Medicaid and IRA’s

long island estate planning attorneyIf you have an Individual Retirement Account (“IRA”) and you are applying for Medicaid there are certain rules and circumstances which affect your IRA. Your IRA cannot be transferred if you are married. The only way to transfer an IRA between a husband and a wife is to have them enter into a separation agreement or get divorced. If you are in an institution and Medicaid is paying for your care, your spouse is entitled to the monthly maintenance needs allowance. The monthly maintenance needs allowance is currently $2,980.50 per month. This is the total you can receive from Social Security and from the IRA or other sources of assets which are in your spouse’s name. It should be noted the funds you receive from an IRA are pre-taxed assets and federal and state income taxes may need to be paid with regard to the funds distributed.

If you have an IRA custodian account you should request your custodian withhold taxes from payments and therefore your spouse can receive the entire $2,980.50 and not have any taxes removed from these funds. The $2,980.50 stipend used for your spouse’s expenses in New York State is the highest in the United States. Unfortunately, this may not be sufficient to live on in the State of New York. A legal proceeding can be brought to obtain a larger allowance, but this is difficult to be successful in these proceedings. The fact that the standard of living in New York State is high is not a valid reason for obtaining a higher monthly stipend.

Conclusion

It may be necessary for Medicaid to pay expenses for you or your spouse, either for private nursing care at your residence or in a nursing home facility. You should meet with an elder care attorney early on and develop a plan to help you qualify for Medicaid should you need it to pay your expenses for nursing home care.estate planning attorney

Long Term Care Issues

long term care lawyerAs the population of America ages, there is a retirement issue many Americans don’t realize exists.  This issue involves long term care.  One of the ways of dealing with long term care issues is to purchase long term care insurance.

Long Term Care Expenses

In the Metropolitan New York area, nursing home expenses run between $10,000 to $12,000 per month.  On an annual basis, that is $120,000 to $144,000 per year.  Few Americans are financially able to meet a financial burden of this size.  One aspect of long term financial planning should deal with the issue of long term care.  Long term care insurance is a possible solution to this problem.  Unfortunately, only approximately 15% of the American public buy long term care insurance.

There are a variety of strategies seniors can use to deal with the threat of long term care expenses.  The following are some of these strategies:

  • Long term care insurance.  If you purchase a policy when you are in your mid-fifties, it can be purchased relatively inexpensively considering the potential benefits available.
  • Set aside a substantial amount of your investments in case you have long term care expenses.
  • Look into lower cost alternatives to nursing homes.  An example of this is residential care facilities for seniors.
  • Live close to a family member who would be in a position to take care of you.
  • Have a portion of the equity in your home held in reserve.  In case of an emergency this could be utilized for long term care expenses.
  • Hire an experienced elder care lawyer and set up your finances and your estate in a manner which allows you to qualify for Medicaid, either for home healthcare aides or nursing home care.

Relying on Relatives

Most seniors do not want to become burdens upon their children.  A senior being cared for by a child could have a negative impact on the ability of the child to work or develop a successful career.

Conclusion

I am a member of the National Academy of Elder Law Attorneys.  I find the very best way to deal with long term care issues is to have long term care insurance.  However, an alternative is to do estate planning with an experienced elder law attorney.  You can move all of your assets out of your name into a trust more than five years prior to going into a nursing home.  This will allow you to qualify for Medicaid.will and estate attorney on Long Island

Qualifying for Medicaid

attorneys who assist in medicaid planning techniquesThere are specific requirements necessary to qualify for medicaid. These standards deal with the assets a person has and their income. In 2013, the maximum amount of “non-exempt property” a person applying for medicaid could have was $14,550. (This was the standard in New York State.) In addition, there are assets that are considered exempt when applying for medicaid. If an individual owns a home, and said individual or the individual’s spouse live in the premises as their primary residence, their house is exempt from being considered with their medicaid application.

Transferring Assets

Assets can be gifted to friends or family members. In addition, life estates can be set up giving the senior the ability to live in the house during the course of their lifetime while title is transferred to children. Another method of divesting oneself of assets is through the use of an irrevocable medicaid planning trust. A trust is an entity with a tax id number. The parent transfers the assets to the trust. The trust is a testamentary vehicle which has its own inheritance scheme in it. It is also necessary to do a pour over will to work with the medicaid planning trust.

Five Year Look Back Period

There is a five year look back period if you are applying for medicaid coverage for a nursing home. If you give your property via a gift, life estate, or medicaid planning trust, this five year look back period still applies to qualify for nursing home medicaid. Due to the fact there is a five year look back period, it is important to do medicaid planning in advance to prevent being assessed a penalty for going into a nursing home during the five year look back period.

The five year look back period only applies to medicaid coverage for nursing home stays. It does not apply to community medicaid. Community medicaid refers to an individual remaining in their home and a home health care aide assisting them. This means an individual may transfer assets and, virtually the next day, apply for medicaid community benefits.

Conclusion

Individuals and families, as they get older, may face the unwelcome prospect of ending up in a nursing home at some point in time. Nursing homes cost about $10,000 to $12,000 per month. This would impoverish most families.

If you have a reasonable plan to protect your assets in the event a nursing home stay is required, you may be able to qualify for medicaid and have government benefits pay for all of your expenses.

medicaid planning attorney on Long IslandElliot S. Schlissel is a member of the National Academy of Elder Law Attorneys who assists clients with regard to medicaid planning issues.

Medicaid In New York – Part I

Medicaid was established in 1965 by an act of Congress. Medicaid is designed to deal with healthcare issues for individuals and families who cannot afford healthcare. Individuals applying for medicaid must meet minimum coverage requirements. These requirements are the individual must be under 21 years of age or over 65 years of age or be eligible for public assistance or recipient of Social Security Disability, blind and/or disabled. There are two types of medicaid, home-care and long term care in nursing homes.

Medicaid Administrated in New York State on the County Level

In the State of New York, Medicaid programs are administrated by each individual county. In the City of New York, Medicaid is administrated by the Human Resources Administration. In counties outside the State of New York, Medicaid is usually administrated by the Department of Social Services.

Eligibility for Medicaid

The resource amount for Medicaid is currently $14,250. Married couples can have combined exempt resources of $20,850. When one spouse goes into a nursing home the remaining spouse (referred to as the community spouse) can keep $113,640 in assets.

There are certain resources that are exempt from Medicaid. Individuals can set up an irrevocable funeral trust for their final expenses and these funds are exempt from Medicaid. For community Medicaid (the individual living at their residence) the equity in a home may not exceed $786,000. Medicaid can still recover against the equity in the home after the individual receiving the Medicaid benefits dies. Medicaid accomplishes collecting against the value of a home by placing a lien on the home for the costs they incur in maintaining the Medicaid recipient. An exception to Medicaid placing a lien on a home, is if the home is the principal residence of the Medicaid recipient’s spouse and/or minor children. The spouse needs to have lived in the home for a minimum of one year prior to the individual’s admission to a medical facility.

Individual Retirement Accounts and Medicaid

Individual retirement accounts or other types of retirement accounts are exempt if the individuals are receiving regular, periodic payments from these accounts. However, the funds received from these retirement benefits are considered income for Medicaid purposes.

helping prepare medicaid As of 2013, the community based Medicaid recipient is allowed income of $2,841 per month. Income above this amount must be utilized for the Medicaid recipient’s healthcare unless he or she has a spouse with income under $2,841 per month. In this situation, the Medicaid recipient’s income can be utilized by the spouse to bring his or her income up $2,841.

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