New Medicaid and VA Figures for 2019
The cost of living adjustment for 2019 for many of the government programs that affect our clients’ lives has been announced so here they are. For 2019, the Social Security Administration announced that Social Security recipients will receive an increase of 2.8%, which is greater than the 2.0% increase last year. Because Medicaid and the VA Aid and Attendance program adjustments are tied to the same percentage increase, this means that those benefits will also increase by the same 2.8%. The Medicaid income cap will go up to $2313 per month. This number is the limit on income per month needed to qualify for most Medicaid programs. For Medicaid recipients whose income exceeds this limit a Qualified Income Trust (commonly known as a Miller Trust) must be used to achieve and maintain eligibility. VA Aid and Attendance pension benefits will also increase by 2.8% in 2018. This means that a single veteran can receive a maximum of $1881 per month, a married veteran can receive as much as $2229 per month and the widowed spouse of a veteran tops out at $1208 per month in VA Aid and Attendance benefit.
Raising a Grandchild (Part 2)
In last week's post I focused on an increasingly common family arrangement in which -for several different reasons - grandparents who expected to retire and live a more leisurely lifestyle instead find themselves caring for their grandchildren. This often starts as a temporary solution but over time becomes a permanent one. Much has been written about the financial impact to seniors. Some are delaying retirement. Others are using savings meant for retirement to house, clothe, feed and education their grandchildren. This obviously will mean a change of lifestyle for many. But it will also impact the grandparents when their health starts to decline and they need long term care. Not much has been written about that. Money spent on raising another household won't be available when long term care is needed. As we know, 24/7 round the clock nursing home level care averages $13,000 to $14,000 per month - $150,000 a year or more. Government benefits to pay for care may become more of a necessity because the funds expected to pay for care may have already been spent and long term care insurance may not have been purchased. Both the
Raising a Grandchild (Part 1)
It is estimated that 2.7 million grandparents are raising their minor grandchildren in their homes. The reasons for this are varied. The birth parents may be unable to care for their children because of physical or mental illness, substance abuse, incarceration, homelessness, poverty, or unemployment. In many cases the grandparents didn’t expect to be raising their grandchildren or at least expected it to be on a temporary basis that over time came to be permanent. The balance of raising a young child while at the same time addressing the issues of aging and long term care presents unique issues that must be addressed to protect both grandparent and grandchild. The first issue is who will care for the grandchild if the grandparent should pass away or become unable to care for the grandchild if, for example, he or she requires nursing home care. As I stated above, the grandchild often moves in with the grandparent on a temporary basis. As time goes by the grandparent becomes the de facto parent, however, there is no legal designation as such. If the grandparent dies (or otherwise can no longer care for the grandchild), provided the
The Hidden Costs of Transferring Your Home (Part 2)
In my post last week I told you about Joe’s call concerning the sale of his mother’s home. A few years ago she went to an attorney to prepare a deed transferring the home to Joe and his sister, but keeping a life estate for herself. A life estate is a legal right to live in the home even though it was now owned by her children. She did this because she wanted to protect it from being spent towards nursing home care. As I explained last week when the home is sold the life estate does equate to an ownership interest for purposes of calculating the capital gains tax, in her case about 25%. The other 75% is considered owned by Joe and his sister. Joe estimated the gain on the sale to be about $250,000. Mom can exclude up to $250,000 of gain on her share so she would not owe tax on her one quarter share, however, Joe and his sister didn’t live in the home so ¾ of the gain would be subject to tax. They will owe about $50,000 in capital gains tax depending on their tax bracket. I could tell Joe was getting
The Hidden Cost of Transferring Your Home (Part 1)
Joe sounded upset when he called us. His mother wanted to protect her home from the cost of long term care so a few years ago she transferred the house to Joe and his sister, keeping a life estate for herself. Now they want to sell the home because his mom needs nursing home care. We asked a few more questions and Joe explained that his mom has very few other assets, maybe about $10,000. He also said the home transfer occurred more than 5 years ago so it falls outside of Medicaid’s 5 year look back, meaning the transfer would not create a Medicaid penalty. Joe’s hope was that the liquid assets would cover whatever private pay amount that might be owed to the nursing home before transitioning to Medicaid. The proceeds from the sale would then be the inheritance that Joe’s mom wanted to provide for her children. So what was getting Joe upset? He had a conversation with a friend who said he would have to pay capital gains tax on the sale proceeds. He didn’t quite understand why that could be true since Mom had lived in the home
New VA Rules Effective 10/18/18 (Part 3)
This week’s post is my third in a three part series regarding the new changes to the VA Aid and Attendance program. As I stated last week, the biggest focus will be on a new 3 year look back and penalty for transfer of assets. That does in many cases take away the ability to qualify immediately after transferring assets, however, not in all cases. Strategies similar to ones we use in crisis Medicaid planning cases will still be available. Converting countable assets to noncountable ones can help qualify an applicant without waiting out the penalty. These include buying a bigger home or purchasing a car. Something called “half a loaf planning” can also sometimes be an option. Provided the amount to be transferred results in a penalty that is less than 3 years it is possible to calculate an optimum transfer amount such that the excess amount of assets over the net worth limit that remain in the Veteran’s name will be used to cover the time frame of the penalty. This will maximize the amount that can be transferred by determining the earliest possible month that the Veteran (or widowed spouse) can qualify for the VA