Attorney Mark D. Munson, CELA* Shepherd Elder Law Group, LLC

August 9, 2018

PROTECT YOUR ASSETS: Long-Term Care and

Medicaid Planning

Hutchinson | Overland Park

www.ShepherdElderLaw.com

* Distinguished as a Certified Elder Law Attorney by the National Elder

Law Foundation, as accredited by the American Bar Association.

Asset Protection Planning

 Tax Planning

 Insurance Planning

 Limited Liability Entities

 Risk Management Planning

 Medicaid Eligibility Planning

Medicaid Eligibility

Planning

 What is Medicaid Eligibility?

 What is Medicaid Eligibility Planning?

Medicaid Eligibility

SINGLE PERSON

 Eligibility Criteria

• U.S. Citizen

• Elderly (age 65 or older), blind, or disabled

• $2,000 or less in assets

• Income less than the cost of care

SINGLE PERSON

 Asset Exemptions • Home up to $572,000 (if intent is to return)

• Automobile

• Personal property

Medicaid Eligibility

SINGLE PERSON

 Asset Exemptions (continued) • Pre-paid funeral arrangements ($1,500 burial

fund; $4,500 irrevocable trust account; up to

$7,000 of irrevocable funeral plans and burial

insurance for funeral services (with unlimited

value for caskets, vaults, spaces, etc.)

• Life insurance with no potential cash surrender

value (i.e., term, group, Veterans, etc.) and life

insurance up to $1,500 face value

Medicaid Eligibility

SINGLE PERSON

 Income Exemption

NONE

This means all income must go

toward long-term care

(except $62 monthly for personal needs allowance).

Medicaid Eligibility

Medicaid Eligibility

MARRIED COUPLE

 Eligibility Criteria

• For the spouse in need of long-term care, the asset

allowance and exemptions are the same as a single

person.

• The “Community Spouse” is allowed to keep

additional assets and may be entitled to income

from the spouse who needs long-term care.

COMMUNITY SPOUSE

 Asset Exemptions

• Home (unlimited value)

• Automobile (unlimited value)

• Retirement accounts belonging to the CS

(i.e., IRAs, 401(k)s, etc.) (KS only)

Medicaid Eligibility

• In addition to the asset exemptions, the

“Community Spouse” is allowed to keep $0

to $123,600 in non-exempt marital assets,

depending on the amount of the couple’s

non-exempt marital assets.

COMMUNITY SPOUSE

 Resource (or Asset) Allowance

Medicaid Eligibility

If a couple’s combined non-exempt

assets are:

Community Spouse

may keep:

$0 - $24,720 ALL

$24,721 - $49,440 $24,720

$49,440 - $247,200 HALF of the combined assets

Over $247,200 $123,600

COMMUNITY SPOUSE

 Resource Allowance

Medicaid Eligibility

What are Examples of

Non-Exempt Marital Assets?

 Checking Accounts

 Savings Accounts

 Certificates of Deposit

 Stocks

 Bonds

 Mutual Funds

 U.S. Savings Bonds

 Non-Homestead Real

Estate

 Mineral, gas, and oil

interests

 Life Insurance with Cash Value

 Non-Qualified Annuities

 Nursing Home Spouse’s

Retirement Benefits (IRAs,

401(k)s, etc.)

 Non-Retirement Investment Accts

 Inheritances

 Gifts from Family and Relatives

 Cash on hand

The remaining balance of $100,000 must be spent

down before medical assistance will begin paying for

spouse’s long-term care costs.

COMMUNITY SPOUSE

 Potential Problem

Non-Exempt Marital Assets = $200,000

Community Spouse Resource Allowance = ($100,000)

Remaining Balance = $100,000

• The Community Spouse is entitled to have up

to $2,030.00 of monthly income. To get to this

level, income of the “nursing home spouse”

can be given to the Community Spouse.

COMMUNITY SPOUSE

 Income Allowance

EXAMPLE

John and Jane Doe are married. John is in the nursing home

and has a monthly income of $1,000. Jane is still at home and

has a monthly income of $800. Jane can have John’s entire

monthly income of $1,000 given to her because $1,800

(John’s monthly income of $1,000 plus Jane’s monthly

income of $800) is less than $2,030.00.

COMMUNITY SPOUSE

 Income Allowance

EXAMPLE (continued)

If John’s monthly income was $2,000 per month, only

$1,230 could be given to Jane, and John would have to

pay $708 toward his care at the nursing home. John is

allowed to keep $62 per month as his personal needs

allowance.

COMMUNITY SPOUSE

 Income Allowance

Medicaid Eligibility

Any Questions?

Medicaid Eligibility

PLANNING

Planning for Incapacity

 Durable Power of Attorney

• For property and financial decisions

 Power of Attorney for Health Care

• For health and medical decisions

• HIPAA

 Power to create trusts and make gifts

 Power to fund trusts and transfer assets

 Power to deal with retirement benefits -

401(k)s, IRAs, etc.

Powers to be Included in your

Durable Power of Attorney

 Need to make sure that medical assistance

eligibility planning can be accomplished if

you are incapacitated.

Powers to be Included in your

Durable Power of Attorney

The number one goal and objective in any asset

protection planning engagement involving Medicaid

should be to protect the assets of the original

owner(s) so that assets are available if needed and

protected if not needed.

Number One Asset Protection

Planning Goal and Objective

How Do I Protect My Assets?

 The key to asset protection planning is

getting assets out of your name so that you

no longer have legal ownership over those

assets so that they are not available to you.

How Do I Protect My Assets?

 If your assets are available to you, they

must be used on your care, including long-

term care costs.

 The only way to get assets out of your

name is to give them away by making

gifts. A gift is a transfer of assets where

you do not receive anything in return.

How Do I Get Assets

Out of My Name?

Considerations When

Gifting Assets

 Five–year look-back period.

 Determination of penalty period. (Calculated by dividing the value of gifts within the

last five years by the average daily private pay

nursing home cost in Kansas, which is currently

$197.88) ($160.73 in Missouri)

Considerations When

Gifting Assets

 Delayed penalty period start date

(The need for asset protection after a gift has been made is now far more important than ever before.)

Delayed Penalty Period

Start Date

 In the event a gift or gifts is/are made within

the five-year look-back period, the penalty

period for the gift(s) will not start until all four

of the following conditions are met and

satisfied:

Delayed Penalty Period

Start Date

 The Medicaid applicant is in the nursing home;

 An application for Medicaid is filed;

 The Medicaid applicant’s income is less than the cost

of care; and

 The Medicaid applicant’s non-exempt assets/resources

are less than $2,000.

EXAMPLE

Four years ago, Jane Doe gave away (gifted)

$60,000 to her children. Jane has a 303 day

penalty period ($60,000 / 197.88 = 303) and is

now in a Kansas nursing home. She has applied

for medical assistance, her income is less than the

cost of care, and she has $20,000 in

assets/resources remaining.

EXAMPLE (continued)

Jane’s 303 day penalty period will not start until

the $20,000 she has in assets is spent down to

$2,000 or less.

In order to get Jane through the 303 day penalty

period, it is likely that the beneficiary or

beneficiaries of Jane’s $60,000 gift will have to

give that money back to Jane so she can pay for

her nursing home care.

EXAMPLE (continued)