MediCAID Planning: What is it?

There comes a time in many middle-aged couple’s lives when one or both of them are faced with “making plans” for their elderly parents.

If this hasn’t happened to you yet and your parents are still alive, keep reading! If you have friends who have elderly parents, please read and share this with them! If you are the elderly parent, please share with your children, because chances are, they will need it sometime in the future.

The harsh reality is that many people outlive their ability to properly care for themselves at home and will either need someone to move in with them or will need to move to a more institutional setting where assistance is provided. Sometimes they make the decision for themselves but more often than not, the adult children have to step in and make these tough decisions despite the push-back they get from mom or dad.

MediCAID planning is planning for this elderly person’s future but should also include planning for the caregivers as well! Very few people are born knowing how to be a caregiver for an older loved one. Fewer still have the substantial amount of time available to do the job well. MediCAID planning is comprehensive strategizing to help the senior and the caregiver through the process of growing older. It may never actually involve Medicaid, but it begins the discussion with the possibility that, at some point, Medicaid might be needed to pay for the care the senior needs.

Every person has three primary needs that must be addressed as they grow older. There are legal issues that must be resolved. There are financial issues that must be resolved. Lastly, there are the medical and personal needs that must be resolved. Most of us take care of these issues while we are able to and take them for granted, but a surprising number of seniors have critical gaps in their planning that don’t become evident until it is too late to fix them. For example, let’s say that a married couple have one another named as their beneficiaries of their retirement plans. One spouse dies but the surviving spouse never makes a change to their plan by adding the children as beneficiaries. This could cause tax problems for the children and could trigger probate where it could have been avoided.

Another detail that can be addressed is how accounts are set up with the investment advisor. Many are jointly-held and if a spouse has died, it makes sense to re-title these assets while you still have time. Meeting the financial advisor and gaining some knowledge of the senior’s portfolio and investment mix is also helpful. If the elderly account holder has not named someone else as his or her Agent, once they lose their capacity, no one can make changes or even gain information about these accounts!

Helping an elderly loved one with their medical and personal needs is where many caregivers spend their time. Unfortunately, many are overwhelmed with the growing demands on their already packed schedules. They take things from day to day and are not able to plan well ahead of immediate needs, and this can cause problems in the future. Helping the caregiver understand their role and helping the caregiver find other resources is vital to their sanity and effectiveness. This too is an important aspect of MediCAID planning.

My parents are both slipping a little but I don’t know how to begin this process!

 We see this all the time. Chances are, your parents want to leave things to you after they are gone but want their life-savings to take care of them for as long as possible while they are here. Without proper planning, that might be unachievable, so ask them if they would spend an hour of time but no money, talking with an attorney who helps seniors just like them? We can review with them their goals and point out pitfalls along the way that might interfere with those goals. If we can help them put a plan in place, we will quote them a flat fee to do the work. We do not use hourly billing.

My mother continues to live at home alone even though Dad died a couple of years ago. I want her to move but she won’t consider it!

 And why should she move? Her church, Post office, grocery, drug store and friends are all in her neighborhood. On the other hand, you probably aren’t, and as she comes to rely on your more and more for help, it will become a burden for you to drive across town just to pick her up. Too, her neighborhood might not be as safe as it was decades ago and your concern for her safety is warranted. There may be several reasons why she should move, but change comes slowly to everyone, especially those who have many memories in their old home. Ultimately it is her decision, but we would be happy to spend an hour of time, for free, discussing with her the pros and cons of selling her home and moving. There is no cost to meet.

Mom and Dad have their home, CDs, a savings account and some stock and I am concerned they will lose it all, and their home, if either of them have to go into a nursing home!

 Without proper planning, there is a good chance you are right. Nursing homes cost at least $8,000 per month and the cost is NOT covered by Blue Cross, TriCare or Medicare. It is private-pay until their money runs out. If they each have $300,000 of excess cash sitting around to be used for nursing home care, they might not need to plan. If they aren’t so lucky though, understanding the rules and the exceptions has a real dollar value! It would be devastating for one to enter a nursing home and the one still in the home have to suffer with no end in sight. Protecting their home and protecting their nest-egg is central to MediCAID planning. Not planning well ahead of need is a recipe for disaster though.

My mother remarried and signed a pre-nup. She thinks this will protect her if her new husband has to go into a nursing home.

 Pre-nuptial agreements are wonderful tools in second marriages but they provide absolutely no protection should either of them have to enter a nursing home.

My father has been gifting all the kids $10,000 per year to spend down his estate in case he has to enter a nursing home.

This is a common mistake. The IRS says that any person can gift to any other person up to $15,000 (not $10,000) per year and it is a tax-neutral event. However, Medicaid has a different set of rules and their rules say that ANY gift made within five years of needing Medicaid will create a transfer penalty. So, if your Dad applies for Medicaid, they will ask that all the $10,000 gifts he has made over the last five years be returned to him and then spent down on his nursing home care before Medicaid will begin. This may be impossible to achieve, so he might want to get some professional advice going forward.

MediCAID planning is there to help seniors and their families understand the rules they must follow in those three areas we mentioned- legal, financial and medical. Following the rules saves money, avoids delays and many times keeps the government out of the family’s business. No one wants the County Conservator taking over every aspect of a person’s life, from where they live and what they wear to who can visit them, but that can be the outcome of not planning. No one wants to have to sell their home to pay for care but that can be the outcome to not planning. Life is hard enough. There are no gold stars for making life harder on yourself or your family. Call us for advice on caring for your loved ones. We do this all the time and chances are, you don’t.

Nolan Elder Law & Estate Planning LLC