Louisiana Long Term Care Medicaid Planning Blog

Annuities and Louisiana Long Term Care Medicaid Planning

It seems like a lot of people own annuities these days. Banks are in the business of converting people who have CD's or a lot of cash into annuities and that creates some special issues when we try to protect those annuities from having to deplete them on the nursing home prior to Medicaid ineligibility. I was working with a family last week and they told me about 6 months ago they had about $120,000 in cash and they were approached by their banker, they used that to purchase an annuity, and then they discovered about Medicaid planning and protecting things if they went into a nursing home. They couldn't just transfer that annuity to their kids because they would have to surrender the annuity and pay significant surrender charges. I said maybe we can transfer that annuity into a special type of trust. We've got to call the insurance company first and make sure the transfer into the trust is not a surrender of the annuity which would cause all of these surrender charges to incur. We did just that, we got on a conference call and called the insurance company. As with most insurance companies that offer annuities, they allowed us to create a trust and make this trust the owner of that annuity and everything else about the annuity would stay the same. It would not be surrendered. So 5 years from now, if that couple has to go into a nursing home, this annuity $120,000 plus whatever it grows to won't have to be consumed on the nursing home. It'll be protected for the children which is what these folks wanted. So be careful if you own annuities and you an interest in qualifying for Louisiana's long term care Medicaid. We've got to look asset by asset and see what's best to do. If you want more information, we help a lot of people with their Medicaid planning statewide throughout Louisiana, but only in Louisiana you can contact us at 866-491-3884. Also check out our blogs, we've got a ton of information that should be helpful to you. Have a great day!

Louisiana Medicaid Planning and Cash Value of Life Insurance Policies

If you own life insurance policies that have cash value be aware that that can be a trap if you ever enter a nursing home and expect to be eligible for Louisiana long term care Medicaid. I was working with a gentleman not long ago. He had about $100,000 of life insurance and those life insurance policies had about $20,000 of cash value. SO he was forced to cash those policies in, get the $20,000, and then spend the $20,000 on the nursing home prior to qualifying for Medicaid. His life insurance went away. Now many term life insurance policies don't have cash value so you're not going to be ineligible for Medicaid because you own term life insurance. But other life insurance policies: universal life insurance, whole life insurance, those typically have some cash value and you can be forced to surrender those policies and use that cash to pay for the nursing home. So as with all Medicaid planning, planning ahead is the key. We talk about doing things at least 5 years before you enter the nursing home to protect assets that you have. Check out our blog and the blog posts, you'll learn a ton about this process and then if you're genuinely interested in having us help you get through this process and protect what you have you can check out our website and call us at 866-491-3884,. That's our toll free number statewide. Have a good day!

Return Transferred Resources To Reduce Penalty Period

I want to mention a valuable Medicaid planning tool authorized by the Louisiana Medicaid manual. It has to do with somebody in the nursing home who has made some gifts or transfers of their assets within five years of going into the nursing home. There's a little known seldom used rule in our Louisiana Medicaid manual that allows the recipient of the gift to return some or all of that gift to the Medicaid applicant. Why would somebody want to do that? It reduces the amount of the initial gift or transfer and so what that does is it reduces the penalty period where that nursing home resident is going to be ineligible for Medicaid. It's complicated, lay people can't go through it, and it's a series of transactions. My point is, if somebody is going into the nursing home with money, or somebody is already in the nursing home and they are private pay, and they had made some transfers within the last 5 years there are things that can be done within the rules of the Medicaid manual to protect some, oftentimes about half of the resources of that family. If you want to know more about that you may want to check out other blog posts. If you're interested in retaining our law firm to walk you through that process you can give us a call. Our toll free number is 866-491-3884. Have a great day!

Dad Has Dementia- Daughters Help with Medicaid Planning

I want to talk to you about some Medicaid planning. I was talking to a couple of women this week. They were working hard to take care of their father. Their father still lived in his own home and some dementia had set in. They all lived in the Metairie, Louisiana area and the daughters were going every day to visit their father to make sure he was well taken care of, but they realized it was going to get to a point where the father was not going to be able to live independently. The father owned a home and some bank accounts. There wasn't an immediate need for nursing home care so what we did was created a special trust for that family. Dad's assets are going into that trust. The family all gets along and they're all very supportive of dad. So what will happen is five years from now or beyond, if dad enters a nursing home, those funds and that home will be protected from the nursing home poverty. Dad won't be forced to deplete those life savings in a Louisiana nursing home at $5,000-$6,000 a month. Those assets will be preserved which is what he would've wanted and what will be best for him and his family. The key to Medicaid planning is always plan ahead. We have this five year rule which really means you have to plan for this to protect everything at least five years before you enter a Louisiana nursing home. So if you have some experiences or comments or even questions you'd like to share, post a comment to this blog post and perhaps you'll be starting a discussion that can help you or others make sure assets are preserved for your family. Have a great day!

Can You Protect Annuities From Nursing Home Care Costs?

We see it all the time. An individual or couple is interested in finding out how to protect their money if they have to go into a nursing home. We ask them what they own and often times they own annuities. Three years ago they bought an annuity at the bank or from an insurance company. They paid fifty thousand dollars for the annuity and it's growing, tax deferred, and now it's worth fifty five-thousand dollars. They may go into the nursing home in the future and they don't want to have to spend that money. What they can't do is just put that annuity in a child's name because an annunity that's in their name can't be transferred to a child's name without pulling all the money out of the annuity. There'd very likely be surrender charges and there would be income tax consequences. That's not a very practical option. What we often do is transfer annuities to a special type of trust, often times called a grantor trust, so there's no surrender charges due, the annuity is not being surrendered, and there are no tax consequences at that time. It's a way annuities can be transferred out of someone's name and protected from the nursing home in the event that in the future the previous annuity owner has to get long-term care in the nursing home. Annuities are special creatures; there are all kinds of different rules that apply to annuities. It's not as easy as just transferring an account or another piece of real estate into somebody's name. It's more complicated, we often have to use trusts to protect that. Planning ahead for long-term care is the key. Most people wait too late but you've really got to get started at least five years before you ever go into a nursing home. I'm Paul Rabalais and that's a little bit about Medicaid planning. Have a good one!

Community Spouse Gets to KEEP Their Income

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Yesterday morning, I spent some time at one of the local Medicaid eligibility offices working with one of the nice employees on a particular Medicaid application that is a little bit complicated that we're helping a family through. So we were talking about a lot of these different Medicaid issues, on in particular was how when you have a married couple and only one spouse is in the nursing home, that spouse is called the institutionalized spouse, but you still have one spouse who is relatively healthy. They're living at home; they're called the community spouse. They're still living in the community. There are some special rules that protect the income of the community spouse, essentially any monthly income payable to that community spouse, might be social security, and might be pension. The community spouse gets to keep all of that income and the institutionalized spouse can still qualify for Medicaid. Be aware of that, there are some special rules that protect the spouse who's not in the nursing home. If you feel like our services may be of help to you, you can contact us at 866-491-3884.

What To Do With Mom's Home

I met with a gentleman yesterday and his mother is in a nursing home here in Louisiana. He said he was thinking about selling her home. He didn't know what to do with the home. It was a big mess. For people who own a home and live in a nursing home and are interested in qualifying for Medicaid which essentially pays for the $5,000 monthly nursing home cost. Here are a couple of rules about the home. Most people know the home is an exempt asset meaning you can own a home and still qualify for Medicaid and have Medicaid pay for the nursing home but there are some other rules that are related to the home. One is the estate recovery rule. Sure, you can own a home but if you use Medicaid dollars when you die, Medicaid has a lien on your home. So your home would have to be sold to reimburse Medicaid for what it spent on your behalf. We also have this offered for sale rule. What that means is, in Louisiana, the reason that home is exempt because it is presumed that the person in the nursing home has intent to return to that home. So they allow the home to be protected to be exempt. However; if that home is merely offered for sale it's no longer exempt. Then the value of that home is a countable asset and it creates a big mess for the family. Here's another rule on a home. If you rent your home. That doesn't do any good because if somebody's in the nursing home and that home is rented that rent money is income. That income has to go to the nursing home so typically that's no good either. So be aware that there are a whole slew of rules affecting the family home and nobody knows these rules or understands these rules. Families try to just take care of this stuff themselves and they mess everything up. So if you have significant assets, you have a home that you'd like to protect for yourself, for your children, for your heirs, and you're primarily concerned about what happens if you go into a nursing home you may want to contact us. Toll free is 866-491-3884. See if we can be of assistance to you in protecting your assets and avoiding nursing home poverty. I'm Paul Rabalais and have a wonderful day.

Apply for Long Term Care Medicaid at the RIGHT TIME

We are working with a family in Houma, Louisiana trying to get mom on Medicaid and the issue came up as to when to apply for long term care Medicaid benefits. You can really apply at the wrong time and be penalized from being eligible for Medicaid for way more than 5 years. We have this rule that says when someone applies for Medicaid they ask if the person has made any transfers in the previous 5 years. If the answer is yes, then they do this mathematical formula to determine how long that Medicaid applicant is ineligible for Medicaid. Let me give you an example. Mom transfers $400,000 of assets out of her name. It might be her home, it might be her savings accounts or stock. If mom applies for Medicaid within 5 years after making that transfer Medicaid is going to apply a penalty period of $400,000 divided by $4,000 which is a special Medicaid number. That's going to make mom ineligible for Medicaid for 100 months which is more than 8 years. My point is, an ill timed Medicaid application can be a disaster for a family. Sometimes it's better not to apply at all for Medicaid. Just wait the 5 year period after a transfer was made and then the person will be eligible for Medicaid. So realize that the timing of a Medicaid application is critical for many reasons. More than just the reason that I've just explained. If you need some help with this check out the other posts on our blog. Give us a call at 866-491-3884 and perhaps we can help walk you through that process. I'm Paul Rabalais and have a great day!

Don't Allow a Louisiana Medicaid Recipient or Applicant Inherit?

I was working with a great family in Lafayette last week. It was the grandmother, the mother, the son, there was another family member who was a CPA who was involved in these discussions as well. Mom had an illness and so they were really concerned about protecting mom's money if mom had to go into a nursing home in the future. So we're going to be doing some things to protect mom's money, put it into a special type of trust so that five years from now mom would be eligible for medicaid if she needed it. Then one of the family members brought up a great thought. What if the grandmother dies? She has one child and she's leaving everything to her child who is ill. That really could mess up all these medicaid plans that we're putting into effect for mom. So you want to make sure a medicaid recipient, or someone who may need medicaid in the future, should never inherit anything. It will kick them off of medicaid or it will prevent them from being eligible for medicaid in the first place. The wills, trusts, and estate planning legal documents or parents or spouses of a medicaid recipient or a medicaid applicant become critical toward maintaining the medicaid eligibility of someone. So be aware of that. Never let a medicaid applicant or recipient ever inherit, ever be named in a will or trust to receive something. I'm Paul Rabalais, if you have medicaid questions check out our blog or give us a call at 866-491-3884. We can discuss a plan to make sure you or your loved one becomes medicaid eligible as quickly as the laws permit. Have a good day!

Should a Surviving Spouse Disclaim an IRA?

I was working yesterday with a surviving spouse. Her husband had passed away and she has an illness. Oftentimes when one spouse dies, the surviving spouse and those family members get concerned about how to protect the surviving spouse's money if the surviving spouse has to enter a nursing home in the future. So there were some serious discussions about that because in this particular case the surviving wife has an illness where it increases the likelihood that she'll have to enter a nursing home in the future. So one big important discussion we had involved the husband owning some IRA's and he had named his wife as the beneficiary. So if she actually took those IRA's and put them in her name she really could never get those IRA's out of her name for medicaid eligibility planning purposes without taking the money out of the IRA and paying a fortune in income tax to the IRS. However, she can, what's called "disclaim" his IRA. She's really refusing it, letting those IRA funds go down to her child, and then her child will have some income tax consequences. Her child will have to take this required distributions. It's something that needs to be seriously considered if this surviving spouse needs to do this medicaid planning. You really need to think twice before the surviving spouse accepts the benefits of the IRA. So be aware of all of that before you take action. I'm Paul Rabalais, have a great day!