the 9 most common myths of medicaid and medicaid planning
DESCRIPTION
Presented to the Rhode Island chapter of the Alzheimer's Association on Oct. 3, 2013. This talk was Part 4 of the "Getting Started Education Series", given at The Highlands on the East Side, in Providence, RI.TRANSCRIPT
The 9 most common myths of The 9 most common myths of Medicaid & Medicaid PlanningMedicaid & Medicaid Planning
Mark B. Heffner, Esq.Mark B. Heffner, Esq.Heffner & AssociatesHeffner & Associates
615 Jefferson Boulevard 615 Jefferson Boulevard Warwick, Rhode IslandWarwick, Rhode Island
www.hefflaw.comwww.hefflaw.com401-737-1600401-737-1600
DISCLAIMERDISCLAIMER• Presentation based on CURRENT RHODE ISLAND Regulations and Policy, which are subject to change at any time.
• Medicaid eligibility is STATE-SPECIFIC. Even variations within State depending on regional office
• General presentation for educational purposes only. No substitute for individual consultation with COMPETENT Medicaid lawyer in particular State.
HEFFNER &ASSOCIATES
ELDER LAW
MYTH #1
“MEDICARE AND BLUE CROSS WILL COVER IT”
• Medicare & Medigap supplements such as Blue Cross Plan 65 and Blue Chip only small fraction of nursing homes residents at any given time.
• Many residents never receive Medicare coverage.
• For those who do, most people are NOT covered for the full 100 days and many have substantial co-pays during the period they receive skilled benefits.
HEFFNER &ASSOCIATES
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MYTH #2
“IT’S TOO LATE—WE SHOULD HAVE DONE THIS 5 YEARS AGO”
• It is not too late to pursue effective asset protection planning, even after someone enters a nursing home.
• Plan may include purchase of “exempt” assets (“spenddown”), transfers which do not create ineligibility, calculated transfers.
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HEFFNER &ASSOCIATES
ELDER LAW
MYTH #2
“IT’S TOO LATE—WE SHOULD HAVE DONE THIS 5 YEARS AGO”
• Examples for single people:
• Plan may include purchase of “exempt” assets (“spenddown”), transfers which do not create ineligibility, calculated transfers (e.g. “reverse half a loaf”)
HEFFNER &ASSOCIATES
ELDER LAW
MYTH #2
“IT’S TOO LATE—WE SHOULD HAVE DONE THIS 5 YEARS AGO”
• Significant opportunities for married couples—e.g., purchase of Medicaid-qualifying annuities, revisions to community spouse estate plan.
HEFFNER &ASSOCIATES
ELDER LAW
MYTH #3
“I CAN GIVE AWAY $10K PER YEAR TO ANYONE AND IT’S OK”
• Annual exclusion gifts--now $14/year--are NOT exempted transfers for Medicaid eligibility
• Rather, generally will create a period of ineligibility.
HEFFNER &ASSOCIATES
ELDER LAW
MYTH #4
“THE STATE WILL MAKE ME SELL MY HOUSE TO QUALIFY FOR MEDICAID”
• You can own a principal residence (with equity of less than $525K) and still qualify for Medicaid, provided you declare an intention to return home.
• No recovery until after death, and then only against recipient’s probate estate.
• However, though permitted to retain principal residence, no income may be retained (other than portion of rental income) to pay house expenses.
HEFFNER &ASSOCIATES
ELDER LAW
MYTH #5
“MY KID’S NAME IS ON ALL OF MY ACCOUNTS, SO 1/2 IS SAFE”
• Except in the case where the money truly belongs to the child or other co-owner, 100% of the bank account will be exposed for spend-down.
• There are some exceptions for brokerage accounts, stock and real estate provided the penalty period has passed for adding the name.
HEFFNER &ASSOCIATES
ELDER LAW
MYTH #6
“THE STATE WON’T MAKE ME SELL MY BEACH HOUSE/REDEEM MY CD/ANNUITY …TO QUALIFY”
• Except for a limited number of “exempt” resources (e.g., principal residence (equity less than $525K), irrevocable burial contract), all other assets are deemed “available” for spenddown regardless of whether there is a penalty to redeem the asset or the asset cannot be immediately liquidated.
• AT BEST, may be given time to liquidate non-cash or cash-equivalent resources.
HEFFNER &ASSOCIATES
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MYTH #7
“AS A SPOUSE, I GET TO KEEP ANYTHING IN MY NAME ALONE”
• The spousal allowance is calculated by totaling all of the available marital assets (regardless of which spouse’s name is on the asset) and dividing by two.
• The Community Spouse is allowed to keep one-half of the total joint resources up to a maximum of $115,920.
HEFFNER &ASSOCIATES
ELDER LAW
MYTH #8
“MY ANNUITY IS PROTECTED FROM NURSING HOME COSTS”
• An annuity must be specifically designed in order to be Medicaid qualifying.
• Elements: irrevocable cannot be surrendered, transferred, collaterally assigned, or returned for a return of the premium paid, name State as beneficiary.
HEFFNER &ASSOCIATES
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MYTH #8
“MY ANNUITY IS PROTECTED FROM NURSING HOME COSTS”
• Very unlikely that annuity purchased prior to individual’s nursing home placement will pass muster.
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ELDER LAW
MYTH #9
“IF I QUITCLAIM MY HOUSE TO MY KIDS, IT’S PROTECTED”
• Unless SPECIFCALLY exempted, the transfer of ANY asset is subject to a 5 year look-back period.
• In addition, outright transfer of interest in home produces negative tax consequences, exposure of home to claims of kids’ creditors, loss of control by parent in most important asset.
HEFFNER &ASSOCIATES
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*Copyright 2013, Mark B. Heffner, Esq.
Heffner &Associates615 Jefferson BlvdWarwick, RI 02886
www.hefflaw.com