Safe Aging Now

10/27/2011 @ 10:38:AM By Moynihan_Lyons

Join Maureen Lyon for an informative seminar at Olive Grove Retirement Resort in Riverside,  CA.  She will be discussing the 3 components of Strategic Planning for Safe Aging.

Does your estate plan “really” address your needs when it comes to health, finance and autonomy?  Learning how a strategic plan using custom drafted trusts and powers of attorney can make a real differnce in the quality of your senior years.  Learn, too, about qualifying for the VA Aid and Attendance Benefit and other government benefits.

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Medi-Cal Planning – Part 3

10/25/2010 @ 2:48:PM By Maureen Lyons

Medi-Cal (or Medicaid) “crisis planning” can be precipitated in the case of a senior who has either been admitted to a nursing home or is about to be placed in a nursing home — while being told that they have too much in assets to qualify for the program.

Given the high expense of  nursing homes, (upwards of $70,000 per year) many people look for ways to defray the costs of  long term care through Medi-Cal.  Through proper crisis planning, a senior’s hard earned savings may be protected from Medi-Cal.

There’s a lot of misinformation circulating out there. It is important that you consult with a qualified elder law attorney who is familiar with the Medi-Cal process.

There are strategic approaches that can help. While transfers either outright to a family member or to an irrevocable trust can create a penalty period for the person making the gift, sometimes a planned strategy involving gifting and the use of an annuity can provide a valuable planning tool.

For example, assume Mr. Jones suffers a stroke and ends up in a nursing home, and his cost of care exceeds the couple’s existing monthly income. However, the their total assets may be over the state’s allowable limit for a married couple.

One approach is to purchase an annuity, thereby converting excess assets into an income stream. This may enable Mr. Jones to qualify for Medi-Cal. In addition, the annuity can provide Mrs. Jones with extra income to supplement the loss of her husband’s income (which must be paid to the care facility).

For a single person in crisis planning, a plan of partial gifting plus the purchase of an annuity may also be appropriate. It should be noted, however, that any time a Medi-Cal applicant makes a gift, whether it is to a person or a trust, there can be a corresponding “penalty” or waiting period based on the size of the gift. The larger the gift, the longer a Medi-Cal applicant may have to wait to obtain eligibility.

The above examples should not be attempted without consulting a qualified elder law attorney. These are just used as illustrations to demonstrate how a legal advisor can help a senior fund long-term care requirements.

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Medi-Cal Planning – Part 2

10/18/2010 @ 1:16:PM By Moynihan_Lyons

Medi-cal (called Medicaid in states other than California) planning can be divided into two types based on urgency: pre-planning and crisis planning. Pre-planning is for those individuals who have not yet begun to spend their assets on private care, but may need to in the coming years.

Crisis planning is for those individuals using their life savings for long-term care (either at home or in a facility) with a substantial risk that they will run out of money.

In pre-planning cases, life insurance can provide tremendous planning benefits when implemented correctly. The purchase of a single premium life insurance policy by an irrevocable trust, or subsequent transfer to such a trust, will not only replace a couple’s net worth, but will also protect the cash value of that policy from Medicaid.

Alternatively, if not owned by an irrevocable trust, the cash value of any life insurance policy will count against the amount of assets a person can keep and still qualify for Medicaid.

For example, assume Mr. and Mrs. Jones, both age 65 and in good health, have $450,000 of assets. At their age, a single premium of $100,000 would buy a death benefit of nearly $450,000. If an irrevocable trust owns the policy and neither Mr. or Mrs. Jones have access to the trust assets, after a certain period (most likely 5 years), their entire net worth would be protected from Medicaid, and Mr. and Mrs. Jones would still have $350,000 left to live on. Mr. and Mrs. Jones could transfer more assets to the irrevocable trust, if they desire. In fact, if the couple also purchased a five-yearlong-term care policy (or a life insurance policy with a long=-term care rider), they could protect all of their assets from Medicaid, even with a 5 year look-back period.

For those who choose to plan early, the use of an irrevocable trust combined with life insurance and /or long-term care insurance can provide optimum asset protection for an aging client.

It should be noted that when gifting is used as a planning strategy, the person receiving the gift will often need investment and tax advice regarding the best way to manage the money they receive.

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Medi-Cal Planning – Part 1

10/12/2010 @ 5:39:PM By Maureen Lyons

In previous posts, we discussed the importance of proper disability planning for seniors. This post addresses a related and often misunderstood topic, Medi-Cal planning. (It’s also known as Medicaid in other states.)

Medi-Cal is a federal government program that provides financial assistance to persons age 65 and over, or those under 65 who are disabled and who are in need of substantial medical assistance. It is a needs-based program. A person must have a medical need for assistance and must be of limited financial means before he or she may qualify.

With the rising costs of long-term care, many people cannot afford to pay privately for home health care, assisted living, or nursing home care.

According to the U.S. Department of Health and Human Services, the average costs of care in the United States (in 2009) are:

  • $198/day for a semi-private room in a nursing home
  • $219/day for a private room in a nursing home
  • $3,131/month for care in an Assisted Living Facility (for a one-bedroom unit)
  • $21/hour for a Home Health Aide
  • $19/hour for a Homemaker services
  • $67/day for care in an Adult Day Health Care Center

The care costs for the state of California can be found here.

What is Medicaid/Medi-Cal planning?

The term “Medicaid planning” involves either spending down or otherwise protecting a person’s assets so that he or she has minimal assets and can meet the financial criteria for Medicaid qualification. Although based on federal law, Medicaid rules are different from state to state, and even county to county. It is therefore advisable to consult with a legal expert who specializes in Medicaid.

Furthermore, the transfer of assets, purchase of financial products, or otherwise disposing of assets has tax implications for a transferor as well as the recipient, necessitating the advice of someone who has tax law expertise. A financial advisor can also help seniors choose the correct financial products as part of an overall Medicaid planning strategy.

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Posted Under: Life Care Planning, Medi-Cal Benefits
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Medi-Cal Planning for Long Term Care

9/6/2010 @ 2:19:PM By Maureen Lyons

In previous posts I discussed how long term care needs of seniors can be met through self (or third-party) insurance. But what if these are not possible options?

A senior can use a planning technique called a “Medicaid” trust. (Here in California, it’s called “Medi-Cal” trust). This is part of a comprehensive wealth planning process that your legal advisor can help you with.

In this kind of trust, the trust maker retains the right to all of the trust income for life. However, the senior will irrevocably give up the right to receive or benefit from the principal of the trust. By using this type of trust, a senior can preserve capital and still qualify for Medi-Cal. This will happen only after expiration of the “look-back period” for the transfer of the trust.

This means that if assets have been transferred or given away during the period before applying for Medi-Cal, coverage can be denied. This period can be as much as 5 years.

There is a specific method to calculating this “penalty period” depending on your state’s provisions. Your legal advisor can give your the specifics of this calculation. The variables that will affect the time period are: (a) nursing home cost in your state, and (b) the dollar amount of the transfer.

What are the implications of this “look back period” in terms of the senior’s need for long term care?

For the trust strategy to work, there must be sufficient funds to pay for the long term care needs of the individual during the waiting period before applying for Medi-Cal. This can be met through insurance, an income stream, or other assets.

If a Medi-Cal trust is not desired, it is still possible to make “outright” gifts of property, wait until the look-back period expires, and then apply for coverage.

If the home is the senior’s only asset, there are still certain techniques to protect the property in the context of Medi-Cal eligibility.

What is important to note is that with any of the “advanced” planning strategies available, the senior must have sufficient funds to cover  long term care costs during this ‘look back”  time segment.

Its critically important that seniors consult with a qualified attorney, even when they think that they are engaging in “simple Medi-cal planning.

Long term care strategy, and specifically Medi-Cal planning is a highly specialized field. Laws are constantly changing, and there are a lot of myths and anecdotal “advice” circulating out there that can lead you down the wrong path.

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Posted Under: Care Coordination, Comprehensive Estate Planning, Estate Planning, Life Care Planning, Medi-Cal Benefits
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