BY ANTHONY J. ENEA
- Anthony J. Enea
The following are the most common and financially devastating misconceptions:
1. It”™s too late to do anything. This misconception is particularly devastating in cases where an unmarried person is already in a nursing home for long-term care or will be shortly. While the individual and his or her family may know of the existence of the five-year look back (period of disqualification for nursing home Medicaid) for assets gifted (with some exceptions), they may be unaware that they can engage in what is commonly referred to as a Medicaid crisis plan.
If properly constructed and implemented, a Medicaid crisis plan can protect approximately 40 to 50 percent of the assets of the individual already admitted or being admitted to a nursing home for long-term care. Without its implementation, one would be required to spend down his or her (non-IRA/retirement) savings until he or she has $14,850 or less in available resources. This can be financially disastrous for someone who has managed to save any money during his or her lifetime.
2. Transfer-of-asset rules apply to community Medicaid. One of the distinct advantages of engaging in Medicaid asset protection planning in New York is that while a nonexempt transfer of assets will create the five-year look back period for nursing home Medicaid, it will not, under current law, have any impact on one”™s eligibility for Medicaid home care (community Medicaid).
Thus, hypothetically one could transfer all of his or her savings and still be eligible for Medicaid home care the first of the month after the transfer, assuming one needs assistance with activities of daily living and complies with the rules regarding one”™s income (which can also be protected with a pooled community trust).
3. Assets funded in a revocable living trust are protected for Medicaid purposes. The assets used to fund a revocable living trust are counted as available resources for Medicaid eligibility purposes, and Medicaid will be able to place a lien/claim against said assets/resources during your lifetime for the value of the services provided. The only advantage for Medicaid planning purposes of a revocable living trust occurs once the creators of the trust are deceased. Upon their death, the trust becomes irrevocable and thus no longer subject to the imposition of any claims or liens by Medicaid.
4. IRA/retirement assets are countable and available resources for Medicaid eligibility. IRA/retirement assets, irrespective of their amount, are not counted as an available resource for Medicaid eligibility purposes so long as the applicant for Medicaid is receiving their required minimum distribution. Even if one has thousands or millions of dollars in IRA/retirement assets, he or she could be eligible for Medicaid nursing home or Medicaid home care. Only the minimum required distribution would be considered as countable income to the applicant.
It is important if one has an IRA/retirement account to ensure that said account has named beneficiaries/alternate beneficiaries, and that one”™s estate is not named as a potential beneficiary or becomes the beneficiary by default. If one”™s estate is the beneficiary of the IRA/retirement, then Medicaid would have a lien/claim against the amount paid to the estate for the value of the services it provided.
I am hopeful the above will help resolve some of the common misconceptions about elder law planning that have resulted in the unnecessary loss of assets to many.
Anthony J. Enea is the managing member of Enea, Scanlan & Sirignano LLP, with offices in White Plains and Somers. He can be reached at 914-948-1500 or A.Enea@esslawfirm.com.
