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Maroney Law Blog

Saturday, February 5, 2011

Medicaid Then, Now & in the Future

 
Elder law can be best described as estate planning for the middle class. Rather than planning so as to avoid estate tax implications, those who use an elder law plan generally are those people trying to avoid losing all of their assets to the devastating cost of long term care.
 
Long term care is unfortunately an event that many of us or our loved ones will ultimately face.  In the NY metropolitan region, a nursing home on average costs $15000-$18,000 per month at current rates.  These rates are only going to go up.
 
There are 3 ways to pay for long term care: 
  • Private pay
  • Long term care insurance
  • Medicaid
Medicaid is an asset and income based government program.  One must have his or her assets at or below a very low threshold (approximately $13,800) and must have a very low income level in order to qualify for Medicaid.  If the potential beneficiary of Medicaid benefits has a higher income, the excess will go toward the cost of his or her care. 
 
With respect to qualifying for Medicaid, one must be aware there is a five-year look back or transfer period, wherein the Department of Social Services will search to see whether or not the applicant made any transfers of assets within 5 years of applying for Medicaid.  (There are certain exceptions to the rule including, but not limited to, a transfer to a spouse.)
 
One common tool that we use is to prepare an irrevocable asset protection or “Medicaid” trust.  Provided assets are transferred into such a trust at least 5 years before the applicant applies for Medicaid, the principal of those assets will be protected for purposes of leaving an inheritance to the beneficiaries or loved ones.  Any income earned from such assets, however, will have to go toward the cost of the applicant’s care.
 
Medicaid is a constantly changing field and further changes are sure to come, especially since New York has a new governor who has committed to visiting the issue of Medicaid.  For these reasons, we believe it critical that our clients and/or potential clients listen to their trusted advisor relative to how to plan for Medicaid as opposed to listening to the neighbor over the back fence who tells them what they should and should not do, based on the advice of a distant relative, friend, cousin, etc., who had some prior bad experience.  Medicaid planning is fact sensitive to each individual, and is equally fact sensitive to the time frame within which the application is made.  What was then may not be today and will likely not be tomorrow.
 




Based in Melville and Garden City, New York, the attorneys at the Law Offices of Maroney Associates, PLLC assist clients throughout Nassau County, Suffolk County, Queens, and the cities of Mineola, Hempstead, New Hyde Park, Franklin Square, Williston Park, Queens Village, Melville, Huntington, Farmingdale, Patchogue and Uniondale, NY.



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