How to provide home care for your spouse and still protect your money and assets.
If your spouse’s medical problems have reached the point of being too much to handle, home care is available and it can be fully paid for by New York Medicaid. The nice thing is that as a married couple you can retain the comfort and dignity of living in your own home, get the assistance you need there, and preserve the income and assets you’ve built together over a lifetime. The key to getting these benefits is proper planning, and this is where an Elder Law attorney can help.
Many people incorrectly believe that they will be ineligible for Medicaid benefits because of Medicaid’s five-year “look back.” In New York, however there are two kinds of Medicaid: Community Medicaid and Nursing Home Medicaid, and the rules regarding eligibility are different for each. In New York, there is no look back for Community Medicaid, which includes home care and assisted living. There are pitfalls and stumbling blocks to be overcome, which Lamson & Cutner’s Elder Law attorneys have highly effective ways to handle. Here’s how we do it.
The obstacles you face in getting home care for your spouse.
Home care is expensive and Medicaid only approves applications that meet strict criteria. Daily care of eight to twelve hours currently runs about $5,000 to $8,000 a month. Around-the-clock assistance increases to more than $10,000 a month.
The problem most couples have is ownership of a home and other assets, that exceeds the limit for Medicaid eligibility. With a married couple, when one spouse needs home care assistance, that spouse’s total assets cannot exceed $15,750 (2020 figure). Yet few couples living in New York could survive in these financial circumstances.
Many couples have homes that were purchased decades ago, and they have either paid off the mortgage or have substantial equity. They have some investments, and perhaps a 401K or pension plan. Most are also receiving monthly Social Security income.
It would seem impossible to become Medicaid eligible under these circumstances, yet it can be done. This is how a Lamson & Cutner lawyer can achieve that result for you.
A solution that protects both of you.
The following three-step plan can enable you to achieve Medicaid eligibility and protect your home, income, investments and other assets.
Step 1: Transfer all assets to the well spouse, who does not need assistance. Transfers to a spouse, or to a minor, blind or disabled child, are exempt from Medicaid penalties.
Step 2: While your spouse is receiving Medicaid home care, you maintain your spouse’s assets in your name, or in a protective trust. If your spouse’s health status suggests that he or she may eventually need to enter a nursing home, putting the assets in a Medicaid asset protection trust may facilitate subsequent planning, and will serve as an estate planning strategy as well.
Step 3: Excess income goes into a pooled income trust. This is a special type of trust, run by certain non-profit organizations, which functions almost like a bill paying service, and preserving your income for your own use. For example, let’s say you have Social Security income of $1,895 a month. The Medicaid income limit is $895. You simply write a check every month for the difference of $1,000 to your pooled income trust account, which has been set up specifically for you. The trust will pay your bills according to your instructions. There’s a small monthly administrative fee. When you pass on, whatever is left over in your account stays with the non-profit for charitable purposes. In this way the charity can continue to provide services to those in need.
You can learn more about these income and asset protection strategies in Lamson & Cutner’s new Special Report, 25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs. It’s free.
The benefits you both receive with this approach.
Your spouse will receive home care, fully paid for by Medicaid. Your home, income, investments and other assets you’ve accumulated together as a couple will be preserved, instead of being dissipated to pay the cost of care. This means you both can continue to maintain your lifestyle, and have your money available to use as needed.
Here’s an actual situation.
In a case involving a married couple, a man needed 24-hour care at home, which his wife was no longer able to handle. An Elder Law attorney from Lamson & Cutner protected his income with a pooled income trust, and the man transferred all of his assets to his wife. A Medicaid application was then filed for home care assistance, which was approved. L & C recently handled the client’s recertification. He continues to receive the around-the-clock care he needs, fully paid for by Medicaid. He and his wife have been able to comfortably maintain their way of life and their dignity.
Medicaid will also cover any of your spouse’s medical expenses that Medicare or other medical insurance doesn’t. Additionally, there’s a wide range of community programs that will become available, such as adult day care. All these costs and services will be paid for by Medicaid.
Yet another benefit is that if you ultimately need either home or nursing facility care, the planning steps will already have been taken to facilitate your own New York Medicaid eligibility. An asset protection trust arrangement will also put you in the strongest legal position to preserve the maximum amount of your cash and other assets possible. These can then be used to keep your lifestyle intact at home, or to make your stay in a nursing facility more pleasant. Any assets remaining after you have both passed on can be left to your children or heirs.
One Important Caveat
In cases involving Spousal Refusal, the “refusing” spouse needs to be aware that Medicaid has the right to seek reimbursement for the care and services it has provided to the spouse who needed care. This could be a large expense, but Spousal Refusal is still likely to be an effective strategy, for the following reasons. First, the reimbursement claim will be at Medicaid rates, not at the private pay rate that would otherwise have been incurred. Medicaid rates are typically significantly lower than private pay rates. Second, these reimbursement claims can usually be negotiated, and are often settled at an even lower amount.
The Medicaid system is complex, and the strategies people use to protect their assets need to be implemented correctly in order to work the way they should. This makes it even more important for you to be advised by a thorough and experienced Elder Law attorney you can trust.