Nursing home care is extremely expensive. When a person’s health requires constant and skilled medical care, a nursing home arrangement may be the best option. Generally, seniors do not have the resources to pay for this costly medical care. And even if the senior has accumulated a great amount of assets over their lifetime, long-term medical care can quickly chew away at their hard earned resources. Medicaid benefits are a good resource to help cover the cost of this expensive but necessary medical care.
Medicaid planning is an important consideration for individuals and families. Children do not want to see their parents’ hard earned assets be quickly dissolved due to exorbitant medical care costs. Similarly, individuals wish to protect their accumulated savings and assets from being wiped out should they need to receive long term medical care. Desiring to pass on an inheritance to their family, Medicaid planning with Charlottesville Medicaid planning attorneys is a very valuable tool.
Some fundamental laws currently in effect provide that in order to be eligible for Medicaid coverage while in a nursing home facility, an individual can have no more than $14,400 in countable resources. In certain circumstances, some assets may be exempt from this calculation including one’s home and retirement accounts.
In assessing whether someone meets the requirements for Medicaid eligibility, the law assesses a “look back” period. Generally, there is a five-year period which immediately precedes the individual’s application for Medicaid benefits. Certain gifts made, trusts established, and money placed into trusts can be subject to the look-back rules. Accordingly, those amounts may be considered when determining an individual’s eligibility for Medicaid.
Medicaid planning and the proper use of trusts is extremely complex. It is important that you use a skilled and experienced elder law attorney who can provide advice about the current laws affecting Medicaid planning. Improper planning or inadequate legal advice can result in you or your loved one being denied Medicaid because of simple and avoidable mistakes.
For example, the types of trusts and timing of gifts is very important. Gifts to irrevocable trusts are treated the same as regular gifts when determining a person’s Medicaid eligibility and are thus subject to the same look-back rules. However, a properly drafted and irrevocable trust can allow the trust assets to be excluded from the person’s resources once the five-year look-back period expires.
Adding to the complexity of Medicaid planning is the fact that it is viewed uniquely within the Internal Revenue tax code. Where the IRS contains an annual gift-giving exclusion, Medicaid eligibility does not. Even if the gift is tax free under the IRS, if it is made during the five-year look-back period, it may still be penalized under the Medicaid eligibility rules.
Medicaid eligibility carries a presumption that gifts were made for the purpose of qualifying for Medicaid benefits. To rebut this presumption, an individual must show that the gifts were made for other appropriate reasons such as general estate planning purposes. This may be established by showing the gift is a continuation of an earlier established pattern and that it was not made simply to meet the Medicaid eligibility requirements.
For these reasons, Medicaid planning involves many moving parts. There are a slew of other considerations and applicable regulations. Medicaid planning requires a thorough knowledge of elder law, tax law, estate planning law, and an understanding of the practical implications of every single step. To ensure you or your loved one is able to receive Medicaid benefits if needed, you should consult with an experienced Virginia elder law attorney. Contact the Charlottesville Medicaid planning attorneys at MartinWren, P.C. at (434) 817-3100 to discuss your desires or concerns. Let us use our years of experience and insight to help ensure you or your loved one is able to receive the proper care and benefits.