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Jane was recently quoted as a source in Forbes Health. For a helpful discussion of important estate planning documents including Living Wills, Health Care Proxies, Advance Directives, Health Care Power of Attorney and Physician’s Orders for Life-Sustaining Treatment (POLST), see what-is-a-living-will
Can An Estranged Relative Contest Your Will After You Pass Away?
Jane was recently quoted as a source for a Legal Zoom article on estate planning and Will contests. For Jane’s advice, see: can estranged relatives contest your will after you pass away
Crisis Elder Care Planning with Medicaid Annuities
It can feel overwhelming and terrifying when you are told that a loved one needs 24/7 care in a nursing home. Suddenly, you need to consider where they will be cared for and how you can pay for that without depleting your life savings and losing the family’s home.
For many families facing this situation, spending down for Medicaid with a Medicaid friendly annuity may be the best option available. This strategy can help qualify the sick spouse for Medicaid while preserving the couple’s life savings for the healthy spouse to use to remain at home or to enter into an assisted living facility, if she must. How does this strategy work?
Example 1. Helen is married to Mordy. Mordy is 82 years old, suffers from Alzheimer’s disease and dementia. Helen was caring for Mordy in the home until recently, when Mordy was hospitalized due to a fall. He will not be able to return home to live with Helen. The hospital social worker told Helen today that Mordy will need skilled nursing care at a private pay rate of over $13,000 per month. Helen is very anxious and feels that she cannot afford to pay for that care.
Helen is age 79, and healthier than Mordy. However, ever since Mordy was diagnosed with dementia and cognitive impairment, it has been getting harder and harder for Helen to take care of the home. The household chores and repairs are piling up and Helen can barely handle these tasks, let alone take care of Mordy day and night. Their adult children are well-meaning, but busy with the grandchildren and their jobs. Helen feels constantly stressed and exhausted. She receives $670 from Social Security every month. Mordy receives about $2,000 monthly from Social Security. Helen doesn’t know how she can afford to stay home without Mordy’s income. Helen is declining and she may also need assisted living in the near future. How are Helen and Mordy going to pay for the care that Mordy needs and any future assisted living care for Helen?
Helen and Mordy have about $430,000 in liquid funds, plus their home. As the community spouse, Helen may keep no more than $137,400 and Mordy must have less than $2,000 in his name in order to qualify financially for Medicaid. If Mordy and Helen have countable resources (i.e., liquid assets such as checking, savings, certificate of deposit accounts, annuities, stocks, bonds, mutual funds, and even universal life insurance with cash surrender value, in excess of $139,400, Mordy will be over the countable resource limit for Medicaid and he will have to privately pay for this care each month, unless they should work with an elder law attorney for Medicaid elder care planning.
Helen has a choice. She can either pay the nursing home privately each month until she has spent down the sum of at least $290,600 (plus all of their monthly income), so that Mordy can qualify for Medicaid. Morty will not qualify for Medicaid until Helen has less than $137,400 in her name, plus Mordy’s $2,000 share.
Her other alternative is to buy a Medicaid compliant annuity for up to $295,000, and this annuity will provide her with additional monthly income of about $8,138 per month each month for a term of 36 months. If Helen’s annuity is Medicaid friendly, that annuity will not be treated as a countable asset and for purposes of assessing Mordy’s eligibility for Medicaid, Helen and Mordy will be treated by the Medicaid office as if they have only the sum of $135,000 in both their names, which means that Mordy is now financially eligible for Medicaid. Medicaid plus Mordy’s income will pay for Mordy’s nursing home care. This means that Helen was able to save the $293,000 which funded the annuity and will be repaid back to Helen over the term of the annuity.
Helen now has her own Social Security income, plus the $8,138 monthly from the annuity to pay for the household expenses, and whatever care she may need for herself.
Mordy’s care in the nursing home is being paid for by Medicaid, plus Mordy’s Social Security Income, for the rest of his life. Now Helen can visit him every day and just be the wife, instead of the wife/caregiver/medical transport/medical scheduler/cook/housecleaner, etc.
For more information about how crisis elder care planning with a Medicaid annuity can help you, see Jane’s articles on this important strategy: