The Wise and the Wary
Who can you trust? Deb hears this question over and over again in her professional practice as an elder law attorney and a fee-only, holistic financial planner. Let Deb teach you how to protect yourself and your assets from those who might not have your best interests at heart. [Editor's note: Deb no longer contributes to Silver Planet, but we have made her archived blog entries available as a service to our readers.]
The Government Will Take Everything When Mom Goes into a Nursing Home
Misconception #8 of "The 12 Biggest Misconceptions of Estate Planning Clients"
This statement is untrue, IF you know what you’re doing. All states have Medicaid programs. I emphasize the name only because most of my clients confuse Medicare with Medicaid. They are two completely different government programs—with one exception, which will be covered in my next blog.
Medicaid is a federal- and state-funded program that pays for the costs of more than half of the nation’s nursing home residents. These costs currently average more than $75,000 per year. Positioning yourself to be eligible for this program is a complex endeavor, fraught with pitfalls and “gotchas.” If ever there was a time to hire an attorney, this is it. A competent elder law attorney can advise you on structuring your financial affairs to attain eligibility as fast as possible.
Every state’s laws are different, but there is one statement I can make without hesitation: do not make any gifts of your property before you have a full understanding of your state’s laws. Otherwise, your generous act may trigger a penalty period, resulting in your ineligibility for months, if not years, depending on the dollar amount of your gift. This penalty means that you will have to pay for your nursing home costs out of your own pocket or that of your children’s.
One last point: the whole premise behind Misconception #8 is something of a red herring. YOU are responsible for supporting yourself at all stages of adult life. If you’ve provided for a possible future stay in a nursing home through a large nest egg or long-term care insurance, that’s great. If not, Medicaid will step in, but only after you’ve used your own resources for your care. Medicaid is a needs-based program, not an entitlement program. It is just your ultimate safety net for long-term care. The government isn’t “taking” anything.
By Deborah Hoskins, JD, CFP
The Wise and the Wary Blog
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