It is a sad fact that at this point in human history there is no cure for the effects of growing older, and most of us are going to need assistance as our minds and bodies age. There are two ways of dealing with this event; wait until it happens and plan in a crisis mode, or plan while you are healthy and better able to dictate what you want to happen.
Planning is always the recommended strategy. That means doing some basic estate planning and possibly some advance-care planning. A basic estate plan consists of 4 documents: a will to direct your heirs about how you want your estate distributed; a durable power of attorney to appoint someone to manage your legal and financial affairs when you cannot do so yourself; a designation of health care surrogate to appoint someone to talk to your doctors and make medical and other care decisions for you when you cannot do so for yourself; and a living will to memorialize your decision regarding end-of-life care, such as whether or not a feeding tube, ventilator, or other artificial methods should be used to sustain your body when you are at the end.
Advance-care planning seeks to figure out how to pay for long-term care if it is
needed down the road. One option is long-term care insurance which is a good choice for
avoiding Medicaid and opens up the selection of long-term care facilities to include those
that are private-pay only. The other option, when private-pay is not feasible, is planning for
Medicaid eligibility.
Planning for Medicaid means planning to meet its eligibility requirements. For
individuals, that means around $2,000 in assets and $2,500 in income. Married persons can
have more assets and income, especially if only one spouse is looking to qualify for benefits,
but the levels are still fairly low for most people.
If only one spouse will need care, a practical strategy is to transfer all the assets to
the well spouse who then refuses to pay for the ill spouse’s care. The important part of this
plan is to make sure the well spouse has a will or trust that keeps the assets out of the ill
spouse’s name if the well spouse passes first.
Another useful strategy is an asset protection trust, which can be used by individuals
or married persons. All assets that would otherwise count against Medicaid eligibility
get transferred to the trust. The grantor may retain the right to income from the trust but
must give up all other rights to the trust assets, including any right to manage those assets.
The gift to the asset protection trust starts the clock running for Medicaid eligibility so that,
after 5 years, the gift will not count against the grantor.
In many cases, however, advance planning is not possible because the need to find
care is imminent. In those cases, we look at all available options, including military veteran
benefits, emergency spend-down plans, and qualified income trusts for persons with too
much income to qualify for Medicaid. For families facing a crisis-planning situation, it is
critical to seek professional advice because medical or non-legal personnel may not be aware
of all the options you have.
Most of us will need help of some kind in our senior years, including help with
paying for the help. Consult with your elder care attorney to find a strategy that gets you or
your loved one the care you need without having to spend everything on the cost of that care
and having nothing left over for your family.
