Medicaid Changed the Rules Again? What Does the 5-year Look-Back Mean?

You may have heard that a new Indiana law was implemented in November, 2009, and you may be wondering if the changes have made it impossible to pre-plan for possible nursing home care. Rest easy, because we’ve been working on this for years, and there are many planning strategies available to save your hard-earned assets from catastrophic loss due to nursing home admission.

We’re taking calls every day from concerned clients and hearing questions like, “Now I have to wait 5 years to get Medicaid, right?” The simple answer is, “it depends”.

DRA (Deficit Reduction Act) was put in place last year (in Indiana) and made some major changes to the processing of Medicaid applications. DRA also changed the way we plan for Medicaid. Fortunately, we had plenty of notice prior to this law taking effect, and have been safeguarding our clients’ assets against the new rules for some time now.

Trying to understand the Medicaid rules can make your head spin! For example: One of the new rules is that the “look-back” period has been extended from 3 years to 5 years. This does not necessarily mean that you will wait 5 years to obtain benefits. The look-back period is determined by starting with the “look-back date”, which is simply defined as the date on which 2 things are true . . . first, you or your spouse are a resident of a long term care facility, and second, you have filed a Medicaid application. When both are true, you have established a look-back date. Now, go back in time 5 years from that date (but stop if you get to November 1, 2006 whether it is 5 years or shorter). This is your “look-back period”. If you transferred any assets and did not receive anything in return for that transfer, during the look-back period, the transfer is subject to a penalty and may disqualify you for benefits for a certain period of time.

But don’t give up there, because there are “cures”, and “partial cures” . . . and many other strategies for planning that can save you thousands of dollars! It’s a complex series of rules . . . and you shouldn’t be expected to wade through these waters alone.

That’s why you should consult with an expert whose job is to understand the rules and figure out the best planning strategies for you and your family.

Hunter Law Office, PC helps families protect their assets against loss from the unforeseen (and foreseen) events in life that inevitably take us off course. We are unique in that our practice is focused on each individual client . . . we design a plan around you and your family . . . because that’s what Estate Planning is supposed to be!

Will Your Parents’ Poor Planning Cost You? Are You the Next Sandwich Generation victim?

Do you know anything about your parents’ estate plans? Most of us assume our parents have taken care of these matters, but do you really know? Have their Wills been updated since you were a kid? Do they have a trust? Is it funded? Have they taken any steps to protect their assets in the event of catastrophic illness? Do they have Long Term Care Insurance, or are they counting on you to support them when the money runs out?

Many of us are so busy with work, home, family, kids, etc., etc., that we don’t really take the time to talk to our aging parents about their situation. But if you did take the time, you might be surprised. I see clients every day who say, “I have a Will, so everything will be fine”, only to discover that the Will was written 20 or 30 or more years ago, and has never been updated. I’ve even seen Wills that name guardians for “children” who are now in their 50’s and 60’s.

Don’t assume that because your parents have a Trust, all will be well. Many trusts are insufficient when it comes to protecting the family nest egg. While there are a multitude of different types of trusts, the most popular are Revocable Living Trusts, which are designed to avoid probate. These trusts offer NO PROTECTION against the losses that can occur during life. Planning for death is important, but planning for LIFE is vital.

In today’s environment of spiraling health care costs, and the increased likelihood of time spent in a nursing facility, poor planning can end up costing your parents’ life savings, your inheritance, or even your life savings . . . risking your children’s future. Approximately 1 in 2 Americans over the age of 65 will spend time in a nursing facility. The monthly cost of this care will be between $4,500 and $8,000 (or more), and the cost will not be going down over time! Can your parents afford it? Is their income sufficient? How long would it take to spend their entire life savings at this extraordinary rate of spending: a year, two years, maybe five years? Then what happens?? Will you be responsible for paying the bill?

If you find yourself in the “Sandwich Generation” – caring for aging parents at the same time you are raising your own family – life can become very complicated. Imagine how much more difficult it will become when your parents’ nest egg is depleted by the costs of care.

Don’t Panic! There are solutions available. Asset Protection planning is the key to effectively protecting an estate against loss to a nursing home. Hunter Law Office, PC has trademarked strategies to fit every situation.

We help families protect their assets against loss from the unforeseen (and foreseen) events in life that inevitably take us off course. We are unique in that our practice is focused on each individual client . . . we design a plan around you and your family . . . because that’s what Estate Planning is supposed to be!