An elder law attorney can devise a plan for a married couple to spend down their assets to qualify for long-term care Medicaid but still retain enough resources for the healthy spouse to remain in their home and cover their costs of living. Read: Spousal Impoverishment: Medicaid Spend-Down Rules for Married Couples
Cost of Elder Law Attorneys and Medicaid Planning. There isn’t a clear-cut answer as to the cost of hiring an elder care attorney for Medicaid planning purposes. Some Medicaid lawyers offer free consultations, while others charge an initial consultation fee or offer Medicaid planning conferences that range in cost from approximately $175 – $500.
In order to sell annuities, one must have a license to sell insurance, and in most cases, Medicaid attorneys are not also licensed insurance sales persons. In addition, Medicaid attorneys generally do not sell irrevocable funeral expense trusts. However, they can do so through a partnership with a licensed insurance sales agent.
Some Medicaid lawyers offer free consultations, while others charge an initial consultation fee or offer Medicaid planning conferences that range in cost from approximately $175 – $500. After the consultation / planning conference and gathering of the facts and needs, a price for services can be quoted.
A Medicaid Compliant Annuity is a single premium immediate annuity (SPIA) that contains zero cash value and provides income to the owner. Properly structured, this annuity functions as a spend-down tool that eliminates excess countable assets, allowing the nursing home resident to become eligible for Medicaid benefits.
It must be irrevocable--you cannot have the right to take the funds out of the annuity except through the monthly payments. You must receive back at least what you paid into the annuity during your actuarial life expectancy.
Annuities are assets often used by pension plans to secure the payment of benefits for eligible employees. But even a private annuity used by an individual is an asset.
Simply stated, a single large payment of money is made to an insurance company in exchange for an immediate monthly stream of income. The payments, which can be for a pre-determined period or for the life expectancy of the individual receiving the annuity (called the annuitant), start immediately upon the transaction.
If the insurer can expect to receive a 7 percent return on its $50,000, the monthly payout would rise to $449.96.
Annuities can help seniors build tax-deferred savings to handle retirement costs such as healthcare and living expenses. Immediate annuities tend to be the best annuities for seniors because they begin paying out within 12 months of purchase.
Similar to an IRA, it has some tax advantages, in that money invested in an annuity grows tax-deferred until you start receiving payments. But an annuity is an asset you can invest in, while an IRA is a tax-advantaged structure that you can use to invest in assets such as stocks, bonds, or ETFs.
A qualified annuity is a retirement savings plan that is funded with pre-tax dollars. A non-qualified annuity is funded with post-tax dollars. To be clear, the terminology comes from the Internal Revenue Service (IRS).
An annuity is a long-term investment that is issued by an insurance company and is designed to help protect you from the risk of outliving your income. Through annuitization, your purchase payments (what you contribute) are converted into periodic payments that can last for life.
You do not owe income taxes on your annuity until you withdraw money or begin receiving payments. Upon a withdrawal, the money will be taxed as income if you purchased the annuity with pre-tax funds. If you purchased the annuity with post-tax funds, you would only pay tax on the earnings.
The term irrevocable refers to a decision or contract that cannot be changed or amended. This term is important in the world of annuities because certain annuities—particularly in years past—involved financial decisions that are binding for long periods of time.
The term “actuarially sound” means that the owner of the annuity will receive their investment back within their Medicaid life expectancy. The life expectancy is determined by using either the state's specific life tables or the life tables published by the Chief Actuary of the Social Security Administration.
A fixed annuity is an insurance product, not a security, because the insurance company must credit the annuity holder's account with the specified interest rate for the contractually-stipulated time period, regardless of market fluctuations in actual interest rates.
Regulation. Variable annuities are securities registered with the Securities and Exchange Commission (SEC), and sales of variable insurance products are regulated by the SEC and FINRA.
Indexed annuities are not securities and do not earn interest based on specific investments. Rather, indexed annuity rates fluctuate in relation to a specific index, such as the S&P 500. In contrast to variable annuities, indexed annuities are guaranteed not to lose money.
A deferred annuity is a contract with an insurance company that promises to pay the owner a regular income, or a lump sum, at some future date. Investors often use deferred annuities to supplement their other retirement income, such as Social Security.
Seventh: The attorney will represent the client (s) before the Medicaid agency. Many Medicaid workers give clients and families wrong information. We see many mistakes that are not to the client’s benefit. For example, the agency will lose an application and tell the client to re-file with the result of loss of months of coverage. Your attorney will not allow that to happen.
How can the attorney help? He can often avoid the cost and delay of probate court entirely by having the resident knowingly sign a power of attorney.
Spend down means that the applicant has only $2,000 at the time of application. If an average suburban married couple follows the advice of most nursing homes they may spend over $100,000 at the nursing home before applying for Medicaid. The attorney should be able to help an average couple to save that $100,000.
We might note that there are two ways attorneys charge for applications: 1) attorney asks for a retainer and bills hourly against the retainer; 2) a flat fee. Most clients prefer the latter since they know the fixed cost and the fee will be part of “spend down.”.
A Medicaid application will be rejected without “documentation” of the current cash value of the asset. It can take four weeks to get the needed paperwork. When children help elderly parents, finding or recovering the documentation can be challenging and time consuming.
First: Here’s a surprise that many families run into: they cannot complete the Medicaid application process without the expense and delay of going to the probate court. Let’s say the resident is a husband who has an IRA and a truck in his name alone. The wife or children cannot access the IRA or sell the truck. They are often directed to the probate court to be appointed his guardian so they can get the cash out the assets for Medicaid “spend down.”
And a bonus, Eighth: The attorney should prevent the applicant/resident from being transferred out of a good nursing home, where he got post-hospital rehab, to a poor one that always has beds open because nobody wants to be there. We have prevented many such transfers and our clients stay at the good nursing home.
4. To take care of necessities. An attorney is required to handle certain legal documents that may come along with a Medicaid Compliant Annuity, such as securing estate plans, drafting a Power of Attorney, and setting up a Trust.
2. To have peace of mind.
Not to mention, attorneys may be required for certain parts of the process. 1. To benefit your client. Working with an elder law attorney shows your clients that you’re knowledgeable in the industry and understand the importance of including a legal professional. It expresses that you have their best interest in mind.
Elder law attorneys are required to stay up to date with any recent legislative changes regarding MCAs or Medicaid in general, which is crucial information that they can then pass along to you and your clients.
Although some insurance agents take care of Medicaid applications on their own, having an attorney involved ensures all bases are covered from a legal perspective. This is especially important when dealing with the intricacies of a Medicaid Compliant Annuity. 3. To get access to the latest information.
Not to mention, attorneys may be required for certain parts of the process.
Many, perhaps most are rejected because of inadequate documentation, unreported assets, incomplete spend down or gifting of assets within 5 years of application.
When your application is denied you have to start over. That’s why the nursing home is on your back about paying the next month in advance, or going to probate court, or getting Medicaid application in fast as possible.
It takes many families three months to get a good application in. It goes like this. The first one is filed. Four weeks later the Medicaid worker contacts you by mail, delivered to the nursing home. You find it in the drawer next to the bed. You happened to find it, nobody told you it came last week. (Sometimes it is not this quick, because the Medicaid Department has been losing applications!) The worker asks for more information. It might be about life insurance policies, or other “unknown” assets. It takes you two weeks to get the information. A week later the worker says “not good enough.” She denies the application and you have to re-file.
When we file an application it is complete. We can often get Medicaid coverage the next month. If we cannot cover the next month’s bill through the application, then we go for PEME (pre-eligibility medical expense). We do not have our clients pay the nursing home in advance. We save that money for Mom or the family.
Can every nursing home Medicaid applicant benefit by having a lawyer handle the application? No. An applicant who has no property but a small savings account would have a simple application and the spend down might be complete merely through purchasing a complete funeral plan. One consultation with a lawyer may be enough for you to confidently file the application. This too is a service we gladly provide.
The nursing home may tell you Dad needs a guardian, so you have to go to probate court. Then the probate court would tell you how to spend the money. (A good part would go to lawyer’s fees and court expenses.)
You can expect that nobody at Department of Health and Human Services, the Medicaid department, will answer your questions. They are not there to answer questions. There job is to review your application and accept it or deny it. When your application is denied you have to start over.
1640.0609.03. Transfers to Annuities on or After 11-1-2007. Annuity purchase is considered a transfer of assets for less than FMV unless all the following requirements are met:
The Medicaid-compliant annuity is a tool to remove excess resources which would make a person unqualified for Medicaid by converting cash assets into a monthly income stream. While plenty of companies offer immediate annuities, not just any immediate annuity will work, for Medicaid-qualification purposes, ...
a single premium immediate annuity (a/k/a SPIA) without deferral (and no balloon payments). the annuity contract must make a payment within 1 year in order to be considered “immediate”. payments must be made in equal amounts (principal and interest),
So if you have a tax-deferred annuity and want to convert it to an immediate annuity, make sure company is familiar with DRA Medicaid Compliant Annuity standards discussed above. Because if any of the Medicaid-compliant standards are missing, the annuity will count as an asset and likely result in Medicaid disqualification.
Community spouse annuities that are revocable or assignable will count as an asset, in the same manner as the applicant’s annuity would count as described above. Annuities purchased by community spouse after approval of LTC Medicaid for applicant spouse are not evaluated for transfer of asset provisions.
The annuity must be actuarially sound (this means that the annuity must return the individual’s premium investment within the same individual’s life expectancy as set forth in Medicaid tables). So the structure is for a term at least slightly less than the Medicaid recipient’s life expectancy.
Can refer to Appendix A-34 when evaluating annuities. DCF will send form CF-ES 2355 to the annuity issuer.
Elder law attorneys help seniors or their family caregivers with legal issues and planning related to aging. Elder law attorneys often assist with tax planning, disability planning, probate and administration of an estate, nursing home placement and many other legal issues. Most elder law attorneys also have professional relationships with social workers, geriatric care managers and other professionals who can assist with additional needs associated with aging.
Before you hire an elder law attorney, the National Academy of Elder Law Attorneys (NAELA) recommends first making sure you’re facing a legal matter that requires an elder law attorney’s expertise. If you’re unsure, consult your financial advisor, estate planning attorney or other legal professionals who can help you decide whether you may benefit from hiring an elder law attorney.
A Certified Elder Law Attorney must meet licensing and other requirements, including specific experience in elder law matters and continuing education in elder law. However, if an elder law attorney doesn’t have the CELA certification, they may still be just as experienced or skilled as a Certified Elder Law Attorney.
Elder law attorneys speciali ze in working with seniors or caregivers of aging family members on legal matters that older adults face as they age. Some elder law attorneys have the designation of Certified Elder Law Attorney (CELA), a certification issued by the National Elder Law Foundation.
Before hiring an elder law attorney, ask about—and make sure you understand—the fee for the first meeting and subsequent meetings and legal services. Ask about the attorney’s areas of expertise and specialization and whether the attorney is board-certified in elder and special needs law. Also ask if the elder law attorney has any warnings, reprimands, disbarments or sanctions against them in your state or other states.
Probate of wills and decedent’s estate administration: $250 to $350 an hour, although the rate would be less—$100 to $150 an hour—if the work is performed by paralegals with attorney supervision
For conventional estate planning documents alone, the fee could range from a few hundred dollars to a few thousand dollars, depending on the complexity of the estate, says Johns.
A good lawyer will devise a personalized Medicaid planning strategy that enables an applicant to retain as much of their wealth as possible for current and future needs while ensuring they will qualify for the long-term care services they require.
In some instances, a personal care agreement is a great way for a senior to compensate their family caregiver (s) while legally spending down to meet Medicaid asset and income limits. The ways in which bank accounts and even real estate are titled can help or hurt an applicant’s Medicaid eligibility as well. Attorneys are well-versed in these and many other legal, medical and financial factors that determine if and when a senior’s application is approved.
Elder law attorneys specialize in helping older adults with long-term care planning, estate planning and government benefits. Those with experience in Medicaid planning understand each state’s rules and regulations and help families by identifying comprehensive strategies to legally obtain and maintain eligibility for public benefits.
A Medicaid lawyer will take all aspects of a senior’s personal and financial situation into consideration to determine when they should apply and whether additional steps must be taken to avoid disqualification for benefits.
Applying too early may result in a penalty and a longer period of ineligibility than normal. Sometimes waiting until an applicant is sure they’re eligible is the best (and most affordable) course of action. On the other hand, filing an application too late means that an elder and their family would miss out on months of long-term care Medicaid coverage while awaiting a determination. Finding the right time to apply can be very tricky and is different for each person. Failing to time things correctly can be a costly mistake.
The truth is that Medicaid planning is not a do-it-yourself project, and applying for Medicaid long-term care is seldom, if ever, easy. Most people understand the questions on a Medicaid application and how to answer them. However, applicants may not understand the impact of these questions or what the state is really trying to find out by asking them.
It may also be possible for an applicant to reorganize their assets and income in ways that help them continue living in the community for as long as possible but also ensure they will qualify for long-term care Medicaid when they need it. Applicants can retain ownership of certain types and amounts of assets while still maintaining their eligibility for benefits.
MAPTs help Medicaid applicants qualify within Medicaid’s stringent asset limits. This type of trust needs to be carefully planned for by an Elder Law Medicaid Attorney to make sure that the transfer of assets into the MAPT doesn ’t delay or hurt the applicant’s ability to qualify for long-term care benefits in the future.
There are Medicaid Planning techniques that an Elder Law Medicaid Attorney uses to lower a person’s countable income or assets to meet the financial eligibility requirements. Medicaid Attorneys help applicants identify and implement the proper strategy based on the applicant’s unique situation so that Medicaid will pay for long-term care without the applicant having to lose their life savings or home in the process.
A Medicaid Attorney helps you plan for incapacity with documents like Financial Power of Attorney, Medical Power of Attorney, and Living Will so that designated family members can manage the finances and care of their loved one receiving long-term care.
In Michigan, the average cost of long-term care is $108,000 per year. This is roughly $8,000-$9,000 per month.
An Emergency Medicaid Crisis occurs if your family member is in a nursing home, or will need to be soon, but doesn’t have the financial resources to pay for care. A Medicaid Attorney can help you structure your assets and quickly apply for benefits so you can get the care you need – ASAP.
In these cases, qualifying for Medicaid quickly is incredibly important so you don’t lose your life savings or home just to pay for nursing home care in an emergency. This is commonly referred to as a Medicaid crisis.
The initial consultation gives you the opportunity to help you understand your current Medicaid eligibility. It also gives us a better understanding of how we can help you plan to protect your home and life savings from nursing home costs while getting you the benefits you need to pay for care.
Babalou, Yes they worked to provide what they could for us. They are very reluctant to go to a nursing home. Of course it may change down the road. My mom just got out of a stint from a hospital stay/rehab facility that lasted over 4 months. My dad had a hip fracture in Dec.
Can changes my Dad made to his estate plan be invalidated if it's proven he was mentally ill?
A lending institution is requiring over 1000% more collateral to operate my step-father's farm and he's in a care center. Is this legal?