Crisis Planning

It depends. The typical scenario is when a Veteran is getting in home care or is in an Assisted Living Facility they are typically eligible for VA Aid and Attendance Benefits but not typically eligible for Medicaid (Medicaid will sometimes pay for very limited amounts of in home care and limited amounts in an Assisted Living Facility but many Veterans will not qualify for this type of Medicaid). If the Veteran later goes to a Nursing Home he can keep his VA Aid and Attendance Benefits and will probably get the maximum benefit. However, in most cases this will not be enough to pay the $4,500 to $6,500 monthly nursing home bill, causing the Veteran to eventually spend all his savings to pay his monthly nursing home bill. Upon entering a Nursing Home most Veterans will choose to apply for Medicaid which will cover the entire $4,500 to $6,500 monthly nursing home bill. However, once he qualifies for Medicaid he will lose all but $90 per month of his VA Aid and Attendance Benefit. A Veteran cannot receive both Medicaid and VA Aid and Attendance Benefit at the same time. They must choose one or the other.

When qualifying for Medicaid whether married or single you can have a home, a car, household furnishings, a prepaid burial contract or a life insurance policy with no more than $1,500 in cash surrender value and $2,000 in money if single and a little more if you are married. Any other assets will disqualify you from Medicaid. For example here are some things people owned which caused then not to qualify for Medicaid. A bass boat, a camper, an outboard motor, more than one vehicle, old trucks and cars, four wheelers, a mule(4 wheel vehicle), a life insurance policy with $1,600 in cash surrender value, $2001 in a checking account, $3,400 in cash in a safe and old savings bonds.

Yes. Get help right away. Many people have only $10,000 or $20,000 and feel they will pay the nursing home for 3 or 4 more months then when they are broke they will apply for Medicaid and therefore they do nothing. This can be a big mistake. Who will pay your funeral expenses when you die? Your children? Who is going to pay the real estate taxes and homeowners insurance on your home while you are in the nursing home? Your children? Who is going to pay the repairs and maintenance on your home while you are in the nursing home? Your children? If you need extra clothes or medical supplies not supplied by the nursing home who is going to pay for these items? Your children? If you need cigarettes, books, magazines, reading materials, candy, snacks, clothing, etc., who is going to pay for these items? Your children? Once you are on Medicaid all of your income (social security, pension and retirement) goes to the nursing home to pay for your care. Medicaid only pays the amount you are short each month. Medicaid only allows you to keep and spend $40 per month from your income (social security, pension and retirement) and $40 per month is not enough to pay for all the expenses listed above. Who is going to pay? Your children? This is why people who only have $10,000 or $20,000 or more want to protect as much of this money as they can, otherwise their children will be paying thousands of dollars each year to maintain and keep up Mom’s home and pay for her little extras. Then when Mom dies they may have to pay substantial funeral bills. Why not pay all these expenses with your last $10,000 or $20,000 and take this burden off of your children. But without taking immediate action this will not happen. Without immediate planning the last $10,000 or $20,000 will be paid to the nursing home and your children will be left to pay all these ongoing expenses out of their pocket. Worse yet what if your children can not afford to pay these expenses. Your home is at risk if the insurance and real estate taxes are not paid. Your children may not want to pay these expenses if they feel the home is going to be lost to Medicaid anyway so why pay these expenses which they may never recover. Planning now can prevent all these problems, but you must act immediately because waiting 2 or 3 months may be too late, Mom may have spent her last $10,000 or $20,000 on the nursing home.

If a nursing home resident is a wartime veteran or the spouse of a wartime veteran they may be eligible for $1,000 to $2,000 in assistance from the VA. If a child has been living in the home with a parent for two or more years before the parent went to the nursing home they may be eligible for a Medicaid waiver which could save 100% of the home. Does the nursing home resident have a long term care policy. If so up to 100% of their assets could be protected if they act now and plan. If they plan now, 5 years from now when the long term care policy runs out all assets could be protected. However, failure to plan now will mean that when the long term care policy runs out the nursing home resident will begin to spend down their savings and other assets and eventually lose everything. If that happens what was the purpose of the long term care policy in the first place. The moral of the story is just because someone has a long term care policy they can still lose everything if they don’t plan.

If the nursing home resident has a long term care policy up to 100% of their assets could be protected if they act now and plan. If they do not plan and they have anything less than a life time policy when the long term care policy runs out they will begin spending their savings until it is all gone. If they do their Medicaid planning now then when the long term care policy runs out all assets would already be repositioned and protected from all future nursing home costs incurred after the long term care policy runs out. However failure to plan now will mean that when the long term care policy runs the nursing home resident will begin to spend down their savings and other assets and eventually lose everything. If that happens what was the purpose of the long term care policy in the first place. The moral of the story is just because someone has a long term care policy they can still lose everything if they don’t plan immediately upon entering the nursing home.

Most people will lose everything they have unless they plan immediately. This requires a crisis plan. This is when someone goes to the nursing home who has done no planning. However, with a crisis plan a person can still protect 40% to 60% or more of their assets even after they have entered a nursing home.

No. Medicaid will not seize or sell your home. Medicaid can place a lien on your home but you still have the right to live in your home till you die. However after you die the home could be sold to satisfy Medicaid’s lien. After Medicaid’s lien is satisfied any proceeds left from the sale of the home would go to your estate and on to your heirs.

If you are on social security you probably have Medicare Part B premiums taken out of your social security check each month. This is just like other health insurance where you pay a monthly premium and when you go to the doctor you have Medicare deductibles and co-pays. This covers most of a retired person’s medical bills but not prescription drugs. Therefore many people purchase a Medicare Supplement which pays the Medicare deductibles and co-pays. Blue-Cross Blue-Shield, AARP and Humana, among others are companies who sell this type of Medicare Supplemental Insurance. In addition many retired persons have purchased a Medicare Part D insurance which covers the expenses of prescription drugs. Again Medicare Part D insurance has deductibles and co-pays which you pay out of pocket. In summary Medicare is a health insurance with monthly insurance premiums. Medicaid is different. Medicaid is an entitlement program. You must apply for and qualify for Medicaid. There are income limitations and asset limitations so your qualification is not automatic. Most people qualify income wise but do not qualify asset wise. If you are single and want to qualify for Medicaid to pay for your nursing home costs you can own a home, a car and $2,000 in money and other assets. Most people have more money than this. Most will need to do some planning and get some advice to help them arrange their affairs so they qualify as quickly as possible. Taking just two or three months to figure all this Medicaid stuff out can cost a person $4,000 to $5,000 per month in nursing home bills. Therefore a mistake in applying for Medicaid can cost a person $8,000 or $12,000 or more because they had one asset too many and now they have to start the application process all over. In the mean time they must continue to pay the Nursing Home $4,000 to $5,000 per month. The learning curve can get very expensive which can make hiring an Elder Law Firm look very economical.

Only after you are impoverished meaning you have less than $2,000 in money.

Yes. Get help right away. Many people have only $10,000 or $20,000 and feel they will pay the nursing home for 3 or 4 more months then when they are broke they will apply for Medicaid and therefore they do nothing. This can be a big mistake. Who will pay your funeral expenses when you die? Your children? Who is going to pay the real estate taxes and homeowners insurance on your home while you are in the nursing home? Your children? Who is going to pay the repairs and maintenance on your home while you are in the nursing home? Your children? If you need extra clothes or medical supplies not supplied by the nursing home who is going to pay for these items? Your children? If you need cigarettes, books, magazines, reading materials, candy, snacks, clothing, etc., who is going to pay for these items? Your children? Once you are on Medicaid all of your income (social security, pension and retirement) goes to the nursing home to pay for your care. Medicaid only pays the amount you are short each month. Medicaid only allows you to keep and spend $40 per month from your income (social security, pension and retirement) and $40 per month is not enough to pay for all the expenses listed above. Who is going to pay? Your children? This is why people who only have $10,000 or $20,000 or more want to protect as much of this money as they can, otherwise their children will be paying thousands of dollars each year to maintain and keep up Mom’s home and pay for her little extras. Then when Mom dies they may have to pay substantial funeral bills. Why not pay all these expenses with your last $10,000 or $20,000 and take this burden off of your children. But without taking immediate action this will not happen. Without immediate planning the last $10,000 or $20,000 will be paid to the nursing home and your children will be left to pay all these ongoing expenses out of their pocket. Worse yet what if your children can not afford to pay these expenses. Your home is at risk if the insurance and real estate taxes are not paid. Your children may not want to pay these expenses if they feel the home is going to be lost to Medicaid anyway so why pay these expenses which they may never recover. Planning now can prevent all these problems, but you must act immediately because waiting 2 or 3 months may be too late, Mom may have spent her last $10,000 or $20,000 on the nursing home.

Medicaid Spend Down is spending a person’s money down to below $2,000 in order to qualify for Medicaid assistance to help pay the Nursing Home Bills. A person can Spend Down their money to purchase things such as a prepaid burial plan, repairs and maintenance on the home, updating furniture and appliances and other expenditures as long as it is solely for the benefit of the person applying for Medicaid. You cannot give your money away or spend your money on anyone other than you and your spouse. If you do this will create a penalty which will disqualify you from Medicaid for a period of months.

Little things like a bass boat, a camper, more than one vehicle, old trucks and cars, four wheelers, a mule(4 wheel vehicle), a life insurance policy with $1,600 in cash surrender value, $3,400 in cash in a safe, old savings bonds, $2001 in a checking account. All these items are called countable resources. A person is limited to a total of $2,000 in countable resources. Most of these assets can be converted into noncountable resources which do not disqualify a person from Medicaid. There are various ways and techniques to convert a countable resource into a noncountable resource depending on the type of asset you are trying to convert.

Yes, you do have options on which assets to protect and which assets to let go. For example in a Crisis Plan where the Mom has just entered a Nursing Home and no planning has been done, what assets can be protected and what are my options. Many times to protect one asset we may have to use or spend another asset. For example many people will spend some or all of their liquid assets to protect the Personal Residence or some other piece of real estate. Sometimes one asset may be relatively easy to protect while another asset may require the spouse or children to get appraisals done or sell an asset not easily sold like a time share, old boat or camper or lot with a mobile home on it located in another state.

The transactions required to protect an asset may be difficult or very inconvenient to do and take a considerable amount of a child’s time to complete and the asset to be protected just isn’t worth the hassle. So yes, you do have options on which assets to protect and which assets to let go.