This term is used by our firm to denote the planning strategy of making sure that our client’s assets are protected to the fullest extent of the law. This means paying the correct medical expenses, nursing home costs, taxes, administrative fees, service fees, and penalties. This also means that we seek to keep family members from bearing the burden of the expenses that their parents may incur.
The new paradigm in Pennsylvania and many other states is to shift costs to family members without considering the family’s ability or responsibility to pay these costs. This may be the biggest threat to our client’s children; in most cases, they are unaware of this threat.
Medicaid Planning: Crisis and Pre-Crisis FAQ’s
How soon can I get Medicaid? First off, there is a difference between standard “Medicaid” and “Medical Assistance” in Pennsylvania. The former benefits all Pennsylvanians with low assets and income and may provide income, food, and hospital benefits. The latter is a program for Pennsylvania elderly and disabled individuals requiring nursing care and, in some cases, home care. For Medical Assistance, one must be institutionalized, either categorically or medically needy, and have assets below certain thresholds. Married couples have more complicated requirements. You are eligible if you are in a nursing home and have assets below a threshold known as the “protected share.” (see below)
Once you apply, and so long as you have not made gifts, you begin your coverage with final approval, which should be issued within 45 days but often takes longer.
What is the five-year lookback? The length of time the Department of Human Services (“DHS”) investigates assets and financial transactions to see if the applicant is eligible for assistance. The investigation begins with filing an “MA Application.” After filing this with the County Assistance Office (“CAO”) the CAO may “look back” over the previous five years. Any transfers during this time for less than adequate consideration or made to reduce assets to qualify for Medical Assistance will be totaled and divided by the average cost of a nursing home in your state. This results in a period of ineligibility for whatever number of months the gift would purchase at the average nursing home. This delay begins when the applicant is “otherwise eligible,” which means (1) in a nursing home, (2) with assets below the threshold, and (3) an MA Application has been filed.
What assets can I keep when my spouse qualifies for Medicaid? You can keep your home, your retirement assets, and half of your liquid assets up to about $140,000. Since the ill spouse can keep up to $8,000, the total amount a couple may keep is about $150,000
How long does it take to qualify for Medicaid ? You can do it almost immediately if you spend down your assets in an acceptable manner.
Can I get medicaid help me at home? There is a “Waiver” program that serves individuals at home who need nursing home-level care. This is not an entitlement and is only available on a limited basis.
Can a Nursing Home charge me for medical expenses for my parents? Yes! This is very surprising to most children in Pennsylvania but you are absolutely liable for medical bills incurred by indigent parents.
Can I gift $15,000 per year to my children? Everyone should first understand 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 $16,000 but previously $15,000 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 years before the elder applies for Medical Assistance) is going to be added together, and the penalty for making the gift is 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.
Is it a good idea for my parents to give me their home? Never a good idea for various reasons, including the fact that a home gift disqualifies the parents if they go to a nursing facility within five years of making the transfer.
Can the nursing home take my house? They would like you to think so, and sometimes they will ask for it, but NO, they can’t, and the house is exempt so long as you intend to return there.
Does the nursing home get half of my assets? NO! They don’t automatically get any part of your assets, although they will sometimes tell people such things. If you don’t know what you are doing, however, they might get all of your assets either by not knowing or by now following the rules for Medical Assistance.
If my checking account is in my name, is it safe from a nursing home? 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.
Will the government take my home? No people in the government 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 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 are worried about being stuck with people in this situation and are asking for 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.
Can I stay in my home if I get sick? You can certainly stay in your home as a majority of the people needing nursing care do. There is no one going to “take” your home, including the government or any nursing home. If a nursing facility asks you to deed over your home, immediately contact a qualified elder law attorney. A home is an exempt asset for Medicaid purposes and will remain as long as you intend to return.
Can I gift money to my church? Can I pay for my daughter’s wedding? Be very careful about gifting, as this will carry heavy consequences if you require nursing care. If you are younger and healthy, there are methods of gifting and asset protection that a qualified elder law attorney help you with.
If I cash my CDs and keep the cash, will this protect the money? Any cashed accounts will be questioned when applying for Medicaid, and to the extent that you cannot track the cash flows, they will be considered gifts. Cashing out your CD and keeping the money in your basement is a bad idea for several reasons, including this one.
Are County nursing homes OK? They are usually better than most private homes because their reimbursement rates from Medicaid are close to their private pay rates. Generally speaking, we like our local County homes a lot.
Medicaid is only for the poor correct? Wrong, it is a program that benefits 70% of all Pennsylvanians who enter nursing care.
What is Medical Assistance? A form of Medicaid that pays for long term non-skilled care for seniors and disabled individuals.
Do I have to name a particular funeral home when I open an irrevocable burial account? No, there are banks that permit you to put aside funds that can be accessed for your funeral by a funeral director at the time of your death. The account must be irrevocable and must conform to Medicaid rules.
Does the state take my assets when I go on Medicaid? Not while you are living but at your death, to the extent that you have assets in your name alone, the Estate Recovery portion of Medicaid will recapture funds paid out on your behalf from your estate.
Does Medicaid pay for my hospital? There is a form of Medicaid for medical illness and injury, but our clients are Medical Assistance long term care applicants. This does not pay for hospitals and doctors, but Medicare will. It is important to maintain your Medicare coverage when you go on Medical Assistance.
Should I drop my health insurance when I apply for Medical Assistance? See above – no! This is not a good idea because Medical Assistance does not cover medical care.
What is a Medicaid “Waiver”? A non-entitlement program in Medicaid that “waives” some requirements to permit certain needy individuals to obtain coverage. Our clients are especially benefitted from the PDA Waiver, which waives the requirement of nursing home institutionalization and permits care at home.
What did the Deficit Reduction Act do to Medicaid long term care? Changing gifting and lookback rules generally made the program more complicated and punitive to families.
How do I apply for Medicaid? Filing an application with the County Assistance Office of the County in which you are domiciled. For purposes of domicile, it would be the nursing home where you are treated.
What do I or my family pay when I am waiting to be approved for Medicaid? If your assets are below the individual or married threshold, you are “Medicaid Pending.” While Medicaid Pending, you should still make payments of your income to the home.. they will bill you for the entire private pay amount, but only your income is required to be paid over less a personal allowance. If you are not approved for Medicaid, you will owe the difference.
Who are medically needy? Those whose acuity level requires nursing home care. This is a category of medical assistance. Most seniors will fit into this category.
How does Medicaid apply to married couples? Married couples often obtain Medicaid, and complex rules seek to protect the spouse living in the community. Definitely seek the advice of an elder law attorney if you are married, and your spouse enters a nursing home. Do it early, as time is of the essence.
How can my spouse obtain protection when applying for Medicaid? There are spousal protection rules and maintenance allowances that attempt to protect the community spouse.
What is a “protected share”? The amount a community spouse may keep from the couple’s assets.
What is a “maintenance allowance”? The amount of income that the community spouse needs to live in her home. This may be earned by her or taken in part from her spouse’s income .
What should I do now to protect myself in the future for Medicaid? 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 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. You could have gaps in your coverage if you do not have representation. If there are gaps, your children are responsible. Children should make sure that these issues are in order.
Contact Us Today!
The Elder Law Attorneys at Shober and Rock represent clients with a wide range of needs. Call (215) 345-4301 today to consult with our experienced Asset Protection Attorneys.
