Second Marriage – Happily Ever After? (Part 2)
Last week I was telling you about George and Mary. Mary has dementia and may soon need nursing home care. George had gone to an elder law attorney who told him that once Mary spent down her assets she’d qualify for Medicaid. That advice came at a time when George and Mary were living together, but not as husband and wife. That all changed when George and Mary recently were married. It’s what Mary always wanted. But, it also changed things dramatically as far as Medicaid is concerned. Now George must spend down Mary’s and his own assets before achieving Medicaid eligibility. He’ll be able to keep his home and approximately $120,000. I asked George about their finances. He told me he has approximately $1,000,000 and Mary has $300,000. If Mary lives long enough she could easily exhaust her assets and start spending down his. So, what should he do? Luckily, he has some time. I recommended to him that we do asset protection planning for him, placing his assets into a trust under what we call 5 year planning. In 5 years, if Mary spends her assets completely, as long as George has a home and no more
Second Marriage – Happily Ever After?
George called me because his wife, Mary wasn’t doing well. She has dementia and he is facing the prospect of needing long term care for her, possibly in a nursing home, although he would like to do everything possible to keep her at home. As the conversation always does, it quickly focused on the cost and how to pay for it. George told me that he and Mary only recently married after having been together for 30 years. She had always wanted to be married. Her declining health had made him realize that life is short and if this is what makes her happy then, “why not”? However, he told me that they had always kept their finances separate. He felt pretty confident that she could pay for her own care for at least a few years. That was good but I explained to George that should she run out of money he would need to start paying for her care from his bank account. He didn’t seem to mind but asked me about Medicaid. “Wouldn’t Medicaid kick in after Mary runs out of money,” he asked. “We went to an elder law attorney a few years back and
Confusing Medicaid with Other Government Programs (Part 2)
Last week I was telling you about the call I received from Lou. His dad had been living in senior housing but now needs nursing home care. Dad has $80,000 left in assets which he plans to spend down and then apply for Medicaid. When I asked Lou about gifts and other transactions over the past 5 years he told me that his dad had set up an irrevocable trust just before applying for senior housing. Since it wasn’t a problem in terms of qualifying for the housing program, Lou figured it would be the same for Medicaid but he was wrong. That’s because the housing program focused on income and not assets. How much income he had, determined his eligibility as well as how much rent he paid. I explained to Lou that the irrevocable trust assets were only relevant so far as the income generated from them (ie. interest or dividends). Keep in mind that there are different housing programs that can sometimes have different rules but many of the programs work this way. Medicaid, on the other hand, does look at the assets. First, I told Lou that just because his dad has an irrevocable trust
Confusing Medicaid with other Government Programs
The other day, Lou called me about his dad, who had been living in senior housing for a few years. His health has deteriorated and he now needs nursing home care. Lou’s plan is to spend down the $80,000 his dad has left, applying it towards the nursing home bill. Sounds like a solid plan. Lou wants help with the Medicaid application. I asked him about gifts and other transactions over the past 5 years, the Medicaid look back period. Lou was pretty confident he didn’t have a problem. He told me that he had set up an irrevocable trust and transferred a few thousand dollars into it shortly before Dad moved to the senior housing. Since it wasn’t a problem when he applied for the housing he figured it wouldn’t be for Medicaid either. That’s where Lou got it wrong. While eligibility for senior housing is generally needs based, the rules are quite different from Medcaid. Government benefit programs can have very different rules. Next week I’ll explain exactly where Lou’s mistake was.
A Personal Story
About a month ago, my parents’ health took a sudden turn and it led me down the path that many of our clients and their families face, tackling long term care. In our case, it was an accident outside their home. My mom broke her leg. My dad suffered some bumps and bruises but nothing worse than that. As elder care attorneys, Laurie and I are very familiar with the range of service available when a crisis arises and the amazing work performed by rehab facilities, social workers, care managers, therapists and home health care agencies. We relied upon the people we have come to trust and recommend to our clients to help my mom. The recovery process is a slow one but with the guidance and care she has received, and will continue to receive, she’s on the mend. We have been lucky in that, until now, both my parents have been healthy and independent. However, I always knew of the likelihood that this time would come. I am always reminded of a conversation I had some time ago with the child of a 95 year old parent who called me seeking help. She said, “I just never thought
VA Pension not Income for Medicaid Purposes (An Update)
Last year I wrote about an important court ruling in a case that impacts Medicaid and VA Aid and Attendance benefits. Several elder law attorneys filed a lawsuit against the State of New Jersey which, despite being in clear violation of federal law, insisted on counting VA Aid and Attendance benefits as income for purposes of determining eligibility for Medicaid. This impacted many applicants who were denied Medicaid because, with the VA benefit, their income exceeded Medicaid’s income cap . The judge in that case, Galletta v. Velez, agreed that the State of New Jersey was flat out wrong. Last month came word that New Jersey has agreed to issue a Medicaid Communication to all its county agencies advising them that they may not count the Aid and Attendance as income for eligibility purposes. In addition, the State agreed to pay the plaintiffs’ attorney fees and costs . As I have always explained to my clients about Medicaid, the State often takes a position that is blatantly wrong because it knows that it can get away with it. The high cost of appealing a decision and fighting it out in court makes it impractical and in many cases just