Ralph Robbins
Certified Financial Planner
Ralph S. Robbins, CFP©, is a licensed Certified Financial Planning Practitioner and an Accredited VA Claims Agent specializing in Eldercare Financial Planning. He works everyday helping families in crisis find creative ways to fund long-term care expenses and deal with family financial issues.
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Question
If I have a joint bank account with my mother can I move her funds to a new account in my name in case she mov...
If mom is on Medicaid she will need her own account. Otherwise, it doesn't really matter.
Question
Will medicaid cover what Mom's long term care insurance will not since that can't be spent down? Her nursing h...
Thanks for the updated info. The suggestions I am making are based on your mother and step-father living in the State of North Carolina. ... Thanks for the updated info. The suggestions I am making are based on your mother and step-father living in the State of North Carolina. In my view you have two choices and both involve applying for Medicaid NOW. In one instance you can do planning that will be seek benefits in the near term and in the other you will be planning to receive benefits at least some point in the future. (North Carolina does not have a Spousal Refusal option).
The immediate goal should be to obtain a financial “snapshot” (believe it or not that is the technical term) of the couple presently. The total assets of the couple are then added together and then half attributed to the nursing home spouse and half attributed to the at home spouse (Community Spouse).
For example, if a couple owns $90,000 in countable assets on the date the applicant enters the hospital and stays in it or a nursing home for 30 days or more, he or she will be eligible for Medicaid once their assets have been reduced to a combined figure of $47,000 – $2,000 for the applicant and $45,000 (one-half of $90,000) for the at-home spouse. If the couple owned $250,000 in assets, the spouse in need of care would not become eligible until their savings were reduced to $117,920 ($2,000 for the nursing home spouse and the maximum $115,920 for the community spouse).
Confusing, isn’t it? The bottom line is that assets can be preserved for both spouses to be used for their benefit. It is to their advantage to get started now. You definitely need to seek professional help with this matter. see more
The immediate goal should be to obtain a financial “snapshot” (believe it or not that is the technical term) of the couple presently. The total assets of the couple are then added together and then half attributed to the nursing home spouse and half attributed to the at home spouse (Community Spouse).
For example, if a couple owns $90,000 in countable assets on the date the applicant enters the hospital and stays in it or a nursing home for 30 days or more, he or she will be eligible for Medicaid once their assets have been reduced to a combined figure of $47,000 – $2,000 for the applicant and $45,000 (one-half of $90,000) for the at-home spouse. If the couple owned $250,000 in assets, the spouse in need of care would not become eligible until their savings were reduced to $117,920 ($2,000 for the nursing home spouse and the maximum $115,920 for the community spouse).
Confusing, isn’t it? The bottom line is that assets can be preserved for both spouses to be used for their benefit. It is to their advantage to get started now. You definitely need to seek professional help with this matter. see more
Question
Will medicaid cover what Mom's long term care insurance will not since that can't be spent down? Her nursing h...
The short answer is that, from an income standpoint, mom will qualify for Medicaid if her income and long-term care policy benefit are not... The short answer is that, from an income standpoint, mom will qualify for Medicaid if her income and long-term care policy benefit are not sufficient to cover nursing home expenses. Simply add up all of mom's income, add the insurance benefit, and if that does not meet the cost of care you might consider applying for Medicaid (if otherwise eligible).
Some questions:
1. Does the policy currently pay the full cost of care?
2. Does the policy have an inflation rider?
3. Does all or a portion of mom's income support the husband (or vice versa)?
4. What state do they live in?
Some facts and ideas:
1. Incoming producing property is not a countable asset for Medicaid eligibility purposes if net income is going to cost of care.
2. Although they retain mostly separate assets, the state will consider the husband's assets when evaluating eligibility. In some states all assets can be transferred without penalty to the community spouse who can then retain up to $115,920. In other states half the couple's total assets are attributable to each partner and the penalty-free transfer is not permitted (depending on the level of assets). Proper planning can contend with these limitations.
3. Some states permit “spousal refusal” whereby the Community Spouse can simply refuse to support the institutionalized spouse, others do not.
4. If the policy plus her income is currently paying the cost of care it may make sense to move her assets now to an irrevocable trust with you as trustee. This will start the clock on the “five-year look back” for asset transfers. This may be a good move for two reasons: a) as joint holder her assets are subject to the claims of your creditors and b) her assets may be preserved to assist her while receiving public benefits down the road. see more
Some questions:
1. Does the policy currently pay the full cost of care?
2. Does the policy have an inflation rider?
3. Does all or a portion of mom's income support the husband (or vice versa)?
4. What state do they live in?
Some facts and ideas:
1. Incoming producing property is not a countable asset for Medicaid eligibility purposes if net income is going to cost of care.
2. Although they retain mostly separate assets, the state will consider the husband's assets when evaluating eligibility. In some states all assets can be transferred without penalty to the community spouse who can then retain up to $115,920. In other states half the couple's total assets are attributable to each partner and the penalty-free transfer is not permitted (depending on the level of assets). Proper planning can contend with these limitations.
3. Some states permit “spousal refusal” whereby the Community Spouse can simply refuse to support the institutionalized spouse, others do not.
4. If the policy plus her income is currently paying the cost of care it may make sense to move her assets now to an irrevocable trust with you as trustee. This will start the clock on the “five-year look back” for asset transfers. This may be a good move for two reasons: a) as joint holder her assets are subject to the claims of your creditors and b) her assets may be preserved to assist her while receiving public benefits down the road. see more
Question
Can the IRS take the settlement I received on mom's behalf due to my back taxes?
I just realized after I posted that I was presuming that mom was still living. If she is not then yes, any balance after her estate has... I just realized after I posted that I was presuming that mom was still living. If she is not then yes, any balance after her estate has been reimbursed for expenses (actual monetary damages) that were a part of the basis of the complaint will be subject to recovery by the IRS. Look at it this way, if mom has passed then essentially you inherited the money and it no longer has anything to do with her. see more
Question
Can the IRS take the settlement I received on mom's behalf due to my back taxes?
You state that you received the settlement on your mom's behalf which means that it is not your money and therefore not subject to... You state that you received the settlement on your mom's behalf which means that it is not your money and therefore not subject to confiscation by the IRS. If, however, you simply put it in a bank account in your name only you may be asking for trouble as it may be deemed a gift from your mother.
The attorney who settled this matter should have advised you as to the proper handling of the settlement. Was the nursing home stay being paid by Medicare and/or Medicaid at the time? If so, one or both may be entitled to a portion of the settlement. Is mom on Medicaid now? Depending on the character of the award (e.g., medical costs, pain and suffering, punitive) all or part may be considered a countable asset with respect to Medicaid eligibility. I would suggest first speaking to the attorney who handled the case. see more
The attorney who settled this matter should have advised you as to the proper handling of the settlement. Was the nursing home stay being paid by Medicare and/or Medicaid at the time? If so, one or both may be entitled to a portion of the settlement. Is mom on Medicaid now? Depending on the character of the award (e.g., medical costs, pain and suffering, punitive) all or part may be considered a countable asset with respect to Medicaid eligibility. I would suggest first speaking to the attorney who handled the case. see more
Question
My mother gave my family & I a gift of $24,000. My sister's are saying I have to return it. Am I required by l...
SuziQ - Before you start going to lawyers and paying all kinds of money consider this: It is perfectly reasonable for your mother to pay a... SuziQ -
Before you start going to lawyers and paying all kinds of money consider this:
It is perfectly reasonable for your mother to pay a reasonable amount for room and board no matter where she is living and the powers that be will not penalize her for paying for her upkeep in your sister's home. To create the adequate paper trail and to keep taxes to a minimum the situation should be handled as follows:
1. There should be a written agreement between your mother and your sister. This should be an agreement for room rental and should not be an agreement for board and personal services.
2. The rent should be fair market value or less. You want to consume as much of the $1,000 for rent as possible. So if a similar room with utilities would rent for $700 per month, charge that. This will technically be considered rental income to your sister. If she decides to report the transaction she will then be able to deduct pro rata expenses including utilities, property taxes, insurance, mortgage payments, etc. This should offset the rental income. If it doesn't, she can drop the rent until it does. That way the income and expenses will balance out to $0. Anything over the rent amount up to $1,000 will be mom's costs for food and miscellaneous expenses. Medicaid will have no problem with her spending $200 or so a week on her needs and it won't even be questioned.
There is no need to go to the expense and subject your sister to the taxation of a Personal Service Contract. see more
Before you start going to lawyers and paying all kinds of money consider this:
It is perfectly reasonable for your mother to pay a reasonable amount for room and board no matter where she is living and the powers that be will not penalize her for paying for her upkeep in your sister's home. To create the adequate paper trail and to keep taxes to a minimum the situation should be handled as follows:
1. There should be a written agreement between your mother and your sister. This should be an agreement for room rental and should not be an agreement for board and personal services.
2. The rent should be fair market value or less. You want to consume as much of the $1,000 for rent as possible. So if a similar room with utilities would rent for $700 per month, charge that. This will technically be considered rental income to your sister. If she decides to report the transaction she will then be able to deduct pro rata expenses including utilities, property taxes, insurance, mortgage payments, etc. This should offset the rental income. If it doesn't, she can drop the rent until it does. That way the income and expenses will balance out to $0. Anything over the rent amount up to $1,000 will be mom's costs for food and miscellaneous expenses. Medicaid will have no problem with her spending $200 or so a week on her needs and it won't even be questioned.
There is no need to go to the expense and subject your sister to the taxation of a Personal Service Contract. see more
Question
If a married couple owns a home together can they put the home in a living trust ?
There are three issues that usually come up with respect to the home and long-term care: 1. Will the home be "countable asset"... There are three issues that usually come up with respect to the home and long-term care:
1. Will the home be "countable asset" for Medicaid eligibility purposes?
2. Will the home be a "recoverable" asset by the state after the demise of the Medicaid beneficiary?
3. Effective transfer to heirs.
Answers:
1. The homestead residence of a Medicaid applicant for long-term care services is almost always an exempt asset as long as the applicant has expressed an "intent to return" to the residence. In some states, like Florida, this is implied. In others, it must be indicated in some form. Some states do not consider a residence held in a revocable trust homestead property so this needs to be verified.
2. All states have a "Medicaid Estate Recovery" program charged with the mission of recovering assets at the demise of Medicaid beneficiaries. Most states will only pursue "probate assets", in other words, only those assets that are subject to probate. You are correct in that property titled in a revocable trust is not subject to probate (in most states) and therefore most likely not subject to estate recovery.
3. I believe this is handled in #2 above. I would only add that in some cases and in some states an Enhanced Life Estate Deed (Lady Bird Deed) may be more effective where it is permitted and other techniques are not effective with respect to other state specific issues as mentioned in #1 and #2 above. see more
1. Will the home be "countable asset" for Medicaid eligibility purposes?
2. Will the home be a "recoverable" asset by the state after the demise of the Medicaid beneficiary?
3. Effective transfer to heirs.
Answers:
1. The homestead residence of a Medicaid applicant for long-term care services is almost always an exempt asset as long as the applicant has expressed an "intent to return" to the residence. In some states, like Florida, this is implied. In others, it must be indicated in some form. Some states do not consider a residence held in a revocable trust homestead property so this needs to be verified.
2. All states have a "Medicaid Estate Recovery" program charged with the mission of recovering assets at the demise of Medicaid beneficiaries. Most states will only pursue "probate assets", in other words, only those assets that are subject to probate. You are correct in that property titled in a revocable trust is not subject to probate (in most states) and therefore most likely not subject to estate recovery.
3. I believe this is handled in #2 above. I would only add that in some cases and in some states an Enhanced Life Estate Deed (Lady Bird Deed) may be more effective where it is permitted and other techniques are not effective with respect to other state specific issues as mentioned in #1 and #2 above. see more
Question
What government programs are avilable to help pay for dad's nursing home care?
Woodbury is in Gloucester County. This is your contact: you can apply on-line here: https://oneapp.dhs.state.nj.us/ Here is a description... Woodbury is in Gloucester County. This is your contact:
you can apply on-line here:
https://oneapp.dhs.state.nj.us/
Here is a description of services with links to requirements
http://www.state.nj.us/humanservices/dmahs/clients/medicaid/abd/index.html
If Dad has less than $2,000 in assets and income is below $2094 per month there should be no problem. If he has more let me know.
The social worker at the new facility may also be willing to help you with the application.
Good luck and God bless. see more
you can apply on-line here:
https://oneapp.dhs.state.nj.us/
Here is a description of services with links to requirements
http://www.state.nj.us/humanservices/dmahs/clients/medicaid/abd/index.html
If Dad has less than $2,000 in assets and income is below $2094 per month there should be no problem. If he has more let me know.
The social worker at the new facility may also be willing to help you with the application.
Good luck and God bless. see more
Question
If a married couple owns a home together can they put the home in a living trust ?
There is no reason why a home jointly titled cannot be retitled in the name of a living trust unless: a) it is not permitted by state law... There is no reason why a home jointly titled cannot be retitled in the name of a living trust unless: a) it is not permitted by state law or, b) one of the joint holders does not "have capacity" (in other words, doesn't know what they are doing) and there is no power of attorney in place to allow someone to perform contractual functions for that person.
A more relevant question may be: Why do they want to re-title the property thusly? see more
A more relevant question may be: Why do they want to re-title the property thusly? see more
Question
When is the best time to apply for Medicaid?
I would suggest applying immediately. Any funds currently remaining over the $2,000 limit should be preserved for mom’s benefit while she... I would suggest applying immediately. Any funds currently remaining over the $2,000 limit should be preserved for mom’s benefit while she is receiving Medicaid. Even if it costs a few thousand to do the planning it is worth preserving what can be preserved as Medicaid falls way short in providing much needed items (eyeglasses, hearing aides, dental services) and doesn’t pay for other needed items (clothes, entertainment items). She will certainly need the money.
These two strategies will work in most states:
1. Supplemental Needs Trust. Established by a 501(c)3 non-profit organization the potential Medicaid applicant joins this existing trust and transfers (grants) assets to it. A lawyer is not needed to do this. Once transferred, the funds can be used for virtually anything pertaining to the Medicaid beneficiary’s health, maintenance, and welfare. The applicant is immediately eligible for Medicaid provided other requirements have been met. Caveats: 1. at the demise of the beneficiary any remaining funds must first be used to “pay back” the state for Medicaid funds expended before any residual goes to heirs. 2. cost of administration.
2. Personal Services Contract. A contract between the parent and an adult child whereby the adult child is now deemed an “employee” of the parent to provide care giving and advocacy services. The contract establishes an hourly rate of pay, the number of service hours per week, and the statutory remaining life expectancy of the care receiver expressed in months. The sum of these is the lump sum amount that may be legally transferred from the parent to the adult child in full advance satisfaction of the contract. Caveat: This is a taxable event with employment and/or income tax implications to both the parent and adult child.
If you are not interested in the above, or in addition to the above, consider the following before spending down to $2,000:
1. Irrevocable Funeral Trust if pre-needs have yet to be made. Most states permit up to $12,000 to be set aside in such a trust.
2. In addition to, or in lieu of, #1 above states permit between $1,500 and $2,500 to be set aside in cash assets as a “burial fund” in addition to the $2,000 asset limit.
Good luck and God bless. see more
These two strategies will work in most states:
1. Supplemental Needs Trust. Established by a 501(c)3 non-profit organization the potential Medicaid applicant joins this existing trust and transfers (grants) assets to it. A lawyer is not needed to do this. Once transferred, the funds can be used for virtually anything pertaining to the Medicaid beneficiary’s health, maintenance, and welfare. The applicant is immediately eligible for Medicaid provided other requirements have been met. Caveats: 1. at the demise of the beneficiary any remaining funds must first be used to “pay back” the state for Medicaid funds expended before any residual goes to heirs. 2. cost of administration.
2. Personal Services Contract. A contract between the parent and an adult child whereby the adult child is now deemed an “employee” of the parent to provide care giving and advocacy services. The contract establishes an hourly rate of pay, the number of service hours per week, and the statutory remaining life expectancy of the care receiver expressed in months. The sum of these is the lump sum amount that may be legally transferred from the parent to the adult child in full advance satisfaction of the contract. Caveat: This is a taxable event with employment and/or income tax implications to both the parent and adult child.
If you are not interested in the above, or in addition to the above, consider the following before spending down to $2,000:
1. Irrevocable Funeral Trust if pre-needs have yet to be made. Most states permit up to $12,000 to be set aside in such a trust.
2. In addition to, or in lieu of, #1 above states permit between $1,500 and $2,500 to be set aside in cash assets as a “burial fund” in addition to the $2,000 asset limit.
Good luck and God bless. see more
Question
How can my parents pay for their medications?
You say they do not qualify for Medicaid yet their only source of income is Social Security. I am certain there is a program they will... You say they do not qualify for Medicaid yet their only source of income is Social Security. I am certain there is a program they will qualify for. Let me know more details and the state you live in and I may be able to help direct you. see more
Question
What government programs are avilable to help pay for dad's nursing home care?
I would like to help but your question is not clear. I understand your father is currently in a nursing home but what I am not clear on... I would like to help but your question is not clear.
I understand your father is currently in a nursing home but what I am not clear on is what the nursing home is saying about Medicaid.
Are they saying they will not accept Medicaid unless the family has paid for at least two years?
If they will not accept Medicaid then I'm afraid you are going to have to find another facility that will.
Let me know if you would like to add a clarification.
Good luck and God bless. see more
I understand your father is currently in a nursing home but what I am not clear on is what the nursing home is saying about Medicaid.
Are they saying they will not accept Medicaid unless the family has paid for at least two years?
If they will not accept Medicaid then I'm afraid you are going to have to find another facility that will.
Let me know if you would like to add a clarification.
Good luck and God bless. see more
Question
The monthly cost for a Memory Care home is $4200. We would like to charge dad $3000 a month for care in our ho...
It looks like the link to the IRS website I had in number 1 above did not post. To find the information try a Google search for "IRS... It looks like the link to the IRS website I had in number 1 above did not post. To find the information try a Google search for "IRS “Renting to Relatives” regulations" and the IRS page should come right up. see more
Question
The monthly cost for a Memory Care home is $4200. We would like to charge dad $3000 a month for care in our ho...
The staff here at AgingCare.com asked me to comment as they felt that your question has not been properly addressed. To think that staff... The staff here at AgingCare.com asked me to comment as they felt that your question has not been properly addressed.
To think that staff is actually going through responses to make sure that your needs as readers are met is, I think, quite remarkable! What a great act of service!
So let me see if I may be of help to you and others in similar circumstances. There are two primary issues to be considered here: 1. income and other tax liabilities possibly accruing to the parent and adult children and, 2. qualifying for public benefits.
Let’s take the last one first because if you are interested in making sure that all of Dad’s expenditures or transfers are in line with meeting the financial requirements to qualify for Medicaid or Veteran benefits (non-service connected pension) – either now or in the future – there are certain do’s and don’ts. For instance, you will want to carefully document all transactions and you will not want any uncompensated gifts coming from
Dad to the adult children within five years of application for Medicaid.
If, however, you are not interested in, or can never foresee Dad receiving public benefits of any sort including Medicaid, then the ideas below are of no value to you and Dad can just gift all of his assets to you with no tax consequences at all (except for potential Unified Estate and Gift Tax consequences if total lifetime gifts exceed $1 million in 2013 – presuming the “Bush tax cuts” expire).
In the case where public benefits would be helpful now, or may be needed in the future, you have several options that will work with varying efficacy from a practical and taxation standpoint. (By the way, all of the strategies below can be used either by themselves or in conjunction with one another).
1. Charging Room and Board – It is perfectly legitimate to expect any adult to contribute to household expenses and to pay for their own health, maintenance, and welfare. Expenses paid by Dad, whoever they are paid to for these purposes, will not have a negative impact with respect to public benefit eligibility from a “gifting” standpoint as all transfers from him, to you, will, hopefully, be for the fair market value of goods and services being provided. There are income taxation implications which you can read about here; IRS “Renting to Relatives” regulations.
2. Charging for Care Giving Services – Here too, there is nothing “wrong” with being compensated for the personal care giving and other services (advocacy, management of financial and other personal affairs, etc.) you are rendering. For public benefit eligibility purposes it is important that the details of the arrangement be established by contract. This “Personal Services Contract” will establish a term, the rate of pay, the services to be rendered, and other provisions that will, in fact, allow a lump sum amount to be transferred from Dad to you in full advance satisfaction of the contract – a legitimate and legal transfer from a Medicaid eligibility standpoint. Again, though, there is a tax issue in that because this is an employment contract, income taxes and other employment based taxes will apply causing appreciable diminution of funds with little in the form of “deductions” available to offset the liability.
3. Purchasing a Life Estate – When an parent moves into an adult child’s home and has assets that would disqualify them from public benefit eligibility, or if the adult child would like to avoid the income tax consequences resulting from numbers 1 and 2 above, it may make sense for the parent to purchase a “Life Estate” in the home of the child.
The purchase of a Life Estate is as its name implies - the purchaser is buying the right to live in the property for the rest of their life with all the rights thereto. At the purchaser’s demise, all rights revert back to the “remainderman” (the adult child who sold the Life Estate to the purchaser).
The maximum amount that will be considered fair compensation as a purchase price will be the fair market value of the home minus the “remainder interest” as determined by using tables provided in your State’s Medicaid manual. Here is an example using Florida’s tables: If the home has a fair market value of $300,000 and the purchaser age is 88, $92,577 can be transferred to the adult children to purchase a Life Estate. (If the parent were younger, say age 77, a transfer of up to $141,147 would be permitted).
The purchase of a Life Estate by the parent would effectively reduce his/her assets without creating a Medicaid eligibility penalty and without creating (in most cases) a taxable event. If the purchase of the Life Estate were not enough to bring the parent’s assets to a low enough level for eligibility, either or both 1 and 2 above could be used.
Caveat: The parent must live in the children's home for at least one year for the transfer to not be deemed a gift.
4. The Supplemental Needs Trust (SNT) – Another option available in many states is participation in an SNT. This is an irrevocable trust, in fact the only irrevocable trust other than an Irrevocable Funeral Trust, that the parent can transfer assets to and become immediately eligible for Medicaid provided all other requirements are met. Unlike other trusts, a new trust document is not drawn and a lawyer is not required as the parent is simply joining an existing trust previously established by a 501(c)3 organization specifically to benefit Medicaid beneficiaries. Assets transferred to the trust may be used for virtually anything required for the health, maintenance and welfare of the grantor (parent) including paying for room and board and/or the support services of an adult child. The caveat here is: a) the cost of trust administration and, b) any funds remaining in the trust at the demise of the parent must first be used to pay back the State Medicaid program for the cost of Medicaid services rendered. Any residual thereafter may be distributed to heirs.
A lot to consider, I know, but I hope this helps. Good luck and God Bless see more
To think that staff is actually going through responses to make sure that your needs as readers are met is, I think, quite remarkable! What a great act of service!
So let me see if I may be of help to you and others in similar circumstances. There are two primary issues to be considered here: 1. income and other tax liabilities possibly accruing to the parent and adult children and, 2. qualifying for public benefits.
Let’s take the last one first because if you are interested in making sure that all of Dad’s expenditures or transfers are in line with meeting the financial requirements to qualify for Medicaid or Veteran benefits (non-service connected pension) – either now or in the future – there are certain do’s and don’ts. For instance, you will want to carefully document all transactions and you will not want any uncompensated gifts coming from
Dad to the adult children within five years of application for Medicaid.
If, however, you are not interested in, or can never foresee Dad receiving public benefits of any sort including Medicaid, then the ideas below are of no value to you and Dad can just gift all of his assets to you with no tax consequences at all (except for potential Unified Estate and Gift Tax consequences if total lifetime gifts exceed $1 million in 2013 – presuming the “Bush tax cuts” expire).
In the case where public benefits would be helpful now, or may be needed in the future, you have several options that will work with varying efficacy from a practical and taxation standpoint. (By the way, all of the strategies below can be used either by themselves or in conjunction with one another).
1. Charging Room and Board – It is perfectly legitimate to expect any adult to contribute to household expenses and to pay for their own health, maintenance, and welfare. Expenses paid by Dad, whoever they are paid to for these purposes, will not have a negative impact with respect to public benefit eligibility from a “gifting” standpoint as all transfers from him, to you, will, hopefully, be for the fair market value of goods and services being provided. There are income taxation implications which you can read about here; IRS “Renting to Relatives” regulations.
2. Charging for Care Giving Services – Here too, there is nothing “wrong” with being compensated for the personal care giving and other services (advocacy, management of financial and other personal affairs, etc.) you are rendering. For public benefit eligibility purposes it is important that the details of the arrangement be established by contract. This “Personal Services Contract” will establish a term, the rate of pay, the services to be rendered, and other provisions that will, in fact, allow a lump sum amount to be transferred from Dad to you in full advance satisfaction of the contract – a legitimate and legal transfer from a Medicaid eligibility standpoint. Again, though, there is a tax issue in that because this is an employment contract, income taxes and other employment based taxes will apply causing appreciable diminution of funds with little in the form of “deductions” available to offset the liability.
3. Purchasing a Life Estate – When an parent moves into an adult child’s home and has assets that would disqualify them from public benefit eligibility, or if the adult child would like to avoid the income tax consequences resulting from numbers 1 and 2 above, it may make sense for the parent to purchase a “Life Estate” in the home of the child.
The purchase of a Life Estate is as its name implies - the purchaser is buying the right to live in the property for the rest of their life with all the rights thereto. At the purchaser’s demise, all rights revert back to the “remainderman” (the adult child who sold the Life Estate to the purchaser).
The maximum amount that will be considered fair compensation as a purchase price will be the fair market value of the home minus the “remainder interest” as determined by using tables provided in your State’s Medicaid manual. Here is an example using Florida’s tables: If the home has a fair market value of $300,000 and the purchaser age is 88, $92,577 can be transferred to the adult children to purchase a Life Estate. (If the parent were younger, say age 77, a transfer of up to $141,147 would be permitted).
The purchase of a Life Estate by the parent would effectively reduce his/her assets without creating a Medicaid eligibility penalty and without creating (in most cases) a taxable event. If the purchase of the Life Estate were not enough to bring the parent’s assets to a low enough level for eligibility, either or both 1 and 2 above could be used.
Caveat: The parent must live in the children's home for at least one year for the transfer to not be deemed a gift.
4. The Supplemental Needs Trust (SNT) – Another option available in many states is participation in an SNT. This is an irrevocable trust, in fact the only irrevocable trust other than an Irrevocable Funeral Trust, that the parent can transfer assets to and become immediately eligible for Medicaid provided all other requirements are met. Unlike other trusts, a new trust document is not drawn and a lawyer is not required as the parent is simply joining an existing trust previously established by a 501(c)3 organization specifically to benefit Medicaid beneficiaries. Assets transferred to the trust may be used for virtually anything required for the health, maintenance and welfare of the grantor (parent) including paying for room and board and/or the support services of an adult child. The caveat here is: a) the cost of trust administration and, b) any funds remaining in the trust at the demise of the parent must first be used to pay back the State Medicaid program for the cost of Medicaid services rendered. Any residual thereafter may be distributed to heirs.
A lot to consider, I know, but I hope this helps. Good luck and God Bless see more
Question
What is the difference between Medi-Gap and Medicare advantage insurance?
The best way to understand this is as follows: Medicare beneficiaries have two options to obtain Medicare benefits 1. "Original... The best way to understand this is as follows:
Medicare beneficiaries have two options to obtain Medicare benefits
1. "Original Medicare" (which is how it is officially termed), or
2. Medicare Advantage aka "Part C" plans.
(There are four "Parts" to Medicare. Part A covers hospitalization and hospital services under Original Medicare, Part B covers physician services under Original Medicare, Medicare Advantage plans are designated as Part C, and stand-alone Medicare Prescription Drug plans are designated as Part D.)
The two choices explained:
Original Medicare –
1. Beneficiary pays Part B and in some cases Part A premium to the US Treasury.
2. Beneficiary claims are paid to the provider by the US Treasury.
3. Beneficiary may see any provider that accepts Medicare (freedom of choice)
4. Beneficiary must pay deductibles and co-insurances.
5. Deductibles and co-insurances may be insured against by purchasing Medicare supplement insurance (also known as “Medi-gap insurance) from an insurance company.
6. Because the Medi-gap premium is fixed for the year, and in most cases all deductibles and co-insurances will be covered, the beneficiary knows in advance what the maximum out of pocket medical expenses may be for the year.
7. Beneficiaries must purchase a stand-alone Part D prescription drug plan.
Medicare Advantage –
1. Beneficiary pays Part B and in some cases Part A premium to the US Treasury.
2. Beneficiary contracts with a profit or not-for-profit corporation to provide medical benefits to the beneficiary.
3. Corporation or “managed care company” (many times an “HMO” – Health Maintenance Organization) receives a monthly stipend from the Federal government for each beneficiary enrolled in its program.
4. Corporation is responsible for all expenses incurred by the beneficiary and providers are paid by the corporation, not the US Treasury.
5. There are usually no deductibles but there are copayments required at the time of service.
6. Many plans do not have an out of pocket annual maximum limit on copayments.
7. Many plans do not require a premium to be paid (Part B/A premiums must continue to be paid).
8. Most plans require that beneficiaries use only providers that are contracted with the corporation. Some plans allow for non-contracted providers at a higher co-payment rate or other reimbursement schedule (lack of freedom of choice).
9. Many plans include Part D prescription drug cover at no extra charge.
Which plan is best for you or your loved one? As always, it depends. In larger service areas where there are many choices of contracted providers Medicare Advantage plans work well and are generally less expensive to use than Original Medicare with or without a Medi-gap insurance supplement.
In general, it has been my experience that those beneficiaries who are younger and/or healthier are more satisfied with Medicare Advantage plans than those who are older and not as healthy.
But if freedom of choice is your primary concern then the best option is Original Medicare. see more
Medicare beneficiaries have two options to obtain Medicare benefits
1. "Original Medicare" (which is how it is officially termed), or
2. Medicare Advantage aka "Part C" plans.
(There are four "Parts" to Medicare. Part A covers hospitalization and hospital services under Original Medicare, Part B covers physician services under Original Medicare, Medicare Advantage plans are designated as Part C, and stand-alone Medicare Prescription Drug plans are designated as Part D.)
The two choices explained:
Original Medicare –
1. Beneficiary pays Part B and in some cases Part A premium to the US Treasury.
2. Beneficiary claims are paid to the provider by the US Treasury.
3. Beneficiary may see any provider that accepts Medicare (freedom of choice)
4. Beneficiary must pay deductibles and co-insurances.
5. Deductibles and co-insurances may be insured against by purchasing Medicare supplement insurance (also known as “Medi-gap insurance) from an insurance company.
6. Because the Medi-gap premium is fixed for the year, and in most cases all deductibles and co-insurances will be covered, the beneficiary knows in advance what the maximum out of pocket medical expenses may be for the year.
7. Beneficiaries must purchase a stand-alone Part D prescription drug plan.
Medicare Advantage –
1. Beneficiary pays Part B and in some cases Part A premium to the US Treasury.
2. Beneficiary contracts with a profit or not-for-profit corporation to provide medical benefits to the beneficiary.
3. Corporation or “managed care company” (many times an “HMO” – Health Maintenance Organization) receives a monthly stipend from the Federal government for each beneficiary enrolled in its program.
4. Corporation is responsible for all expenses incurred by the beneficiary and providers are paid by the corporation, not the US Treasury.
5. There are usually no deductibles but there are copayments required at the time of service.
6. Many plans do not have an out of pocket annual maximum limit on copayments.
7. Many plans do not require a premium to be paid (Part B/A premiums must continue to be paid).
8. Most plans require that beneficiaries use only providers that are contracted with the corporation. Some plans allow for non-contracted providers at a higher co-payment rate or other reimbursement schedule (lack of freedom of choice).
9. Many plans include Part D prescription drug cover at no extra charge.
Which plan is best for you or your loved one? As always, it depends. In larger service areas where there are many choices of contracted providers Medicare Advantage plans work well and are generally less expensive to use than Original Medicare with or without a Medi-gap insurance supplement.
In general, it has been my experience that those beneficiaries who are younger and/or healthier are more satisfied with Medicare Advantage plans than those who are older and not as healthy.
But if freedom of choice is your primary concern then the best option is Original Medicare. see more
Question
Is there VA financial assistance for a non-family caregiver?
The answer to both questions above is potentially yes. It depends on if the Veteran's eligibility status. The Aid and Attendance... The answer to both questions above is potentially yes. It depends on if the Veteran's eligibility status.
The Aid and Attendance Improved Pension is a needs based program and is designed to assist veterans with reimbursed medical expenses including the cost of home care, assisted living care, and other out of pocket expenditures such as durable medical equipment.
This is a needs based program and not all veterans will qualify.
See more information here:
http://www.vba.va.gov/bln/21/pension/vetpen.htm
Durable Medical Equipment may also be available to a veteran as a medical benefit. If the veteran is not already receiving health benefits from the VA contact your local VA medical center and have him/her enrolled. They will triage the veteran and provide what is needed. May be a very lengthy process however. see more
The Aid and Attendance Improved Pension is a needs based program and is designed to assist veterans with reimbursed medical expenses including the cost of home care, assisted living care, and other out of pocket expenditures such as durable medical equipment.
This is a needs based program and not all veterans will qualify.
See more information here:
http://www.vba.va.gov/bln/21/pension/vetpen.htm
Durable Medical Equipment may also be available to a veteran as a medical benefit. If the veteran is not already receiving health benefits from the VA contact your local VA medical center and have him/her enrolled. They will triage the veteran and provide what is needed. May be a very lengthy process however. see more
Question
Is a World War II veteran's wife eligible for VA Benefits?
If she is receiving hospice care she will not require VA benefits as it will be covered by Medicare. If she is removed from hospice care... If she is receiving hospice care she will not require VA benefits as it will be covered by Medicare. If she is removed from hospice care Aid and Attendance will be appropriate to apply for if Medicaid is not an option. Medicaid, however, would be the first choice. see more
Question
My parents currently have Power of Attorney over one another. Is there a way to arrange in advance for a third...
As your father's agent you should have no problem authorizing the disclosure of information to third parties, including your mother. ... As your father's agent you should have no problem authorizing the disclosure of information to third parties, including your mother. Ask the facility and insurance company for an authorization form. You should be fine. see more
Question
If I enroll my mother in Long-term Care Medicaid insurance to pay for adult day care, in-home care visits etc,...
The problem is this: Medicare only pays for SKILLED nursing services in the home or any other venue for that matter. SKILLED care is care... The problem is this:
Medicare only pays for SKILLED nursing services in the home or any other venue for that matter. SKILLED care is care ordered by a physician and rendered by skilled professional such as a Physical Therapist, Occupational Therapist, LPN, RN, etc. At home, these services are intermittent in that the provider will come to the home, provide the service and then leave.
Whilst receiving skilled care the patient may also receive intermittent the personal care services of a home health aide once or twice a week. These personal care services end when skilled services end which occurs once the patient has stabilized or no longer progresses with in home therapy.
Under no circumstances does MEDICARE pay for custodial care.
If long-term custodial care is required, MEDICAID or private pay are typically the only options.
Some states due have Home and Community Based Services (HCBS) under their Medicaid programs. How her income will need to be handled will depend on the state in which you live and the program she enters.
In my state, Florida, most receive HCBS under what is known as "Diversion". In this program the beneficiary keeps her/his income.
Hope this helps...God bless and good luck. see more
Medicare only pays for SKILLED nursing services in the home or any other venue for that matter. SKILLED care is care ordered by a physician and rendered by skilled professional such as a Physical Therapist, Occupational Therapist, LPN, RN, etc. At home, these services are intermittent in that the provider will come to the home, provide the service and then leave.
Whilst receiving skilled care the patient may also receive intermittent the personal care services of a home health aide once or twice a week. These personal care services end when skilled services end which occurs once the patient has stabilized or no longer progresses with in home therapy.
Under no circumstances does MEDICARE pay for custodial care.
If long-term custodial care is required, MEDICAID or private pay are typically the only options.
Some states due have Home and Community Based Services (HCBS) under their Medicaid programs. How her income will need to be handled will depend on the state in which you live and the program she enters.
In my state, Florida, most receive HCBS under what is known as "Diversion". In this program the beneficiary keeps her/his income.
Hope this helps...God bless and good luck. see more
How is the 5-year "look back" period for Medicaid checked?
As long you retain receipts there should be no issue whatsoever. Using the debit card is fine.
Expanding further on understanding the “look back” period:
The law allows Medicaid agencies to examine asset transfers made by Medicaid applicants that took place in the five years prior to application.
Those transfers made without fair market value compensation are considered “ineligible transfers” and the value of the asset so transferred may then be included in the applicant’s asset base in determining Medicaid eligibility.
Example: Mrs. Jones gifts $5,000 to her daughter Emily for home repairs in Emily’s home. Two years later Mrs. Jones applies for Medicaid.
Because Mrs. Jones did not receive any goods or services from Emily valued at $5,000 or more, the $5,000 gift may be considered a countable asset in determining Mrs. Jones asset level for Medicaid eligibility purposes.
How agencies discover asset transfers varies by state. In Florida, for example, the application still only asks about transfers made in the past three years and only three months of financial records are required to be produced at application. In New York, however, the applicant must produce five years of financial records at application. Go figure. see more