Louisiana Long Term Care Medicaid Planning Blog

Community Spouse Allowance Increased for Louisiana Married Couples

During 2010 and 2011, the amount of Countable Resources that a married couple could own to be eligible for Louisiana Long Term Care Medicaid if one of the spouses went into a nursing home (Institutionalized Spouse) and the other spouse continued to reside at home or in the community (Community Spouse) could not exceed $109,560.

For example, let's say Grandma and Grandpa own a home, a car, and they have $100,000 in the bank. If Grandpa goes in the nursing home and Grandma continues to live at home, Grandpa will be eligible for Medicaid so long as he meets all of the other eligibility requirements.

Today, new regulations were issued by the Louisiana Department of Health and Hospitals which increased this "Community Spouse Resource Allowance" from $109,560 to $113,640 for Medicaid applications in 2012. Click here to see the schedule.

While the home property is an exempt asset for Medicaid, it appears that there is a limit on the amount of equity in a home that is exempt. While I can't find a reference to Schedule Z-2300 anywhere else in the Medicaid Manual, it was revised to indicate that $525,000 in home equity is exempt for 2012 - up from $506,000 in 2011. Click here to see schedule Z-2300.

If you or your family have between $100,000 and $750,000 in assets you want to protect from nursing home expenses, and you want to avoid nursing home poverty, give us a call from anywhere in the state at 866-491-3884.

 

 

Louisiana Medicaid Eligibility and Debt

 

As many of you know, when qualifying for Medicaid if you ever go into a nursing home, Medicaid looks at the total amount of assets that you have. One thing that confuses people is they don't look at the amount of debt that they have when they go into a nursing home.

I was meeting with a family yesterday and Mom was about to go into the nursing home in the next few days or weeks. They were concerned because they had over $220,000 of financial assets, which is over the $109,000 figure when you have one spouse in a nursing home and one spouse who stays at home, that she wasn’t going to qualify for Medicaid and they were going to have to pay for that $5,000 a month nursing home cost out of their pockets. They realized that they owe $115,000 on a reverse mortgage on their home. So what they can do is just take part of their financial assets and pay off the $115,000 reverse mortgage then on the next day they'd have $105,000 of countable resources under the $109,000 figure. Mom would qualify for Medicaid immediately.

Be aware that Medicaid disregards debt and the asset valuation. They don't look at net worth; they just look at your assets.

Louisiana Medicaid Planning: Divorce v. Depleting Life Savings

 

Just this past Friday I was working with a husband and his son. They were about to put his wife in a nursing home. This family has to decide on either getting a divorce for Medicaid eligibility or depleting their life savings that they've worked hard for 70+ years to build.

Bottom line is if you plan ahead by starting this process at least 5 years before you go into the nursing home, you can enable your family to avoid very difficult decisions that this family is going through. Usually when you are about 65 or 70, that's when families start considering Medicaid planning. So get the information now, plan and do what you have to do to protect your family.

Louisiana Medicaid Planning and IRAs

 

Today I want to talk to you about Medicaid eligibility planning, particularly when someone is going into the nursing home with an Individual Retirement Account (IRA). I was working with a family from Baton Rouge yesterday and Dad was going into the nursing home with his main asset being an IRA. So they face having to take distributions from their IRA while Dad is in the nursing home and spending that money on nursing home costs until the total value of dad's assets are less than $2,000.

We're going to plan ahead and we're going to do some things to protect some of that money, but it does require taking distributions from the IRA and paying income tax on those distributions. So in order to minimize the income taxes, they are going to take a distribution from the IRA this year and another distribution after the first of next year. Then we are going to do some Medicaid planning to protect that money.

It's a little more difficult to do Medicaid eligibility planning if you have an IRA. It often requires taking some distributions which would be taxable income. Be careful with IRA's since there are special rules on Medicaid planning.

Paul Rabalais

Medicaid Eligibility Planning

 

I met with a woman yesterday whose husband has fairly advanced dementia. She was worried she would no longer be able to take care of him in her own home. She went to visit a few nursing homes and they gave her a lot of information including the medicaid application. The medicaid application won't do her any good unless her husband is going to be eligible for medicaid.

If one spouse is in the nursing home and another spouse is at home, then that couple can have a vehicle, a home and an additional $109,000 in assets. I started asking her about her assets and she really didn't know how much her accounts are valued at. So she is meeting with her financial advisor today to discuss the value of those accounts.

So much of medicaid eligibility planning is about knowing what you own when you enter a nursing home. So make sure before you start this process of trying to figure out if you or a loved one is eligible for long term care medicaid, you have a good grasp on what you or they own and the value of those assets. Then we can start the process of making sure things are set up properly to protect what you have for your loved ones.

Paul Rabalais

Louisiana Long Term Care Medicaid Planning and Protecting the Home

 

Generally, the home is an exempt asset for Louisiana Long Term Care Medicaid Eligibility Purposes. This means that you can own a home and still qualify for Medicaid so long as your other "Countable Resources" total less than $2,000 in value.

There are many, many, many rules regarding the home. Here - generally - are three:

1. If your home is "offered for sale," it is no longer excludable;
2. If your home is out of state, it is a countable resource; and
3. Estate Recovery laws permit Medicaid to recover Medicaid assistance payments from your estate. Since your exempt home will be in your estate, the estate will have to sell the home to pay the Medicaid debt.

The key to avoiding problems that result from the application of Medicaid eligibility rules is to plan ahead - plan at least five years before you need nursing home care.

There May Be Hope For Individuals Entering The Louisiana Nursing Home With Assets

On October 14, 2010, at 4:05pm, I received an email from the Louisiana Medicaid Eligibility Policy Unit. It stated that the Louisiana Medicaid Eligibility Manual was clarified.

For the past several months I had thought that the Medicaid office was applying our laws incorrectly. It appears though with this clarification I was right all along. I applaud the State for clarifying this uncertainty.

It all has to do with what happens when a person makes a transfer and then part of the transferred resources are returned. The bottom line is that the penalty period that started does not stop, and that the penalty period can be reduced by the return of transferred resources. The following is the example given straight from the Medicaid Eligibility Manual:

"Applicant for LTC is determined eligible for Medicaid on October 1, 2008. However, a transfer of property valued at $70,453.00 occurred on September 1, 2008. A transfer of resource penalty was applied and the applicant was ineligible for vendor payment for 17 months and 18 days beginning October 1, 2008. On September 01, 2009, it was reported that $23,000.00 of resources were returned to the individual in August, 2009. The returned resources were used to pay the facility fee and his countable resources were below the resource limit as of September 1, 2009. ** The penalty period should be recalculated using the un-refunded portion of the $47,453 of the uncompensated transfer. ** The re-calculated penalty period of 11 months and 26 days begins September 1, 2008 with vendor payment beginning September 27, 2009."

What does all this mean? It means there is hope for people who are either in the nursing home with liquid financial resources, or are on the doorstep of the nursing home with financial resources. The way the math usually works out, we can typically help a family save about half of their life savings.

Come see us five years prior to entering the nursing home and we can likely save the whole kit and kaboodle.

Of course every set of circumstances is different, and we won't know what you can protect until you come in to any one of our three offices in Louisiana for your no-cost initial visit. Find us in Baton Rouge, Mandeville or New Orleans. We have attorneys full-time in all three areas who are committed to helping families like yours sort through rules like this. Don't try this at home!

Paul Rabalais

Your Retirement Account Could Be a Huge Hurdle for Medicaid Eligibility

Yesterday I met with a woman who was interested in qualifying for medicaid in case she ever needs to enter a nursing home as she gets older. I explained to her that the only way to qualify for medicaid payments for long-term nursing home care was to make sure her assets totalled less than $2,000 at the time she applies for medicaid benefits.

I have written about countable resources on this blog previously and essentially all of your countable resources are the assets that count toward that $2,000 limit. Included in Countable resources is the value of any IRA, 401(k), or other retirement account. What does this mean?

It means that the funds in those accounts must be donated into an irrevocable trust if they place you over the $2,000 limit. The only way to put those funds into trust would be to close out the account and then move the the money you take out into an account in the name of the trust. However, when you close out the account and receive the value of your retirement account in full, you will be taxed on this entire amount because the IRS views it as income. This means that often medicaid planning is not a viable option for individuals with large retirement accounts,

If you would like to discuss Medicaid planning and what options you have in preparing for long term care,feel free to call me at (504) 274-1980 or shoot me an email to Chris@rabalaislaw.com

Chris Kane, Attorney

Director, New Orleans Office

 

Louisiana Long Term Care Medicaid Laws Clarified Regarding Transfers of Assets

I received an email on Thursday, October 14, 2010, from Louisiana's Medicaid Eligibility Policy Unit. Sections of the Eligibility Manual have been clarified. This is good news for people who are going into the nursing home and want to protect their life-savings. It's technical stuff but it's good for Louisiana families. Here's how I read it:

• If you are in a nursing home and you transfer all your money out of your name, you will be penalized for one month from Medicaid eligibility for every $4,000 of value that you transfer. For example, Dad transferred his $80,000 out of his name as he went into the nursing home. This transfer will incur a 20 month penalty period.
• Here's where our unique "Transfer and Return Protection Plan can save at least half of a family's savings. Let's say Dad's children return half ($40,000) of the "Transferred Resources."
• Until October 14, Louisiana Medicaid Eligibility rules were less than clear on whether the penalty period start date changed when assets were returned to the Medicaid applicant.
• The new rules from last week clarified that once a penalty period begins, the start of the penalty period cannot be changed - only the length of the penalty period is modified.

Again, this appears to be good news for individuals and families that want to protect assets when a loved one goes into the nursing home.

If you are interested retaining our Medicaid Planning legal services, and would like a no-cost initial visit to discuss protecting your families assets, feel free to contact us. We have attorneys that serve Louisiana families in the Baton Rouge area (paul@rabalaislaw.com), the Northshore area (brent@rabalaislaw.com), and the New Orleans/Metairie area (chris@rabalaislaw.com. Or, you can call our office toll free at 866-491-3884.

Paul Rabalais  

6 Easy Steps To Medicaid Planning - In Layman's Terms

At our office we like to keep things simple for our clients. In my more than 20 years as a practicing attorney working with more than 5,000 families, I've never heard anyone say, "We'd really like a long, confusing, hard to understand legal document with tons of legalese."

On the contrary, people tell us all the time that they like the way we explain things in easy to understand terms and they like the way our documents minimize the legalese.

So, consistent with our "simple" approach, I'd like to present a simple overview of Louisiana Long Term Care Medicaid Planning. Here are the steps that we often take people through to protect their assets and qualify for Louisiana Long Term Care Medicaid:

1. Know the Basic Asset Rules. If you have more than $2,000 of Countable Resources when you are in the nursing home and you apply for Medicaid, you won't qualify for Louisiana Long Term Care Medicaid. Common types of Countable Resources include bank accounts, investments, IRAs, annuities, and land.
2. Know the Basic Penalty Rules for Making Transfers. If you transfer assets out of your name, you will be penalized from Medicaid Eligibilty for up to five years. For every $4,000 of value that you transfer out of your name, you will be penalized for one month. The penalty period starts when you are in the nursing home and you have less than $2,000.
3. Asset Review. Make a list of everything you own. Pretty much everything you own is a Countable Resource except for your home and your car. Having more than $2,000 worth of Countable Resources will prevent you from becoming eligible for Medicaid, which means you have to fork out $5,000 per month for the nursing home.
4. Create a Trust. You will want to create a very specific type of trust so that you can control your life savings but protect it from nursing home costs. The trust must be irrevocable and you cannot be a principal beneficiary of the trust. You can be the trustee of your trust.
5. Transfer Assets to Your Trust. Assets you want to protect should be transferred - in kind - to your trust. The transfer starts the five year period which must expire before you become eligible for Medicaid. You can keep enough assets in your name to spend on your care and get you through the next five years. Be aware that you cannot transfer IRAs to a trust without first taking a distribution from the IRA - maybe you leave the IRA in your name and spend it over the next five years.
6. Stay Educated and Monitor Your Situation. You may have to make adjustments over time due to our life changes and due to law changes. That's why it's important to work with professionals like us who understand the issues and want to maintain a lifetime relationship with you and your family.

As you might imagine, there's often more to it than that but now you have the basics. Every Louisiana family has a unique story and unique circumstances, so our job is to apply our Medicaid Planning Systems to your unique family story.

If you would like to participate in our no-cost legacy planning family visits, call our office at 225-329-2450, or email our Chief Administrative Officer, Laura Bittel, at laura@rabalaislaw.com, to set that up. Procrastination in this area literally destroys families. Take action today. Have a good one!

Paul Rabalais