate.
  • Name a beneficiary. Assets that have a named beneficiary—for example, your retirement plan, life insurance policy, or transfer-on-death or payable-on-death bank accounts—escape probate by sending items directly to beneficiaries.
  • Give assets away while you’re still alive. Although this is a no-brainer, it deserves an honorable mention. Simply put, if the property is no longer owned by you at the time of death, it doesn’t go to probate. This, however, can cause issues with qualifying for Medicaid if long-term care is needed, so we encourage you to speak with an elder law attorney before giving away money or assets.

At Miller Estate and Elder Law, we pride ourselves on providing clients with a high level of attention to detail that takes all of the guesswork out of estate planning. We create tailored solutions that are based on your specific goals and objectives. Our educational resources and unique programs keep you and your estate plan up-to-date, giving you the confidence needed to be secure in knowing your estate is in good hands.

Contact us today, register for a free workshop, or browse our resources, which address many common questions. With our guidance, you’ll gain peace of mind knowing your estate will be ready for smooth sailing after you’re gone.

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256-472-1900

bill@millerestateandelderlaw.com

How to Care for Someone with Dementia: Guardianship/Conservatorship for Parents

How to Care for Someone with Dementia: Guardianship/Conservatorship for Parents

by | Feb 3, 2022 | Long-Term Care, Medicaid, Medicaid Planning, Medicaid Qualification

how to care for someone with dementia

As our parents and loved ones grow older, they become the target of scammers and con artists across the globe. This is especially scary if your parents have developed dementia, Alzheimer’s, or another form of mental incapacitation. Knowing how to care for someone with dementia—and how to protect them—isn’t always straightforward, and sometimes legal intervention is required. If you are not named the agent on a preexisting power of attorney document, having an elder care attorney help you set up a guardianship/conservatorship may be the best way to make sure your parent’s finances are safe from predators.

When considering how to care for someone with dementia, it’s important to remember that they are a much easier target than most due to memory loss, confusion, and not being as mentally present as they used to be.

One of the best resources available to help you tackle the legal and financial planning issues that arise with the elderly is to engage the services of an elder care attorney, or a law firm that specializes in elder law. Working with a qualified attorney will ensure you have what you need to protect your parents and aging loved ones.

However, with or without a lawyer, you should know how to care for someone with dementia, as well as how to recognize the warning signs that your aging loved one has fallen victim to a scam:

Common Scams To Be Aware Of

Some of the most common scams that target the elderly, as well as those with conditions like dementia and Alzheimer’s, are:

  • Fake lotteries and sweepstakes that ask for money upfront for prize collection or entrance fees
  • People posing as representatives from government agencies like Social Security, Medicare, or the IRS
  • Bogus discount prescriptions and medical equipment
  • Credit card fraud
  • The “Grandparent Scam” where someone will claim that a grandchild is in trouble and needs money
  • Investment schemes
  • And others…

Signs To Look Out For

Guarding against those who would abuse our elders is a big part of how to care for someone with dementia. The following are some of the many signs of suspicious activity to be wary of:

  • Unusual monthly charges on bank and credit card statements
  • Out-of-the-ordinary calls from companies, utilities, government agencies, or charities requesting money in an unusual way
  • Callers who pressure you to make immediate decisions, ask for a lot of personal or financial information, or demand payment in unusual or specific ways
  • Official-looking emails, letters, bills, offers, etc. with spelling and grammar mistakes, or that seem out of place

What You Can Do?

If you have a parent who has Alzheimer’s or dementia—or some other form of incapacity—and they’re having a difficult time making decisions, or are getting taken advantage of, you may want to contact an elder care attorney about getting a guardianship or establishing a conservatorship over their finances. If your aging loved ones are not able to manage their own care or money, an elder law attorney can help you navigate the process of stepping in and protecting them.

Download our Free Guide: Caring for Aging Loved Ones

If you need to protect your own aging parents or loved ones, start by downloading our free guide: Caring for Aging Loved Ones: The ABCs of Long-Term Care Planning or by calling our elder law firm at (256) 251-2137. Our team is here to help guide you through the process of planning for long-term care, and setting up guardianships and conservatorships when needed.

Contact Miller Estate & Elder Law

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256-472-1900

bill@millerestateandelderlaw.com

Ensuring Medicaid Eligibility Before Long-Term Nursing Care is Needed

Ensuring Medicaid Eligibility Before Long-Term Nursing Care is Needed

by | Feb 3, 2022 | Long-Term Care, Medicaid, Medicaid Planning, Medicaid Qualification

medicaid eligibility

If your spouse needs nursing home care, we hope that you’ve prepared by taking out a long-term care insurance policy or ensuring Medicaid eligibility well in advance of needing it. The question of how to pay for long-term care is generally the first issue that arises when placing a loved one in a nursing home. Many people don’t realize it, but there are only three viable ways to pay for long-term care:

1. Long-Term Care Insurance

Planning ahead by securing long-term care insurance is the best way to pay for nursing home care, but it only works if your spouse already has an insurance policy long before care is needed. If you try to get long-term care insurance after you need it, it’s too late to qualify. This is because most policies require medical underwriting, and if you already receive long-term care services, you are unlikely to qualify. Getting a long-term care insurance policy well before you need the benefits will save you much stress and hardship down the road.

2. Out of Pocket

Exactly as it sounds, out of pocket means that you will have to pay 100% of the nursing home care costs yourselves. Most couples don’t have the finances on-hand to cover care this expensive, especially considering how long you may need the care. In Alabama, for example, the average cost of long-term nursing care is $78,000 per year. Your life savings can be eaten up in a matter of months with nursing home fees that high!

3. Qualify for Medicaid

Medicaid—not Medicare—is the government program that covers the cost of long-term nursing home care. The application process is slow and difficult, and the requirements to qualify are very financially restrictive. Applying for Medicaid when you already need nursing home care—also known as Medicaid Crisis Planning—will likely mean paying out of pocket at first. That’s because, in order to qualify for Medicaid when you’re married, you’ll only be able to keep about 50% of your combined assets—up to a maximum of about $130,000. This means that if you have $300,000 total in assets, you won’t meet Medicaid eligibility requirements until you spend down about $170,000. Then, once you do qualify for Medicaid, all of your spouse’s income will go directly to paying for the nursing home, and you’ll have to rely on your income alone—plus whatever is left of your assets—to get by on. Learn more about the rules of Medicaid eligibility in Alabama.

However, through Long-Term Care Planning, you can employ several strategies to protect your assets from the cost of nursing home care and ensure Medicaid eligibility when you need it. A qualified elder law attorney will help you determine the best way to organize assets now, so you don’t lose everything to the nursing home later.

Take the Next Step

Sign up for our free webinar about how to get qualified for Medicaid by using the brief form below, or contact attorney Bill Miller today at (256) 251-2137.

Contact Miller Estate & Elder Law

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256-472-1900

bill@millerestateandelderlaw.com