The Cost of Long-Term Care: Are You Prepared?

10 Signs that Families Need Help

Due to the 60-month lookback period, many seniors desire to plan ahead for long-term care as part of their estate planning, looking far into the future. This is what we call “Pre-Planning.” If the seniors are healthy enough, we strongly encourage them to purchase long-term care insurance to provide a large amount of flexibility in their options for future living. Even if seniors are not eligible to purchase long-term care insurance at a price that they feel is affordable, the attorneys at the Life Planning Law Firm, P.A. often assist seniors in implementing plans that can go a long way toward protecting assets in case of future need for assisted living or nursing home care. Done early enough and if there are honest, reliable family members or others involved, such “pre-planning” can save a large fraction of the seniors’ assets. Part of what distinguishes the Life Planning Law Firm, P.A. from other law firms is our ability to assist seniors and their families with Crisis Planning. This ability is based on in-depth knowledge of the Florida eligibility rules, intensive study and experience with client cases in this field, and astute attention to the needs of seniors and their families in these urgent situations. Crisis Medicaid Planning typically occurs when the senior has received an extremely serious medical diagnosis, most commonly when hospital or rehabilitation facility medical personnel have determined that he or she cannot return home after rehab. At this point, the senior and family are facing extended nursing home time without Medicare coverage, starting at around $8,000 per month and certain to increase in the future. Every month that will pass will consume a substantial portion of the senior’s or couple’s life savings. It is easy to see a life savings of one or a few hundred thousand dollars being consumed in a matter of a few months or years. Even allowing the Community Spouse to retain the Community Spouse Resource Allowance will destroy the rest of the savings that the Community Spouse may need in order to live for years or decades into the future. Crisis Planning is essential to protect what can be saved under these drastic, adverse circumstances, where the costs of waiting even one month are very high.

Attorney Kevin Pillion has received Accreditation by the Department of Veterans Affairs (“VA”) that enables him to give advice to and file benefit claims for all Veterans. Accreditation refers to “The authority granted by the VA to those attorneys who meet the established standards.” The Department of Veterans Affairs stated purpose in requiring attorney accreditation is to ensure that claimants for VA benefits receive “…qualified assistance in preparing and presenting their claims.” With this certification, Attorney Kevin Pillion has the distinction of being one of only a few attorneys in Southwest Florida with a VA Accreditation. To receive Accreditation, Federal law requires an attorney to complete an application and continuing legal education requirements. An attorney must also establish that he is of good character and reputation. The privilege of accreditation carries with it the responsibility to maintain specified standards of conduct and comply with the laws that govern VA representations, as set forth in the United States Code and the Code of Federal Regulations. The VA accreditation system is designed to ensure that lawyers who represent VA claimants have a thorough understanding of the VA health and benefit systems, so that they may provide quality assistance in the preparation, presentation and prosecution of those claims.

1. Relying solely on a will or a living trust A Will takes effect only upon your death, and a Living Trust, although preferable in some cases, will not protect your assets from Medicaid Recovery and Nursing Homes. 2. Relying on Medicare or health insurance Neither Medicare nor health insurance pays for the cost of long-term care in a nursing home. With the average cost exceeding $7,000 a month, without a Plan most families will quickly run through their life savings. 3. Transferring all assets to children or other relatives This almost always results in lengthy, unnecessary periods of ineligibility when Medicaid or other public assistance is applied for. And the tax consequences can be devastating. Often, it’s wiser to do nothing. 4. Placing all assets into joint ownership with another family member This is often regarded the same as a transfer and can result in lengthy disqualification periods. Or it may not shelter assets at all. It can also create unfortunate legal problems for families. 5. Selling the family home to pay for nursing home care This is almost never required. Yet many still believe that a person must sell his home to pay the nursing home. 6. Not taking Medicaid estate recovery seriously Medicaid can and does sell your home after your death to recoup benefits paid out on your behalf. 7. Applying for a guardianship This court-supervised method of dealing with a person’s incapacity is time-consuming, costly, burdensome, and restrictive. With proper planning, you avoid the need to go to Court. 8. Relying on family members to “do the right thing” when critical health care and financial decisions need to be made In the absence of a Plan to protect assets and other planning documents, this is an awful burden to place on the members of your family. 9. Not seeking the advice of a specialist in elder law and asset protection planning Medicaid and other government benefits programs are a highly complex area of the law; the law varies from state to state and even within a particular state. Very few attorneys and advisors know and understand the laws and rules that apply. 10. Doing nothing Unless you have no assets to protect or you are unconcerned about how decisions will be made in the event of your disability or incapacity, you should take steps now to protect yourself.

Like many other people, you may be thinking about giving your home away now that you are older. There may be several reasons why you might consider doing this: You want to avoid probate You want someone else to take responsibility for the upkeep of the property You want to help a family member You fear you can no longer live alone and want someone to stay in the home with you, or You worry that you may have to enter a nursing home someday. If you are one of the people thinking about transferring your home, here are some things to think about first. You should never sign away your home ownership without first getting advice from an attorney. There are many risks in transferring a home to another. You should talk to an attorney who is certified for or knowledgeable in elder law or estate planning. Here is some general information about the risks you face if you transfer your home. What happens if you transfer your home? You will lose control over the use of your home and property. You will have no say in whether the property is sold, mortgaged, taken by creditors or used for a purpose that you don’t like. You will lose the right to live in the home or somewhere on the property. You will lose the right to rent the property or otherwise use or occupy the property. You may create problems with creditors. You may get in trouble if you have creditors that have a lien on the property or if you file bankruptcy. If you transfer a home or other property, and, as a result, a bank or other creditor is unable to collect a debt, the transfer can be canceled. In some circumstances, such a transfer is considered fraud. You may lose your Property Tax relief. If you are over age 65 or disabled, you may have the right to some relief in paying property tax under state law. If you add another person’s name as co-owner of the property, that person’s income will be counted along with yours. The increase in income may cause you to lose your eligibility for tax relief. Of course, if you are no longer the homeowner, you would no longer have to pay the taxes. The new homeowner will not have a right to relief from these taxes unless he or she can qualify. You may lose the chance to get help from Home Weatherization and Rehabilitation programs. You may lose your eligibility to participate in these programs if you add another’s name to the property deed or if you transfer the property. If You Are on Medicaid or Get an SSI Check If you have Medicaid and live in a nursing facility, or if you live in a nursing facility and plan to apply for Medicaid within the next three years, there is a Medicaid penalty for any gift or transfer “for less than fair market value.” The state checks to see if transfers of any property (including a home) occurred during the three years prior to entering the nursing home or applying for Medicaid. The time is five years for transfers involving trust property. A transfer made that is improper for Medicaid purposes may result in the denial of Medicaid for a certain amount of time (depending on the amount of the gift or transfer). Taking your name or any co-owner’s name off the deed is also considered a transfer that may be penalized under the Medicaid program. If you give away assets when you are on SSI, there is a penalty similar to the Medicaid penalty. You may lose SSI for a certain amount time depending upon the amount of the gift or transfer. If you give your home to someone who receives SSI or other government benefits, your gift may cause the other person to lose benefits, if he or she already has a home. (Owning property, other than your home, can affect eligibility for SSI, Medicaid, Families First benefits and food stamps.) There may be TAX consequences if you give your home away. You may have to pay a gift tax. The gift tax, generally, applies to the transfer of a present interest. Sometimes, the first $10,000 of a gift is exempt from taxation. There may be a $20,000 exemption if a gift is made by a married couple. The person who receives the gift may have to pay more capital gains tax if he or she sells the property at a later time. There are many factors which determine whether a capital gains tax is owed and how much the tax will be. An agreement to exchange your home for in-home care is risky and should always be reviewed by an attorney. This is especially important if you plan to give the caregiver the deed to your home or a promise that the caregiver will inherit your home. These arrangements are dangerous and may cause many problems. The agreement may also affect Medicaid eligibility and tax liability. Never make this type of agreement without the help of an attorney who is knowledgeable in this area of the law. *Prepared for the Caregivers Project, January 15, 1998, by Pam F. Wright, Certified Elder Law Attorney, West Tennessee Legal Services; Updated March 2001 by Timothy L. Takacs, Certified Elder Law Attorney