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.

Savings bonds and Medicaid – what should I do when Dad applies for benefits?

sav-bondsFor generations, savings bonds have been purchased for newborns and retirees alike as an investment in the future. While savings bonds aren’t a complex investment vehicle, bonds that aren’t properly handled can cause Medicaid ineligibility.

Here’s a common scenario:

“My dad owns savings bonds; he bought them years ago and added my name to them when his health started declining, so they are payable to me or him. He is now in a nursing home and needs to apply for Medicaid – do these savings bonds count against him? Since I’m a joint-owner, can I cash them so they aren’t an available resource?”

First, it is important to note that savings bonds are a countable resource – the Pennsylvania Medicaid application explicitly names U.S. Savings Bonds as a resource to report. Additionally, savings bonds list the owner’s social security number, which means savings bonds can be tracked through the Treasury department and linked to a Medicaid applicant.

Although the savings bonds are payable to either you or your father, the state may consider the bonds an available resource for your father, because he can redeem them himself. In Pennsylvania, if a Medicaid applicant can sell a jointly-owned resource without the other owner’s consent, the applicant’s share of the resource is presumed available to the applicant. An applicant’s share of a jointly-owned liquid resource is determined by the applicant’s contribution to the resource; this is a very fact-specific determination, but because your father purchased the bonds, the entire value will likely be considered available to him.

If you cash the savings bonds now, the state may consider the action a gift from your father to you, and he will incur a period of Medicaid ineligibility. The determination of whether this will be considered a gift depends on the circumstances, so it is important to proceed with caution.

Given the complex nature of these resources when it comes to Medicaid eligibility, it is important to seek expert advice. By consulting with a certified elder law attorney, you can learn how your resources are characterized and develop a Medicaid Planning arrangement that best serves your needs.

Protecting the Family Home: Part 2. Can the state take my home after I die to recover Medicaid benefits I received?

When you bought your family home years ago, you didn’t just see an asset with equity value – you saw a legacy you could pass to your children. When the time came for you to move into a nursing home, you were relieved to learn that you didn’t have to sell your home to apply for Medicaid. However, did you know that, without proper advance planning, the state can take your home after you die to recover Medicaid benefits you received?

In Part 2 of our series “Protecting the Family Home,” we discuss what happens to a Medicaid recipient’s home after death and the importance of advanced Medicaid planning.

Although your home is generally an excluded resource for Medicaid eligibility and does not have to be sold while you collect benefits, this protection may be lost after you die. Under a process known as “estate recovery,” the Department of Public Welfare can make a claim against your probate estate after your death to recover Medicaid payments made for your benefit.  Your “probate estate” generally includes all of your property that does not pass through a beneficiary designation. If your home is part of your probate estate, your family may have to sell your house to repay the claim.

Complex planning techniques may be used to protect your family home from estate recovery, but the most effective Medicaid planning takes place well in advance of a crisis situation.  By working with a certified elder law attorney before applying for Medicaid, you may be able to preserve your family home for your children.

At Sykes Elder Law, we have experience with a variety of complex Medicaid Planning techniques – give us a call today to discuss how we can help you achieve your estate planning goals.

Protecting the Family Home: Part 1

Do I have to sell my home to be eligible for Medicaid benefits?

This is the first post in a series discussing what happens to your home when you apply for Medicaid benefits.

When you enter a nursing home and need to apply for Medicaid, the issue of whether your home must be sold can be a concern. People often misunderstand Medicaid’s rules regarding homes, which can make emotional conversations about a loved one’s care even more complex.

Generally, you do not need to sell your home to be eligible for Medicaid. In Pennsylvania, a Medicaid applicant’s principal place of residence, up to $543,000 equity value in 2014, is an “excluded resource.” This means the state will not count the home against you, the applicant, when determining your eligibility for benefits. For the home to earn “excluded” status, you must state in writing that you intend to return to the home.

The home may also be an excluded resource, with no limit on equity value, based on who is still living there. If the Medicaid applicant’s spouse is still living in the home, the home is excluded; this is also true if the applicant’s child — under age 21, blind, or permanently disabled – is living in the home.

Any additional residences, other than the primary residence, are protected if another exclusion applies (for example: the property is income producing) or if the property can be preserved as part of the Community Spouse Resource Allowance (CSRA).

With assistance from a certified elder law attorney, a number of strategies may be used to help protect the family home. At Sykes Elder Law, we have years of experience in Medicaid Planning and can help you find the plan that best suits your needs.