Estate Planning Law Firm of Louisiana

Property Insurance Proceeds Exempt for Louisiana Medicaid Eligibility

I had a telephone conversation the other day with someone who's mother received an $11,000 check from her property insurance company for roof damage that had occurred in a recent hail storm.

Her mother was about to apply for Medicaid and she wanted to know if her mother would be penalized for having this cash in her bank account, even though she planned to use the funds to repair or replace her roof.

I told her the funds were not countable based on her circumstances. The specific provision of our Louisiana Medicaid Eligibility Manual provides, "Do not count as resources the lump sum payments received due to claims resulting from natural disasters as long as the funds are used for replacement and repair of property."

Paul Rabalais

Trap For Transfers After February 8, 2006 But Before New Rules Issued

In February 2008, the Louisiana Medicaid Manual was changed. Many of the changes were made retroactive back to February, 2006.

If you or a loved one made a transfer of assets after February, 2006, hoping to qualify for Louisiana long term care Medicaid in three years or less, you'd better understand the newly issued rules.

For transfers prior to February 8, 2006, the penalty period started when the transfer was made. For transfers after February 8, 2006, the penalty period starts when the Medicaid Applicant is in the nursing home, has less than $2,000 in countable resources, and would otherwise qualify for Medicaid except for the transfer of resources. However, even though post 2/8/06 transfers fall under the new rules, the new rules were not issued to the public until February, 2008.

Bottom line - the Medicaid Eligibility Rules in Louisiana are more complicated and restrictive than ever before. If you want to know how they affect you or a loved one, post a comment or drop me an e-mail at paul@rabalaislaw.com. Don't take any action until you fully undersand the rules. My second piece of advice - don't procrastinate. Every month you procrastinate could cost you in excess of $5,000.

Family Almost Makes Big Medicaid Mistake

Been working with a Louisiana family for the last two days. A woman owns a home and about $15,000 in her bank account. She's spending about $6,000 a month on the nursing home and medication.

The family doesn't like the thought of having to spend their own money to maintain her home after she spends all of her cash down - especially since the home will be subject to Louisiana Estate Recovery after she dies.

So the family decides to contact their local realtor to list the house for sale. BIG MISTAKE. By "offering the house for sale," the Louisiana Medicaid Eligibility rules provide that she would no longer have the required "intent to return," and thus the residence would no longer be an exempt asset.

So what's the solution? We came up with one and it will save the family about $100,000. If you are concerned about your or your loved one's future Medicaid eligibility, and want some answers, simply send me an e-mail at paul@rabalaislaw.com

Until next time.

Paul Rabalais

New Penalty Period Begin Date in Louisiana

Under the old Louisiana Medicaid eligibility rules, it always made sense to make transfers earlier rather than later. That's because the penalty period started when the transfer was made.

Under the new rules in the Louisiana Medicaid Eligibility Manual, reissued February 7, 2008, it provides that, for assets transferred on or after February 8, 2006, the penalty period begins the month the applicant is determined eligible for Medicaid except for the transfer of resources.

Apparently, this means that if you transfer your resources, then you will be penalized for a certain number of months (Value of transferred resources divided by $4,000), but the Penalty Period does not start until you apply for Medicaid and would otherwise qualify (you have less than $2,000 of countable resources), except for the fact that you made the transfer. In this case, you will be denied eligibility but it will start the penalty period.

These new Louisiana Medicaid eligibility rules create lots of new planning opportunities. If you or a loved one want to know how to protect your assets from the rising cost of long term care, send me an e-mail with the particulars at paul@rabalaislaw.com

Paul Rabalais

Cleaning Up Old Medicaid Planning Mistakes

Met with a family today. It was another case of bad Medicaid Planning gone worse. A short while back, Mom transferred her house to her children, and took a demand note for the purchase price. Now, Mom has a little cash left, and she owns this negotiable promissory note. Mom is now in the nursing home blowing through the cash.

Unfortunately, the Louisiana Medicaid Eligibility manual could not be clearer. Mom's negotiable promissory note is a resource. Even after Mom spends down all her cash, she still won't be eligible for Medicaid because she owns this promissory note.

What's the solution? Good question. We think we can salvage about half of what Mom owns, but it will take a lot of work. It would have been much better if Mom and her daughters had engaged in some intelligent Medicaid planning five years ago. But, as often the case in Medicaid planning and in life, hindsight is 20/20.

If you or a loved one wants to know how to protect assets from rising nursing home costs, send me an e-mail at paul@rabalaislaw.com, or give me a call at (225) 329-2450. If you call, make sure you tell Laura that you read about me on the blog.

Paul Rabalais

Personal Care Agreement Effective Medicaid Planning Tool

Was working with a family over the past few days. The children were taking care of their mother. The mother had Alzheimer's. The family did not know what to do because every nursing home that the family visited told the family that Mother would have to spend all of her savings and sell all of her property (especially the property that was not Mother's home) before qualifying for Medicaid.

It's a common concern. Many people would say she has to transfer her assets and wait five years before qualifying for Medicaid. But what if the family does not have five years to wait.

A possible solution. Since the kids are working their tails off - keeping their Mother 24 hours a day in their residence, Mother can pay the children pursuant to a very carefully worded Personal Care Agreement. One slip up here and Mother won't ever qualify for Medicaid.

We figured out that in a few short months, Mother will qualify for Medicaid and most of Mother's savings and real estate will be preserved. If you want to know how a Personal Care Agreement, or other Medicaid planning options might benefit your family, give us a call at (225) 329-2450, or drop me an e-mail at paul@rabalaislaw.com

Paul Rabalais

Teleseminar a Big Success

Hosted a teleseminar last Thursday to teach listeners the new Medicaid Eligibility Rules issued last month by the Louisiana Department of Health and Hospitals. I spend most of the teleseminar reviewing both the rules that have not changed, along with the important new rule changes. As expected, the important component now is to PLAN EARLY!

How early? Well, even under the new rules, you can protect your entire estate if you engage in the proper planning at least five years before you need Louisiana long term care Medicaid. If you don't have five years, you can still protect a large part of your estate using newly created Medicaid planning tools we developed since these new rules have been enacted.

Thanks to Roland Cheramie for his comments after the teleseminar: " Joyce and I would like to thank you again for the excellent presentation.  This was a great review, and also an update on current activities, new regulations etc.  It is also refreshing listening to others share questions. This presentation was very professional, and easy to understand this complicated process.  We viewed your outline on our computer monitor, and listened on our amplified speaker system in the convenience of our family room.  What a way.....great job.....lets have more in the future.!"

If you'd like us to make you aware of future educational presentations, and include you in our e-newsletter, Your Estate Matters, simply send me an e-mail at paul@rabalaislaw.com, or give us a call at 225-329-2450.

Paul Rabalais

Louisiana Revamps Medicaid Eligibility Manual

On February 7, 2008, the Louisiana Department of Health and Hospitals reissued many relevant provisions of the Medicaid Eligibility Manual, replacing provisions that had been in effect since October 1, 1995. The changes are sweeping and much-anticipated. The revisions adopted many of the provisions of the Deficit Reduction Act of 2005, and made changes retroactive back to February 8, 2006.

Relevant changes include:

1. The look back date for transfers occurring on or after February 8, 2006 is 60 months;
2. For Medicaid applications on or after November 1, 2007, use $4,000 as the average monthly private pay cost;
3. The penalty period for assets transferred on or after February 8, 2006 for less than fair market value begins the month the applicant is determined eligible for Medicaid except for the transfer of resources;
4. If a transferred resource is returned, Medicaid will treat the resource as not having been transferred.

The new Louisiana Medicaid rules make it more difficult to protect your assets from the cost of long term care. I have to admit that the rules (particularly the one that provides that all transfers made since February 8, 2006) are subject to the 60 month look back date) are more stringent than what many other states have done.

My advice to most is the same: "If you want to protect all of your hard-earned assets from the rising cost of long term care, take the necessary action at least five years before you need Medicaid benefits."  If you want to know how the new Louisiana Medicaid eligibility rules affect you or your family, simply send me an e-mail at paul@rabalaislaw.com, describing your assets and income and any other particulars you feel are relevant, and then see how quickly I respond with some answers for you.

Paul A. Rabalais

Types of Louisiana Trusts

I held a Staff Training Meeting with everyone in the office today - just like I do every Thursday. The attorneys and paralegals are all in attendance. It's a great opportunity to learn and share ideas. This week's topic was trusts. We discussed many of the uses for trusts in Louisiana estate planning. Some of the uses include:

• Testamentary Trusts. These are often used when parents have minor children and the parents don't want a court overseeing their children's inheritance, and the parents don't want their children's inheritance dumped in their children's inheritance when the children turn 18.
• Medicaid Living Trust. If you don't want your entire life savings depleted on long-term care, you should consider our Medicaid Irrevocable Trust. If you do it right, you'll maintain control over your assets, but you won't have to spend them before qualifying for Louisiana Long Term Care Medicaid. Avoids probate too!
• Children's Inheritance Trust. This valuable trust enables you to make your children's inheritance divorce-proof. Would you like to provide for your children AND THEN your grandchildren? No problem. If your children don't spend all of their inheritance before your children die, use our Children's Inheritance Trust to make sure that your grandchildren will inherit when your children die.
• Revocable Living Trust. A common probate avoidance tool. Put all your assets in your Revocable Living Trust, and when you die, your family will avoid the probate - or in Louisiana called the Succession.
• IRA Trust. Want your big IRA to go for your spouse? Sure you do. But what if your spouse then leaves it to people other than your children? Simple solution - name your IRA Trust as the beneficiary of your IRA. Your spouse can benefit after you die, but you control where the assets go when your spouse later dies. This may be one of the most important estate planning tools that is available to you - particularly if most of your wealth is tied up in a roll-over IRA.Watch out for income tax rules though!!!
• Irrevocable Life Insurance Trust. If you're not careful, your life insurance death proceeds will be subject to the federal estate tax. Would you like half of your life insurance to go to Uncle Sam? Of course not. Use the ILIT to exclude your life insurance from your taxable estate.

There are tons of other types of trust. In fact, I was working with a Florida attorney last week. We were working on the provisions of what is commonly referred to as a "Gun Trust."

Bottom line - find out how trusts can help you accomplish your estate planning objectives. If you want to know more, either send me an e-mail at paul@rabalaislaw.com (you'll be amazed at how quickly I respond to your questions) or you can even call my office toll-free at 866-491-3884. Until next post...

Paul Rabalais

2008 Louisiana Medicaid Eligibility Updates

I received the information about the revised 2008 numbers published in the Louisiana Medicaid Eligibility Manual. The new 2008 provisions provide that:

• The individual resource allowance for Long Term Care Medicaid remains at $2,000;
• The married couple resource allowance for Long Term Care Medicaid remains at $3,000;
• The Long Term Care Personal Care Needs Allowance remains at $38 per month;
• The Spouse's Maintenance Needs Allowance has been increased to $2,610 of income per month; and
• The Spousal Resource Standard has been increased to $104,400.

If you are a lay person trying to figure out all of the Medicaid Eligibility rules, you probably don't understand what all of these numbers mean. If you need any help trying to determine whether you or a loved one will qualify for Louisiana Long Term Care Medicaid based on your assets, income, or other circumstances, or better yet, if you don't qualify but want to figure out how to without depleting your life savings, just send me an e-mail at paul@rabalaislaw.com, or give me a call at my office at (225) 329-2450, and I'll see if I can help.

Paul Rabalais