Why use an elder law attorney to help you qualify for Medicaid?

asset-protect2Imagine that your husband recently suffered a stroke. After a stay in the hospital, he now resides in a nursing home. His doctor tells you your husband will not likely improve and will need to stay at the home indefinitely.

You worry how you will pay for care at $10,000 a month without impoverishing yourself.

A friend suggests you speak with an elder law attorney to come up with a plan. But the friendly, helpful woman in the nursing home’s business office dismisses that suggestion with a wave of her hand. “You don’t need to do that, we’ll help you prepare a Medicaid application – and we’ll do it for free!”

She seems so knowledgeable, telling you with certainty that the rules allow you to keep your house but require you to spend down half your other assets. “Well,” you think to yourself, “money is tight right now. Why pay someone to help me when the rules are clear and the nursing home will help me file an application for free?”

The answer is that you could easily wind up spending tens of thousands or even hundreds of thousands of dollars unnecessarily without a good plan to qualify for benefits.

Hopefully that last sentence got your attention. I’ve seen it happen countless times. A client finally comes to me for help a year or two too late, only to discover that they have been writing large checks for nursing care every month, when they could qualified for benefits long ago. Too late now – the money’s gone.

I don’t want you to end up like that. Read on to find out why it’s important to get good, objective advice, and how you can get that advice easily.

1. Qualifying for Medicaid is not simply a matter of filing an application.

Let me repeat that: Qualifying for Medicaid is not simply a matter of filing an application.

A nursing home resident becomes eligible to receive Medicaid benefits only after meeting certain financial requirements. You will not receive a dime in benefits until you meet those requirements.

The application merely allows benefits to begin once you have already met the requirements. A few people (those with very few assets) qualify immediately. Others have so much in assets that they will never qualify.

But most middle class clients we have seen must first spend down some assets before becoming qualified for benefits. Filing an application makes sense only when you have made the requisite spend-down.

Ideally, you should have a plan for how you will become qualified.

2. Medicaid rules allow numerous opportunities for savings and asset protection.

Medicaid law allows applicants to claim certain assets as “exempt,” meaning they will not count for spend-down purposes. The law also permits some “exempt transfers” of assets (for example, the transfer of a house to a caregiver child) that will help an applicant become eligible without triggering the usual penalty for giving away assets.

For married couples, the rules become more complex, allowing the non-applicant spouse (the “community spouse”) to keep some of the couple’s assets as a “community spouse resource allowance,” permitting the community spouse to receive a certain level of income as a monthly maintenance needs allowance, and allowing the community spouse to keep additional assets if income is needed for the community spouse to receive an adequate needs allowance.

In addition, case law in Pennsylvania authorizes the purchase of an annuity to give the community spouse additional income.

Let me stop here for a moment and return to the example I started with. Is the nursing home business manager (who offered to help you fill out an application) going to sit down with you and calculate your community spouse resource allowance and your monthly maintenance needs allowance to determine if you are entitled to keep additional assets when qualifying for benefits, or to discuss whether the purchase of an annuity would help you qualify sooner and provide income you will need in the future?

My guess is almost certainly not – she lacks the knowledge, training, and time to make those calculations and assessments.

3. Lawyers are trained to serve your best interests.

An experienced elder law attorney (especially one with a CELA designation) has the training to look for all the various ways you can get the best financial result.

And unlike someone who works for a nursing home, your lawyer has no conflict of interest. Keep in mind that the nursing home has an interest in making sure you qualify for benefits when you’ve spent down, but not necessarily in having you qualify any sooner. After all, the nursing home makes more profit when you’re spending down than when you’ve qualified for benefits.

A lawyer, on the other hand, is trained (and required by the rules of professional conduct) to act only in your best interest.

In the case of Medicaid planning, that means finding the spend-down scenario that will best serve your interests in saving money, protecting assets, and providing for the security of the community spouse.

A good elder law attorney will have spent significant time learning the nuances of Medicaid law and accumulating an assortment of techniques to maximize asset protection for clients. This knowledge and expertise can prove invaluable in crafting your plan.

4. We make it easy to find out if hiring an attorney is cost-effective.

At Sykes Elder Law, we make it simple to determine if using an attorney for Medicaid planning makes sense in your case.

When you first call, you will speak to someone who is trained to ask you the right questions to find out if it makes sense to come in for an appointment. We make appointments only for those clients who appear to be good candidates for benefitting from our expertise. If we believe you would not benefit, we tell you; if we believe you would benefit, we recommend an appointment with a certified elder law attorney.

It costs just $385 (at the time of this writing) to have an attorney meet with you, review your circumstances in detail, and make recommendations on how to proceed. Some clients receive great benefit (mentally and financially) from just that one meeting. In many cases, though, clients decide to hire us to help them design and implement a Medicaid qualification and asset protection plan because they have discovered how much more they will save and protect by having professional help.

Worth a phone call?

Let’s go back to the question from earlier in this post: Is it worth it to pay someone to help me, when I could prepare an application myself or get free help from someone at the nursing home?

It may or may not be cost-effective to hire an elder law attorney for Medicaid planning, depending on your situation. But it takes one phone call to start finding out.asset-protect2

How are people related? Understanding consanguinity

Test your knowledge with this question: What relation to you is the child of your cousin?

  1. Nephew
  2. Cousin
  3. Second cousin
  4. First cousin once removed

The question raises an issue of “consanguinity” – the relatedness of family members. As an estate planning and elder law attorney, I constantly need to know how to refer to relations based on blood and marriage.

I rely on a consanguinity chart to help me with the trickier questions of relatedness. You can find an example here. A chart visualizes the relations and makes it easy to find the correct term.

As to the quiz question above, most people pick C, second cousin. But the correct answer is D, first cousin once removed.

Your first cousin is the child of your aunt or uncle, and also the grandchild of your grandparents. Your second cousin is the grandchild of your great-aunt or great-uncle, and also the great-grandchild of your great-grandparents.

But the child of your cousin is your first cousin once removed. What makes the title “first cousin once removed” so confusing to me is that it is also the title of your second cousin’s father or mother. It turns out, though, that each type of “first cousin once removed” shares the same percentage of your DNA, as you can see from this chart.

See why I use a consanguinity chart? If you do too, you’ll keep even distant relations straight.

Warning signs of undue influence

The most common reason for contesting a will is an allegation of undue influence – that is, that someone close to the person creating a will (called the “testator”) gained a substantial benefit by persuading the testator to favor that person, at a time when the testator suffered from a weakened intellect.

When an estate planning attorney meets a new client for the first time, it’s important to watch for warning signs of undue influence. After all, we all want to create valid estate plans that will stand up to scrutiny, not buy our clients a lawsuit.

Here is the advice I give other attorneys about the common warning signs that may indicate the possibility of undue influence.

Warning signs

The first warning sign happens when besides the testator calls to arrange the appointment, or brings the testator to the appointment, or both. The elderly and disabled often rely upon others to make appointments and provide transportation, so this occurrence alone does not necessarily spell trouble, but it could be a sign that making changes to the estate plan was not the testator’s idea.

A much more troublesome sign happens when someone speaks for the testator. For example, you ask Mrs. Jones what brings her in today and her companion says, “She wants to change her will.” Or Mrs. Jones may, when asked a question, turn her companion as if looking for the answer, at which point the companion answers your question. If either of these occurs, you will need to meet with the testator alone.

Another obvious warning sign occurs when you learn that the purpose of the meeting is to make changes to a distribution scheme that favors some beneficiary or beneficiaries at the expense of others. Again, the testator may have a sound reason for doing so and have the reasoned judgment to make that change, but it could indicate someone has influenced the testator.

Sometimes you learn in the course of your interview that the testator has received a diagnosis that potentially affects cognition, such as dementia, brain tumor, or a similar condition. Such a diagnosis alone does not preclude valid estate planning, but such a diagnosis is almost surely noted in the testator’s medical records, and could provide a basis for someone to make a contest.

Take appropriate action

Meeting with the testator alone when doing estate planning is a good practice, and vital when these warning signs appear. Excuse any companions to the lobby or waiting room.

Reassure the testator that this is your standard practice, that everything said in the meeting is confidential, and that you want to make sure that you understand his or her wishes, free from the influence of anyone else. Explore the reasons for making the desired changes at this time and note them for your file.

Ask pertinent questions to make sure the testator has capacity. If you believe the testator lacks capacity, is being coerced, or is under undue influence, do not proceed to write a will. If you can’t determine capacity with certainty, consider getting the written opinion of a doctor or psychologist. If you find the testator has capacity, and is under no coercion or undue influence, make thorough notes in your file to support your conclusion.

If you take the proper measures, the estate plans you write will be much more likely to withstand any future scrutiny.

Questions asked and answered from our last workshop!


  1. I have elderly parents with modest assets. Is it possible to protect any of those assets?
  2. What is the financial impact of parents moving into my home for care? Do I have liability as their Power of Attorney? Is it possible to use Veterans Benefits for their care in my home?
  3. What is the criteria for a disabled child (exempt transfer)? Can I transfer assets to a disabled child without a Medicaid eligibility penalty?
  4. My mom is 87 years old and she is $600 short each month after paying for care. Should I sell her house?
  5. Can I do IRA planning to minimize taxes and maximize benefits to my heirs?
  6. What are the tax consequences of transferring $50,000 as a gift in a single year?

Join us at our next workshop and have your questions answered! Click here to see upcoming dates.

When is it too late to protect assets when qualifying for Medicaid?

asset-protectQuick answer: when all (or almost all) of your assets are spent down and you’re qualified for Medicaid benefits.

Until that time, there are usually opportunities for some savings.

Most people are aware that Medicaid provides benefits for long term stays in skilled nursing, and that the Medicaid rules require applicants to spend down assets to a certain level before qualifying for benefits. Many are also aware that an applicant can keep some assets, like a house and a car, and still get benefits.

Fewer people know that some assets can be transferred away without incurring any type of penalty. These “exempt transfers” (you can read more about them here) include transfers such as establishing a special needs trust for the benefit of a disabled son or daughter, or deeding a house to a caregiver child.

Another way to protect assets is to transfer them to the spouse of the applicant (in Medicaid parlance, called a “community spouse”). Medicaid law contains a number of provisions allowing the community spouse to keep assets, but people often need the advice of an experienced elder law attorney to know how to take advantage of those opportunities.

In addition, an applicant may also have the opportunity to purchase exempt assets. That is, an applicant may be able to use funds that would otherwise be spent down and use them to benefit the applicant or someone else in the family.

In short, you may have many opportunities to protect assets, even when someone has already entered a nursing home. We can help you to devise a plan tailored to getting the best result possible in your situation.