1. MEDICAID PLANNING: HOW TO MANAGE THE $6-7,000/MONTH COST OF STAYING IN A NURSING HOME P. Haans Mulder, JD, MST, CFP® Cunningham Dalman, P.C. 321 Settlers Road Holland, MI 49423 (616) 392-1821 phmulder@holland-law.com

2. Background Attorney and Partner at Cunningham Dalman, P.C. Have a Masters in Tax (MST), CFP® and specialize in estates/elder law and business planning. Serving the Holland area since 1900

3. Background Cunningham Dalman, P.C. has been serving the greater Holland area since 1900. We have 15 attorneys specializing in all areas of the law. Serving the Holland area since 1900

4. Overview Discuss the Medicaid rules and the program. Give you some ideas to plan for managing the cost of staying in a nursing home. Serving the Holland area since 1900

5. Did you know? 40% of people 65 years and older will stay in a nursing home. Average cost to stay in a local nursing home is $6-7,000/month ($72-$84,000/year). Serving the Holland area since 1900

6. What is Medicaid? It is a state and federal program that pays for medical treatment (including long term care). Oftentimes confused with Medicare. Serving the Holland area since 1900

7. When does Medicaid apply? Historically, it only paid for nursing home care. In certain counties (that have the MI Choice Waiver program), it will pay for care in someone’s home or an assisted living facility. Serving the Holland area since 1900

8. Who does Medicaid apply to? Applies to people who are 65 years or older, blind, or disabled. Must satisfy the medical requirements (level of care assessment). Need to meet the income and asset tests. Serving the Holland area since 1900

9. Who does Medicaid apply to? Your monthly income cannot exceed the monthly cost of your stay in a nursing home ($6-7,000 in this area). For the Waiver program, your income (not your spouse) must be less than $2,022/month. Serving the Holland area since 1900

10. Who does Medicaid apply to? The asset test requires that a single person cannot have more than $2,000 in countable assets. You can keep your home (if it’s not in a trust) as well as a vehicle. Serving the Holland area since 1900

11. Who does Medicaid apply to? Asset test allows a married couple to keep their home (again, if it’s not in a trust), a vehicle, and one-half of their other assets (up to a maximum of $109,560). Serving the Holland area since 1900

12. Planning Example #1 Clients are a husband and wife who are in their 70’s. They have a house and $250,000 in investments. Serving the Holland area since 1900

13. Planning Example #1 They previously planned to avoid probate by having an estate plan (which included a living trust, pourover will, and powers of attorney) and titling their assets in their trust. Serving the Holland area since 1900

14. Planning Example #1 They are now worried about the cost of long term care. They are also concerned about one of them passing and what “safety net” will be available for the survivor. Serving the Holland area since 1900

15. Planning Example #1 To plan for these risks, they convert their joint living trust into a single living trust. If one spouse passes away, the single living trust becomes a “survivor’s trust.” Serving the Holland area since 1900

16. Planning Example #1 If the surviving spouse needs nursing home care in the future, she will likely qualify immediately for Medicaid. The “survivor’s trust” creates a “safety net” to pay for expenses not covered by Medicaid (so the children do not have to). Serving the Holland area since 1900

17. Planning Example #1 If one spouse was already on Medicaid, that spouse will remain in the program. It also creates a “safety net” to pay for expenses not covered by Medicaid (so the children do not have to). Serving the Holland area since 1900

18. Planning Example #2 Client is single. She has an estate plan (living trust, pourover will, and powers of attorney). She is healthy and does not anticipate needing long term care in five years. Serving the Holland area since 1900

19. Planning Example #2 She has a house, vehicle, and $250,000 in investments. He receives monthly income of $1,100 in Social Security and $600 from a pension. Serving the Holland area since 1900

20. Planning Example #2 She has monthly expenses of$2,200 so there is a shortfall in her income of $500 per month. Since her husband passed, she has a son who has started to help her in various ways. Serving the Holland area since 1900

21. Planning Example #2 She is concerned about going to a nursing home and not having any resources to take care of her house. She is also worried about Medicaid not covering all of her needs (other medical care, clothes, etc.). Serving the Holland area since 1900

22. Planning Example #2 She creates an irrevocable trust in which she receives the income (interest and dividends). Her son is the trustee and her children are the beneficiaries of the trust principal. Serving the Holland area since 1900

23. Planning Example #2 She makes a gift of $220,000 to the trust. She will receive approximately $916/month in income from the trust. She will not likely need any other resources. Serving the Holland area since 1900

24. Planning Example #2 If she does need other resources, her son can take a distribution from the trust (because he is the trustee and beneficiary). He can then gift it back to her. Serving the Holland area since 1900

25. Planning Example #2 There is a five year “look back” period for Medicaid. She will need to remain healthy five years from the time of the gift for this planning technique to be effective. Serving the Holland area since 1900

26. Questions…… Serving the Holland area since 1900

27. Thank You P. Haans Mulder, JD, MST, CFP® Cunningham Dalman, P.C. 321 Settlers Road Holland, MI 49423 (616) 392-1821 phmulder@holland-law.com www.holland-law.com Serving the Holland area since 1900