Elder Law Estate Planning Misconceptions
One of the most common and devastating misconceptions about elder law estate planning is that it is too late to save money from nursing home costs. On the contrary, there are crisis planning tools that may save substantial assets from being spent on nursing home costs, even after the client has already entered the nursing home. Almost always, if there are assets left, much can be saved.
There are only three ways to pay for nursing home costs – your own assets, long-term care insurance (owned by less than five percent of the population), or Medicaid provided by the government.
Many people know about the “five-year look-back period” and assume nothing can be done without advance planning. The five-year look-back rule means that if you gave any gifts away within the last five years, when asking for Medicaid to pay for expensive nursing home costs, the gift amount creates a penalty period, which results in a period of ineligibility for Medicaid coverage.
Despite the five-year look-back, New York law allows people to protect assets from nursing home costs, even without pre-planning. For single applicants, you may be able to save about half of the assets through the “gift and loan” strategy. For married couples, where one spouse needs a nursing home, “spousal refusal” may protect substantial amounts of assets for the spouse at home. These techniques are discussed in detail at trustlaw.com, under “Practice Areas”, then “Medicaid Strategies”.
The five-year look-back rule does not affect eligibility of Medicaid home care, also known as “community” Medicaid. Currently, an applicant may transfer their assets out of their name and still qualify for home care in the next month.
Many assets, such as retirement accounts, rental properties and the family home in some cases, are exempt from Medicaid. The bottom line is that if someone you love is in failing health, the sooner you consult an elder law attorney the more you will likely be able to save.