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As our population ages and the costs of nursing home care continue to accelerate, older clients and their
families are becoming increasingly concerned about the potential costs of nursing home care, and are
investigating the alternative government programs that are available to provide in-home services as an
alternative to nursing home residence for older citizens who need assistance in their living arrangements.
More and more people are looking to Medicaid as the payor of last resort.
The Medicaid eligibility rules set forth in the publications of the Family Independence Agency are deceptively
simple. Certain assets are exempt, such as a home and motor vehicle, small life insurance policy and an
irrevocable funeral contract. Other assets can’t exceed $2,000.
While these eligibility rules appear to be bleak and unforgiving, there are planning opportunities to ameliorate
the effect of the eligibility requirements, shelter assets for special needs or spouses, and otherwise
accelerate Medicaid eligibility when the need arises.
Medicaid planning has become a sub-specialty of estate planners. Medicaid is not just for the indigent. As we
live longer, more of us will require nursing home care or in-home assistance to avoid or postpone moving to
a long term care facility.
Questions which arise are:
(1) How much property can I have and still be eligible for Medicaid?
(2) How long do I have to wait to apply for Medicaid benefits?
(3) Does giving property away accelerate eligibility?
(4) How do the "look back" rules work for outright gifts? For gifts in Trust?
(5) How can funds be sheltered to provide for special needs of a beneficiary during nursing home residence?
(6) Can other family funds be used to assist with special needs, assuming that Medicaid is paying for primary
care?
(7) Is there any way to preserve any assets for the family?
(8) What special techniques are available to married couples when one spouse requires help?
The questions are legion as each family’s circumstances are unique.
One thing is clear: Nursing homes are expensive. The average rate in Michigan for the year 2000 is $4,331
per month. Resources get depleted rapidly at that rate.
Attorneys can help plan Medicaid eligibility strategy and even file the Medicaid application for nursing home
expenses. It is obvious that qualifying for Medicaid even one month earlier than might otherwise be possible
can more than offset the professional fees involved.
Planning opportunities vary depending upon the age of the person needing help (the "applicant") and the
applicant’s marital status. Different rules apply when the goal is to preserve the applicant’s own funds versus
establishing means to use family funds for assistance without jeopardizing eligibility.
This is a new area of the law and the rules are changing constantly. For example in OBRA 93, the budget law,
Congress tightened the rules for permitting beneficiary’s own property to be held in Trust and thereby
excluded from countable assets.
Special exceptions were created by the law, however, which can offer families valuable opportunities to
transfer assets, set aside money for special needs, and in some instances still pass assets to family
members while establishing Medicaid eligibility.
This is not intended to be a treatise on Medicaid planning, but merely to alert professional advisors that there
are numerous planning opportunities, some involving specialized Trusts, that need to be explored. If you have
clients who can benefit from Medicaid eligibility, and are likely to need this resource.
©BRANDT, FISHER, ALWARD & ROY, P.C.
This newsletter is provided for informational purposes and should not be acted upon without professional
advice.
| WEALTH CONSERVATION: PROFESSIONAL ALERT Brandt, Fisher, Alward & Roy, P.C. |
| July 2000 MEDICAID PLANNING by James R. Modrall III, J.D., C.P.A. |
| If you would like to receive future editions of the monthly Wealth Conservation Newsletter directly to your e-mail account, please e-mail our office using the following link: Estate Planning Newsletter |
| Brandt, Fisher, Alward & Roy, P.C. Attorneys at Law |