This document discusses planning and paying for nursing home care without losing assets. It notes that the risk of needing long-term care is high, with 50% more people expected to have Alzheimer's and 100% more seniors with diabetes by 2025. 70% of those over 65 will need some long-term care services. Medicaid will pay for 50-60% of nursing home costs but is tightening eligibility rules. Asset protection planning, like funding an irrevocable income-only trust more than 5 years before applying for Medicaid or structuring a will to leave assets in a properly drafted trust, can help qualify for Medicaid without penalty. Proper planning is needed to navigate Medicaid rules and protect assets for a spouse or heirs.

2. PAYING FOR THE NURSING
HOME WITHOUT LOSING YOUR
SHIRT!
Robert A. Mason, JD, CELA
Mason Law, PC
Asheboro, North Carolina
Savannah, Georgia

3. Planning Crisis
• Playing The Odds –
– By 2025 50% more with Alzheimers
(Alzheimers Association)
– By 2025 100% more 65+ with Diabetes
(American Diabetes Association)

4. Planning Crisis
• Playing The Odds –
– 70%
The Percentage of Those 65+ Who Will Need Some
Level of Long Term Care Services
– 30% to 40%
The Percentage of Those 65+ Who Can Expect
Nursing Home Level of Care

5. Planning Crisis
• Playing The Odds –
– 50% to 60%
Percentage of Nursing Home Costs Paid by
Medicaid
– Government WILL Tighten Benefit Rules

6. Background – Long Term Care
Two Types of Planning
• CRISIS!!
• Long Range

7. Background – Long Term Care
Types of Long Term Care
• In Home
• Assisted
• Skilled

8. Background – Long Term Care
Financing Long Term Care
• Private
• Medicare
• Long Term Care Insurance
• Medicaid

9. NORTH
CAROLINA
MEDICAID
BASICS

10. Medicaid Basics
Asset Qualification Tests
Countable vs Noncountable

11. Medicaid Basics
Asset Qualification Tests
• Major Noncountable/Nonincludible:
– Residence (less than $536,000 equity if
single applicant)
– 1 Vehicle

12. Medicaid Basics
Asset Qualification Tests
Major Noncountable/Nonincludible:
– Term Insurance

13. Medicaid Basics
Asset Qualification Tests
Annuities – BE CAREFUL!!
• Must be:
nontransferable/nonassignable
• Must be “Actuarially sound”

14. Medicaid Basics
Asset Qualification Tests
Major Noncountable/Nonincludible:
Certain Types of Trusts
(More On These In A Minute)

15. Medicaid Basics
Asset Qualification Tests
• Countable Assets:
Everything Else!

16. Medicaid Basics
Asset Qualification Tests
Married Couple Countable Limit:
ONE-HALF Countable UP TO:
$115,920
Single Limit: $2,000

17. MEDICAID
BASICS -
ASSET
TRANSFERS

18. Medicaid Basics
Transfer Penalties
• Transfers Less Than FMV Within 60
Months of Application
• Penalty: 1 Month for each $6,300
Transferred

19. Medicaid Basics
Transfer Penalties
Resulting Penalty BEGINS On Date
Otherwise Financially Eligible AND in
Skilled Facility

20. Medicaid Basics
Transfer Penalties
EXCEPTIONS
• Interspousal
• Disabled Adult Child
• Sole Benefit Trusts

21. ESTATE RECOVERY

22. Estate Recovery
• Mandated by Congress 1993
• Directs DMA to Recover Against
Estates of Deceased Recipients

23. Estate Recovery
• Probate vs. Nonprobate

24. Estate Recovery
Major Exception: Not If A Surviving Spouse
• Major Exception: Not If A Surviving
Disabled Child
• Estates of Less Than $5,000
• Recoveries of Less Than $3,000

25. Estate Planning Issues –
Working With The Rules

26. Rules Break!
• Transfers More Than 5 Years Old:
IRRELEVANT
• Go To Nursing Home During 5 Years:
Pay Remainder of 5 Years OR Undo
Earlier Transfer

27. 5 Year Strategies
• Give Assets Away
– Many Negatives
• “Income Only” Trust
– Much Better Solution

28. Income Only Trust
• Irrevocable – Sort Of
• Income Continues
• Great Tax Advantages

29. Income Only Trust
• 5 Years To Be Fully Effective
• What Happens If Need NH Within 5
Years?
– Pay Difference Until 5 Years From Trust
Set-up Has Elapsed
– Remember: Difference Between Income
and NH Cost

30. Income Only Trust
• How Pay For Remainder of 5 Years?
– Savings
– LTC Insurance
– VA Benefits? (Maybe as much as
$2,054/mo)

31. Rules Break!
Transfers By WILLS Don’t Count
Against Medicaid Eligibility

32. Properly Structured Will
• Leaving Assets To Others Will Not
Affect Spouse & Medicaid
• CAUTION: Leaving Everything To
Spouse “Loads Up” Surviving Spouse

33. Rules Break!
• If You Or Spouse Set Up Trust AND any
Principal Can Possibly Be Distributed
To You – WHOLE Trust Will Count
• EXCEPT: Trusts Set Up Under A Will

34. Properly Structured Will
• Leave Everything In Trust Under Will
For Spouse
• Trust MUST be Properly Drafted
• Assets In Trust Will Not Count For
Medicaid Purposes

35. CAUTION: Living Trusts
• Most Living Trusts Won’t Do
• Revocable Trusts
– They may avoid probate, but they’re
countable assets
– Might Even Make a Home Countable
– Usually Won’t Do What I Described

36. IN A NUTSHELL . . .
• NEED FOR LONG TERM
CARE: HIGH
• COSTS GOING UP
• GOV’T PRESSURE ON BENEFITS

37. IN A NUTSHELL . . .
• GET INSURANCE IF
YOU CAN
• EVEN WITH INSURANCE
HAVE AN OVERALL PLAN

38. IN A NUTSHELL . . .
• MORE OPTIONS FOR
COUPLES
• SOME OPTIONS FOR
SINGLES (IF YOU GET
PLANNING!)
• MOST EXPENSIVE: DO NOTHING

39. Now serving Central Carolina and Coastal Georgia
Elder Law * Wills & Trusts * Guardianships
All contents of this presentation © 2013 Mason Law, PC