Bottom Line on Long Term Care and Medical Assistance

BOTTOM LINE ON LONG TERM CARE? THE ANSWERS MAY SURPRISE YOU.

Many people have concerns about their future. For the elderly in Pennsylvania, your parents or loved ones, the concerns are quite valid as the issues are complex. The paradox presented to those individuals in Pennsylvania faced with the prospect of long term care is daunting. On one hand they will need to preserve their assets and create sufficient income to cover their expenses. On the other hand, if they get sick and are faced with a long term confinement at a nursing home or rehab, those assets could be lost. If they stay in nursing and then return to the community, it is often with far fewer assets than they need to live. It is a no win situation. Married couples faced with this situation have more choices than single individuals. These choices and the way the system looks at married couples are complicated. Many of our elders, faced with these tough decisions, choose to ignore the problem entirely. Most of our clients wait to see us until they or their loved ones are already in a hospital or nursing home.

The legal environment has changed significantly in the past 8 years. Very tough laws federal laws were passed in 2006 and were adopted by Pennsylvania for applicants on or after March, 2007. Ignoring these laws can have perilous results. Here are some basics to understand and some things you may want to do before you enter this system:

1. The first thing everyone should understand is that gifting is absolutely OFF LIMITS. That includes small gifts (exceeding $500) and what people like to refer to as the “yearly exclusion” gifts (now $12,000 but previously $10,000 per donee per year) and those gifts that people make that they don’t realize are gifts (putting your kids name on the Pocono house, for example). ANY gift of ANY amount (unless it is made more than five (5) years before the elder applies for Medical Assistance) is going to be added together and the penalty for making the gift assessed against the applicant AT THE TIME OF APPLICATION. Since people usually apply for assistance when they run out of money, this could be disastrous. And since children are now personally responsible for indigent parents, the disaster could be that the children’s assets are fully exposed to the costs of nursing care.

Bottom line – DO NOT GIFT! Do not add children’s names to accounts or assets without consulting an advisor familiar with Medicaid laws.

2. The second misconception is about titling on accounts. If the elder has his or her name on an account, it BELONGS to the elder. It does not matter whose name is on the account unless the person on the account with the elder also put the money into the account. This is often impossible to track so avoid these mistakes at all costs. For married couples – if either spouse has their name on something – they BOTH own it! It does not matter who owned it before the marriage happened. This is true even if a couple married a week before the nursing home admission – all of the assets of BOTH spouses are available.

Bottom line – DO NOT DO SELF HELP MEDICAID PLANNING! What you think is true is probably not true.

On a positive note, what you worry about happening probably will not happen.

3. There are not people in the government who will TAKE your home or take your money. Nursing homes do not TAKE your home or your money. What happens is that you get a bill. If you do not pay it, you are asked to leave. If you ask Medicaid to pay it for you and you don’t have proper records or have gifted or do not agree that they should know your personal business, they will simply say NO and decline coverage. They do not come to your house and take your assets. If you do not qualify for coverage for ANY REASON, you will not be covered and if you do not pay privately, you will be discharged from the facility. Because of the tougher laws, facilities worried about being stuck with people in this situation and are starting to ask for more and more information PRIOR to admission. If you cannot prove that you can pay or prove that you will be able to get Medicaid, you will probably not get in.

Bottom line – PREPARE YOURSELF AND POSITION YOURSELF TO BE IN CHARGE. You need to have proper records. You HAVE to have someone who can step in for you when you get sick and have the ability to manage your assets. You MUST have a good Power of Attorney for Assets – THIS IS A MUST! You SHOULD have a good Power of Attorney for Health Care. Pennsylvania’s new Living Will act combines both the Power of Attorney for Health Care and Living Will into a single document. This is a good law and a highly recommended document for you to have. If you do not have representation, you could have gaps in your coverage. If there are gaps, your children are responsible. Children should make sure that these issues are in order.