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Elder Law and Medicaid Planning

Over the years of handling estate planning matters, we have frequently been asked for advice and assistance related to long-term care and asset protection issues. Many Americans are concerned about losing their life savings paying for a nursing home, and not many attorneys in our area are trained to serve these clients adequately. Because it is such a need in our community, we have decided to become leaders in this subject matter so that we can serve our elder clients at a higher level. In fact, we joined Elder Counsel, a network of attorneys on the cutting edge of Elder Law and Special Needs issues. These areas of law are quite specific and require a particular background of knowledge.

Our process for working with clients on elder law issues is initially similar to the process for the rest of our estate planning clients, in which we ensure that your foundational estate plan works in the way you want. Without foundational estate planning, you’re not set up for success. However, if you identify the cost of long-term care as a concern, we work together to identify solutions for long-term care and Medicaid planning as part of putting together a plan for you.

Should I Worry About The Cost Of Nursing Home Care?

Although the high costs of nursing homes is a concern, hopefully you’re not going to worry about paying for a nursing home because you’ll plan for it with professional help. However, it is something to think about and act on now so that you are ready. We all know families with bad nursing home experiences and who spent their last dime paying for it. As of 2023, most nursing homes in Georgia cost between $5,000 and $10,000 per month, or more. While Medicare pays for much of the medical expenses of older Americans, it does not pay for long-term residential care, which means that you would have to find another way to pay.

What Are The Ways To Pay For Long-Term Care?

There are multiple ways to finance long-term care, but here are the most common ones:

  • Medicaid – A government program for the needy and the biggest payor of nursing homes in Georgia.
  • Long-Term Care Insurance – Insurance purchased in advance to pay for at least some of your assisted and long-term care needs.
  • Self-Pay or Family Support – If you or your family have enough resources, you can pay for your care yourself.
  • A Combination of the Above – If you have any income, such as social security or a pension, you will likely need to pay that for your nursing care, and any shortfall may be supplemented by Medicaid if you qualify for it. Alternatively, if you have long-term care insurance which only covers part of your care, you can supplement insurance benefits with any passive income you might have and your other assets as necessary to cover your care.

Is Long-Term Care Insurance An Option?

It might be. Long-term care insurance can seem relatively expensive, but a good policy can ensure you get better care than what Medicaid might pay for, and if you are able to get it, you might protect significant resources for your family. As a practical matter for most individuals, this type of insurance can only be obtained if purchased a long time before you expect to need care.

If you work with us on your planning, we can refer you to a financial advisor who can assist you with finding a good policy. Just be careful and find a dependable insurance company because lots of long-term-care insurance policies in the past have failed because of the skyrocketing cost of care.

How Does One Qualify For Medicaid To Pay Long-Term Care Costs?

The short answer to this question is that you must be elderly or disabled, as well as impoverished at the time you need institutional care. If you are single and have more than $2,000 in resources, you do not qualify. Generally, the exceptions to this resource limit are ownership of a modest home, a single automobile, and certain prepaid funeral arrangements.

Yet, if Medicaid pays for your care, they are entitled to recover the amounts they paid from your estate, meaning a lien could be placed on your home, preventing your loved ones from inheriting it without paying off the lien. If your income (including social security, retirement, etc.) exceeds $2,543, you are also disqualified unless you establish a so-called Miller Trust (aka QIT) that funnels all your income to your nursing facility. If you are married, your spouse only gets to keep $137,400 (as of 2022) for you to qualify for Medicaid.

If you are over the limit, you must use resources to pay for your nursing care and legitimate expenses until you get below the resource limit.  If you want more flexibility that while also qualifying for Medicaid, you may consider establishing and funding an irrevocable trust to protect your assets, assuming you do so well in advance of needing it.

Can I Just Give My Property Away To Qualify For Medicaid?

No. The government will punish you for giving away your resources if you do so within five years of applying for benefits. Under 2022 rules, your benefits will be delayed one month for every $8,821.00 that you gave away during the look back period. So, if you give away a $200,000 house, leaving yourself impoverished, you will not receive benefits for 23 months after you would otherwise qualify for them. This would be disastrous to say the least and would be a real crisis for you. It is hard to imagine the feeling of needing a level of care that you have no way to pay for.

What Should I Do To Plan For Expensive Long-Term Care?

It depends. In a perfect world, you would work with an attorney and financial advisor early enough in life so that you could afford to pay for your care without getting the government involved. In fact, most people, if they could choose, would want to stay in their home and receive care there. However, we understand that this is not always a realistic option, and that is why we have studied to become well-versed on Medicaid planning as a complement to our larger estate planning practice.

If You Are Middle-Aged Or Younger And In Reasonably Good Health

For people in this category, a priority should be on 1) a financial plan for retirement; and 2) getting a foundational, core estate plan in place that ensures your wishes are honored if you become incapacitated or die. You are encouraged to schedule an estate planning session with us. Everyone dies, but not everyone spends a long period in a nursing home, meaning nursing home planning is only one of many things to consider. Having a core estate plan is essential.

As part of your financial planning, you should inquire about long-term care insurance because it is more affordable now than it ever will be for you. Having a combination of long-term care insurance, retirement resources, and an estate plan that appoints a responsible representative to see to your needs in old age is your best bet for having good quality of care as you age.

If You Are Older Than 65 But Don’t Expect To Need Intensive Care Within The Next Five Years

For people in this category, if protecting their assets is a priority, a planning meeting with a lawyer trained in elder law issues is necessary to get clear on a strategy that will work. One solution might be a Medicaid Asset Protection Trust. Some people acting on their own give everything away, but then find out later in life that they needed those resources to live on. Do not be that person!

What Is The Best Way To Start Working With Us?

We believe that everyone, especially if you own property, needs a core estate plan that keeps the court out of your life and protects your family from conflict as much as possible, whether you become incapacitated or die. Also, you need the right individuals appointed to make decisions for you if you can’t. Failure to get this foundational planning in place may result in costly and divisive court proceedings being necessary to manage your affairs.

A good place to start, even if you have a will, is with a planning session, which is an educational session for you (and, if married, your spouse) that turns into a substantive planning meeting if you decide to engage us to create an estate plan. Before the meeting, you complete homework that we provide which helps you inventory your assets and identify important priorities, including your planning for long-term care costs. If you complete the homework, there is no fee for the initial planning session. If Medicaid planning is a priority, you can engage us to prepare a Medicaid Asset Protection Letter proposing a plan tailored to your situation.

What If You Have A Crisis?

Sometimes you expect to go into a nursing home relatively soon, but you have too many assets to qualify for Medicaid and you are stuck in a crisis situation. The answer is not to go it alone or be worried about the cost of a lawyer to help you. You are either going to have to spend your money on the nursing home, or you can spend your resources in ways that are helpful to you or your family but which don’t disqualify you from Medicaid.

This is a complex and ever-changing area of law and working with a knowledgeable elder law attorney is indispensable. We are members of Elder Counsel and have access to numerous resources to guide you in a time of trouble. Although our options are limited if we are inside the five-year lookback period, you may still be able to save some of your money.

Medicaid Asset Protection Trusts

If you plan early enough, one method to protect your assets is through an irrevocable trust that might give you some benefits like the ability to earn income or to appoint who receives your assets after your death, but the principal of the asset is protected so that it doesn’t have to be sold to pay for your care, and Medicaid will have no claim to it. These trusts are more restrictive than the revocable trusts that we prepare for most families, and these irrevocable trusts also require you to appoint someone other than yourself as trustee. However, these trusts offer asset protection not offered by revocable trusts.

Trusts designed for Medicaid asset protection are complex and should not be attempted by just anyone.  If designed properly and funded at the appropriate time, you can also preserve a stepped up basis on assets inherited by beneficiaries, a tax advantage that will be lost if you just give your stuff away. Before we prepare this type of trust for you, however, we really need to go through the estate planning process and get clear on your full picture.

If you are concerned about how the cost of a nursing home would harm your estate, you can engage us to prepare a Medicaid Asset Protection Letter and fully analyze your planning options. A Medicaid Asset Protection Trust is often a good answer, but you will want to explore all of your options and make an educated decision for you after seeing the big picture.

Special Needs Trusts

Although Special Needs Trusts are needed in a different situation than Medicaid Asset Protection Trusts, we mention them here because they are also designed to preserve assets for disabled individuals who receive or likely will receive needs-based governmental benefits, such as Supplemental Security Income (SSI) or Medicaid. A first-party or self-funded special needs trust is typically necessary for a person under the age of 65 who receives a settlement from a personal injury action or lawsuit or if they are receiving an outright inheritance that is not protected. If a person on needs-based benefits comes into possession of money or property, they are likely to lose their benefits until they spend down their assets. The good thing about putting assets in a special needs trust is that the disabled person can keep their benefits. A bad thing about self-funded special needs trusts is that the government will require that any unused assets in trust at the death of the beneficiary be repaid to the government. Nevertheless, if you become immediately entitled to unprotected money or property, it will usually make economic sense to create and fund a special needs trust.

Third-party special needs trusts are special needs trust funded with property of someone other than the beneficiary. If you have a loved one with special needs, it will likely be a great financial benefit to them to incorporate a special needs trust into any gift you make for them in your planning. In fact, in most of our foundational trust plans, we instruct trustees to fund any qualifying beneficiary’s part of your estate into a special needs trust if it would help them preserve needs-based benefits. This can’t happen unless you incorporate it in your planning. A great benefit of a third-party funded special needs trust is that there is more flexibility and no requirement to pay back the government when the beneficiary dies. If you are leaving substantial benefits to a loved one with special needs, you may even have the means to incentivize a trustee or caretaker to engage in activities with the beneficiary, such as taking them to church, to the movies, or to family gatherings, similar to the way that you showed them a good time.

Contact Us To Get Started

We can work with you to prepare either a self-funded special needs trust or a third-party funded trust, depending on your situation. Call Bryant & O'Connor Law Firm today at 912-788-5095, or contact us by email, and let’s get started.

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