New Hurdles Imposed for Medicaid Applicants in New York State

New York state recently enacted legislation, and declined to moderate existing legislation, that makes accessing the state’s Medicaid program more difficult and complicated.

I. The Consumer Directed Personal Assistance Program (“CDPAP”) will undergo major changes.

Currently over 600 companies act as Fiscal Intermediaries (FIs) for the CDPAP program. These FIs assist people who hire Personal Assistants (“PAs”) through the CDPAP program, by handling payroll and benefits. FIs sometimes also help consumers find and train Personal Assistants. These intermediaries are often small, local companies. FIs are under contract with, and are paid by, Medicaid Long Term Care (“MLTC”) plans, mainstream managed care plans, and local Departments of Social Services that authorize CDPAP services.

Now the NYS Department of Health will be required to contract with a single Fiscal Intermediary – and that intermediary must already be operating in another state as a statewide FI. That single FI will subcontract with a small number of existing FI programs. By April 1, 2025, all 200,000 CDPAP consumers and their PAs will be transitioned to the new SINGLE FI or one of their few subcontractors, and ALL other FIs must stop operating.

That means that whichever FI is chosen, and its few subcontractors, are likely not to have a local presence in many of the parts of the state, and consumers who hire Personal Assistants will be dealing with a huge corporation rather than a small, responsive service provider. This will eliminate almost all choice, as well as competition, from the current 600 providers.

II. CDPAP Personal Assistants may have new training requirements

The new law authorizes the Department of Health to adopt regulations “to carry out the objectives of the program including … training requirements for PAs.” Currently, the consumer or their representative trains the PAs, and no outside training is required. CDPAP PAs are then able to perform numerous critical tasks that long-term care aides are not permitted to perform. These tasks include assisting patients with taking medications, injecting insulin, administering oxygen, and other duties that would otherwise require the costly services of a nurse.

If additional training is required, this obligation will discourage potential candidates from becoming PAs. These important workers are already in short supply: fewer PAs will mean it will take longer – or it might be impossible – to find an assistant.

III. Cuts to Medicaid that are still scheduled to occur:

30-Month Look back for Community Medicaid Services

The 30-month “look back” and transfer penalty for Community Medicaid services, which was enacted but which was delayed due to COVID, was not repealed. This measure is scheduled to be implemented in 2025. Implementation will delay or effectively deny home care services that are crucial to enable people to remain in their homes as long as possible.

This complicated change will be a nightmare to implement. The look back will impose a penalty period for transfers made in the 30 months prior to a person applying for Community Medicaid services (these services include paying for some Assisted Living residences). There is currently no look back.

Three ADL Requirement

Currently, disabled people who require assistance with two Activities of Daily Living (“ADLs”) qualify for Community Medicaid services (if financial eligibility is achieved). Implementation of this measure will require that people need assistance with three ADLs before they are eligible.

This increased requirement will make it far more difficult for seniors in declining health to access Medicaid services. In addition, the New York Legal Assistance Group states that this “will deny Medicaid home care illegally to Those With Vision Impairments, Intellectual & Developmental disabilities, Traumatic Brain Injuries, and many other disabilities.” This requirement will go into effect in Fall 2024 if not repealed.

The New York State Bar Association, New York Legal Assistance Group, and the National Association of Elder Law Attorneys are all fighting to repeal this harmful legislation. Our firm will support their efforts.

Ongoing changes to New York State’s long-term care regulations mean that it is more important than ever for anyone over 65, or earlier if you have health issues, to consult with an experienced Elder Law attorney. The sooner you take action, the more long-term care planning can help you. During a consultation with our firm, our attorney will explore your situation, thoroughly explain your options, and enable you to decide for yourself what plan makes the most sense for you.

The most effective planning occurs before you have a need for long-term care, but planning can still have enormous benefits even if undertaken later. Don’t hesitate to call – a consultation will provide you with important information and can give you priceless peace of mind.

More information on all of the CDPAP changes is available at this link: Drastic CDPAP Changes and other Medicaid Outcomes of Final NYS 24-25 Budget - New York Health Access (wnylc.com)

6 Critical Issues upon Discharge from a Hospital or Rehab

If you or your loved one is being discharged from a hospital or rehab facility, either to a home or to assisted living, focusing on the following six issues can be critical:

What temporary or ongoing assistance will be needed (home aide, meals, housekeeping)
How to remain healthy (proper medication management)
How to remain safe (a home safety plan)
Where will you find the aides you need, and who will manage them
How to manage care – family / friends or a professional Care Manager
A key, but often neglected, aspect of care is: How will you pay for it? Medicare will not pay for long-term care, and unless you are very wealthy, the cost of care can wipe out your entire life’s savings.

(Note: Discharge to a nursing home is not discussed in this article)

This checklist will give you a good starting point to keep yourself or your loved one happy, safe, and healthy as long as possible. We also want to emphasize that you CAN protect yourself from financial disaster when health care costs start to climb.

When You Are Discharged, What Issues are Most Pressing?

Issue #1: Help in the home, assisted living, or help in an assisted living

People coming from a hospital or rehab may need ongoing short or long-term care. The institution’s designated liaison (usually a social worker) will recommend the appropriate level of care, based on the patient’s needs. The social worker will also give a list of providers, such as assisted living residences or medical resources, that may be necessary for the patient’s care.

If the patient can go home, but needs more care, they may need to find an aide and/or access additional services. Depending on the patient, specialty care physicians, visiting nurses, or other medical care may be necessary.

If the discharged person needs an aide, finding one who is compatible will be a focus. In the case of assisted living, the person’s mental capacity, physical state, and proximity to friends or family will all affect which facility is best suited for them, and how well they adjust to a new living situation. Most assisted livings permit personal aides in their facilities. Medicaid may cover home health aide services in an assisted living.

Issue #2: Medication Management

This is a thorny issue. Home health aides are not permitted to administer medication. They can put pills in a cup, place the cup on a table, and tell the person that “it’s time to take your pills,” but they can’t administer the pills directly. For a person with dementia, or who has dressings that need to be changed, or physical procedures they can’t manage themselves, a home aide may not be enough.

Hiring a nurse to show up and give medications, or help with another physical need, is expensive, but it may be necessary. One way to provide families with assistance instead of hiring a nurse is through the Consumer Directed Personal Assistance Program (“CDPAP”). With CDPAP, aides hired by the family can be trained by the family, and then have fewer limitations on the care they are permitted to provide.

Issue #3: A Home Safety Plan

Throw rugs, sharp corners, the path to the bathroom, poorly placed furniture, poor lighting – all of these and more can be a minefield of dangerous conditions, if you’re physically or mentally compromised. Fortunately, there are many printed and online resources and services that can help you create a safe living environment.

Issue #4: Finding the Right Assistance

There are many excellent home health agencies. The one the hospital recommends to you may be great – or it may not. You may be happy with the agency, but if you are not, you can change.

It may take some effort to find an aide you are happy with – but that may not be the fault of the agency. If you are unhappy with how the agency operates or manages your situation, find another agency. Our firm’s Director of Client Care and Advocacy can give you a referral if you wish.

You may also choose to hire your own caregiver through the CDPAP program. This choice requires more of your time and involvement than if you hire an agency, but will also give you added flexibility.

If you decide to hire and pay your aide privately, we strongly advise against paying aides “off the books.” There are a variety of serious issues and liabilities that can arise for the employer who does that.

Issue #5: Does it Make Sense to Hire a Care Manager

If it is difficult for you to oversee the care, or if you don’t live nearby, you may wish to hire a Geriatric Care Manager (“GCM,” also sometimes called an Aging Life Care Manager). A GCM can oversee the aides, check in with the patient, and generally manage the process. The added cost needs to be weighed against the great peace of mind such a service can provide.

Issue #6: How Will You Pay for the Care

Private pay aides currently cost $35-$40 an hour or more. A hypothetical example for someone “who doesn’t need much care”: 6 hours a day, 5 days a week at $35 per hour (meaning all weekend care is left to family or friends) adds up to over $1,000 per week, almost $55,000 per year. Double or triple that amount for people who need more help, or who need nursing care, or both.

No wonder people have anxiety attacks when they start paying for care. They realize that even more expenses are on the horizon, and they see their life’s savings being depleted. In the case of a married couple, they may have enough money to care for one spouse, but the surviving spouse may be left in serious financial peril. If they don’t plan, most people literally face financial ruin.

People are often told, “You have to use up all your money before you can qualify for Medicaid. It’s called the spend down.” This is not true, particularly in New York.

Long-term care planning can allow you to remain in your home and maintain your lifestyle without using up almost every dollar of your savings, and the equity in your home, on your health care. Proven legal strategies can allow you to protect yourself, your family, and your assets, and still access high quality health care.

The Bottom Line:

Our firm seeks to educate people about the possibilities available to them in New York. If you own a home, have some savings, or have income from a pension or retirement plan in addition to Social Security, Elder Law planning can very likely result in huge benefits for your lifestyle, your savings, and your peace of mind.

Accessing care is complicated and stressful. Lamson & Cutner created the position of Director of Client Care and Advocacy to enable us to assist our Elder Law and Estate Planning clients who need care services. Our Director works with our clients to help them maximize the assistance they receive through Medicare and Medicaid.

If you or a loved one is in the hospital or a rehab facility, and have not yet done long-term care planning, discharge planning should kick-start your focus on this crucial aspect of your, or their, future.

We encourage you to read more on our website about Elder Law planning and Estate Planning, and to take action now. Your relief and peace of mind from knowing you are protected will be well worth the effort.

The Corporate Transparency Act

Attention clients, former clients, and blog readers who own corporations, LLCs, or who have an interest in a trust that owns an LLC or corporation: major changes have been enacted through the Corporate Transparency Act that may affect you. This blog provides a brief description of the Corporate Transparency Act, its requirements, and what the consequences are for those who fail to comply.

AS OF JANUARY 1, 2024, MANY COMPANIES IN THE UNITED STATES ARE REQUIRED TO REPORT INFORMATION ABOUT THEIR BENEFICIAL OWNERS TO THE FEDERAL GOVERNMENT.

Which companies are required to report?

Companies that are required to report beneficial owner interests are called reporting companies. Reporting companies include corporations or LLCs registered to do business in the United States. Reporting companies must report information about their beneficial owners to FinCEN, a bureau of the U.S. Department of the Treasury.

Who is a Beneficial Owner?

A beneficial owner is any individual who, directly or indirectly, exercises substantial control over a reporting company, or owns or controls at least 25 percent of the ownership interests of a reporting company. For a trust that holds an ownership interest in a reporting company, the grantor, the trustee, or even the beneficiary may be considered the beneficial owner.

What Information Needs to be Reported to FinCEN?

Beneficial Owner:

Full legal name
Date of birth
Complete current address
Unique identifying number and issuing jurisdiction from one of the following non-expired documents (must include an image of the document):
1. U.S. Passport
1. State driver's license
1. Identification document issued by a state, local government, or tribe
1. Foreign passport (if the beneficial owner has none of the above)

When Must the Report be Filed?

If the reporting company was created or registered to do business before January 1, 2024, the company has until January 1, 2025, to file its initial report.

If the reporting company is created or registered on or after January 1, 2024, and before January 1, 2025, the company will have 90 calendar days to file its initial report after receiving actual or public notice that the company’s creation or registration is effective.

Failure to Comply:

The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information may include civil penalties of up to $500 per day the violation continues, or criminal penalties of up to two years in prison and/or a fine of up to $10,000.

Lamson & Cutner, P.C. Can Help!

The requirements imposed by the Corporate Transparency Act can be difficult to navigate and there are severe consequences for those who fail to comply. If you own an LLC, a corporation, or have a trust that holds an ownership interest in one of these entities, our firm can help you stay compliant with this new federal law. Contact us today for a consultation!

Medicaid Asset Transfer Rules In New York

If you think you or a loved one may need to apply for Medicaid benefits in the future, it is important to understand the asset transfer rules. Generally, gifts or transfers of money or property within the applicable “look back” period will subject the Medicaid applicant to a “penalty period” of ineligibility for benefits. The attorneys at Lamson & Cutner can help clients understand the Medicaid asset transfer rules and qualify for Medicaid benefits, taking into account the recently-enacted Community Medicaid “look back” that is currently scheduled to go into effect in 2024. Note: The implementation date for the “look back” has been extended to 2025, although a firm date has not yet been announced. Contact our firm to learn the current status of the Community Medicaid look back.

Download our Estate Planning Handout

Medicaid Look Back Period Extended to Community-Based Services

Applications for Medicaid benefits in a skilled nursing facility are subject to the five-year nursing home look back period. More information about the Nursing Home look back can be found here. In 2020, New York State enacted (but has not yet implemented) legislation requiring – for the first time – a look back period for applications seeking in-home care or other Community Medicaid benefits.

The new look back period is 30 months. However, due to the Public Health Emergency currently in effect, the States are not permitted to impose more restrictive Medicaid eligibility standards. As a result, implementation of the new look back has been delayed until March 31, 2024, and it may be delayed further. For New York's Medicaid system, the changes will require a tremendous amount of logistical preparation, as well as additional work, paperwork, and changes in procedures.

The new look back will mean that many patients and their families will incur substantial additional costs that were previously covered by Medicaid. These may include the costs of adult day health care programs, private duty nursing services, certified home health agency services, assisted living program services, personal care services, limited license home care services, and managed long-term care services provided in a community setting. The transfer penalty period will begin in the month when the applicant’s Medicaid application has been accepted, and the applicant has been approved for care based upon a functional assessment. More information about the Community Medicaid look back is available here.

Understanding Medicaid Look Back Exemptions

People who want to apply for Medicaid can avoid a penalty period in cases where they are able to make an exempt transfer. Medicaid asset exemptions and qualified exempt transfers are not subject to any Medicaid penalty, for either Medicaid Nursing Home benefits or Community Medicaid benefits.

Here is a list of exempt transfers that should be considered in appropriate cases:

A blind or disabled child of any age. A Medicaid transfer of assets to a disabled child of any age — or to a child who is legally blind — are exempt from asset transfer penalties.
A trust for the sole benefit of a disabled person under the age of 65. Note that the contingent beneficiary of the trust must be the disabled person’s estate, and Medicaid will be able to make a claim for reimbursement against the estate if the disabled beneficiary dies when he is 55 years of age or older.
Transfers of assets to spouses are permitted and are exempt. However, spouses have a mutual legal obligation of care and support. Unlike most states, New York permits the spouse who is holding all of the married couple’s assets to refuse to make his or her assets available for the support of the spouse who needs care. This is called “spousal refusal.” When one spouse signs a “spousal refusal” form, Medicaid must provide care to the spouse who needs care, without any penalty period.

Note: Spousal refusal is not necessarily a 'free ride.' Medicaid has the right to seek reimbursement from the spouse who refused, and in the past several years has done so with increasing frequency. Fortunately, even when Medicaid seeks to be reimbursed, it does not mean that spousal refusal ‘didn’t work.’ The amount claimed will be for Medicaid’s costs, which are always less than private pay rates, and a compromise settlement can often be obtained. In a typical case, the reimbursement amount is materially less than what would have been billed on a private pay basis.

Caregiver Agreement. This is a contract between the person needing care, and the person who is going to provide the care. The caregiver can be a child, sibling, or friend. The care services are defined in the contract and are pre-paid in a lump sum. The payment is not subject to any penalty because it is for services to be rendered, and is therefore not a gift or transfer. The net effect, however, is a transfer of assets from the person who needs care. Read more about caregiver agreements here.

In addition to the above, an exempt transfer of the primary residence can be made to any of the following:

A brother or sister with an equity interest in the home who has resided in the home for at least one year.
A “caregiver” child who has resided in the home for at least two years.

We Can Help You Navigate Medicaid’s Asset Transfer Rules

The attorneys at Lamson & Cutner are dedicated to helping clients in NYC, Westchester, and the NY Metro area, understand and navigate the complex laws surrounding Medicaid eligibility. We focus on health care and asset protection, helping client protect the assets, property, and income they have worked their entire lifetimes to accumulate. Contact us today to schedule a no-obligation consultation with an experienced attorney.

The Pooled Income Trust – It’s Not As Complicated As You Think

If you or a loved one are thinking about accessing Medicaid for care in the community in New York City or its suburbs, you will also probably want to join a Pooled Income Trust. The goal of using these trusts is to permit you to remain in your home as long as possible, by allowing you to continue to use your income to pay your expenses.

Why are Pooled Income Trusts needed?

Once you are over 65 and your assets are below the Medicaid threshold for a single person (the current level can be found on our Medicaid Quick Reference Chart - "MQRC"), you are eligible for Medicaid. Your income is not a factor in whether you are eligible to receive Medicaid, but Medicaid does not ignore your income. If you don’t plan, you will be required to contribute toward the cost of your care.

Once Medicaid is paying for your long-term care, the system has a built-in maximum amount of income that you are normally eligible to keep for yourself – again, the current level can be found on the Quick Reference Chart. Any amount over that is called “surplus income,” and - unless you sign up for a Pooled Income Trust - the "surplus income" is required to be contributed toward the cost of your care.

In the New York City Metropolitan area in particular, living on the amount that Medicaid permits you to keep is rarely possible. This is why New Yorkers receiving Medicaid benefits almost always turn to Pooled Income Trusts.

Download our Community Medicaid Handout

What is a Pooled Income Trust?

A Pooled Income Trust is a special kind of trust operated by certain nonprofit organizations. These organizations manage Pooled Income Trusts as a service to persons who are disabled and as a way of generating funds for charitable purposes. Examples in New York are UCS Trust Services and NYSARC Inc.

New York’s laws permit you as a Medicaid recipient to contribute your “surplus income” to your account at a Pooled Income Trust instead of contributing it toward the cost of your care if you are “disabled.” The definition of “disabled” is a flexible one depending on age and health. Most seniors who need home care will qualify. As long as you are doing that, your income will not affect your Medicaid benefits.

How Do I Join a Pooled Income Trust?

When you are applying for Community Medicaid in New York, you would also join a Pooled Income Trust at the same time. You need to sign a Joinder Agreement in order to establish your own personal account at the Trust. The money you send to the Trust each month will be deposited into your personal account.

Each trust has its own procedures, and its own fee schedule – you should find the one that best suits your personal needs. If you are using the services of an Elder Law firm, you should ask them for a recommendation. The Elder Law firm will probably also help you fill out the paperwork to join, and advise you regarding the logistics of paying your bills through the Trust.

Once I Have Joined a Pooled Income Trust, How Do I Use It?

Your Pooled Income Trust account functions a lot like a bank account that someone else manages for you. Each month you send your bills and receipts for items you have purchased for yourself to the Trust. This can include rent, your mortgage, grocery bills, utility bills, phone bills, clothing purchases – pretty much any kind of goods or services, as long as they are for you and are not provided by government assistance programs.

The Trust needs to approve the expenses because Pooled Income Trust funds are only permitted to be used to pay for your own expenses. Once the trust approves the expenditures, they pay your bills for you.

Isn’t it Complicated?

No, it doesn’t have to be. Most people who need Community Medicaid have pretty similar bills each month. The monthly non-discretionary bills can go directly to the Trust. Then, for variable everyday expenses, it simplifies the process if you have a credit card that you can use for purchases that are for you. The credit card bill can be submitted to the trust at the end of the month as well.

There is some paperwork involved, but our clients quickly get the hang of it. Sometimes they need assistance if the Trust does not approve a purchase, but that’s one of the reasons they hired our firm in the first place.

How Did This Type of Trust Come About?

Pooled Income Trusts are permitted by law in order to allow disabled persons to supplement the care they receive from government assistance programs such as Medicaid. It’s also a means of helping people stay in their own homes as long as possible.

Keeping people in their homes actually, saves the government money. If a senior ends up in a nursing home, it is likely Medicaid that’s paying. Even at Medicaid’s discounted rate, paying for nursing home care is almost always far more expensive than helping someone to stay in his or her own home.

Make a Pooled Income Trust work for you! Call us today to begin your plan

What Happens to Your Income When You're in a Home?

Your monthly income, no matter how large or small, will not affect your eligibility for Medicaid Home Care.
However, Medicaid does not ignore income, and there is a limit to monthly
income. In 2020, the limit is $895 per month. If your income is above this
amount, you have “surplus income.”
When you have “surplus income,” you must either contribute it towards the cost
of your care, or deposit it each month into a Pooled Income Trust.
The Pooled Income Trust is specifically designed to protect your “surplus income.”
Using the funds you deposit, the trust will pay your normal living expenses, or for
anything else you need or want, including additional care above and beyond what
Medicaid is providing.
There are certain logistics involved in using a Pooled Income Trust. Also, there
are certain limitations: first, any payments or disbursements from your trust
account must be for your benefit, and not for anyone else. And second, any
money you don’t spend will go to charity if you move to a nursing home or you
pass on.

Download our Community Medicaid Handout

What Happens to Income on Community Medicaid

Your monthly income, no matter how large or small, will not affect your eligibility for Medicaid.

However, Medicaid does not ignore income, and there is a limit to monthly income. The current limit can be found in our Quick Reference Chart. If your income is above this amount, you have what Medicaid considers “surplus income.”

When you have “surplus income,” unless you take the proper steps, Medicaid requires that you contribute that entire amount towards the cost of your care. This is a problem, because very few people can pay all their living expenses with only the amount permitted by Medicaid. Fortunately, there is an alternative: you can deposit your surplus income into a Pooled Income Trust.

The Pooled Income Trust is specifically designed to protect this income. After paying the trust a small fee, the money is yours to spend, as long as you spend it on yourself.

Download our Community Medicaid Handout

Paying for Long-Term Care

Unless you are very wealthy and can afford to pay amounts like $5,000 to $20,000 per month for your care, you need to have a plan. You have two options, other than paying with your own money.

One option is long-term care insurance, if you can afford the premiums and if your age and health are such that you qualify. For some people, particularly those who have good sources of income -- Social Security, pension, and retirement accounts, or other -- long-term care insurance can be a good option.

If you are considering long-term care insurance, make sure that the amount of the daily or monthly benefit is sufficient. If the policy is going to cover only a fraction of the actual costs, and you would wind up depleting your savings to cover the balance, the policy may not be a good idea.

Your other option is Medicaid. For a variety of reasons, many people ignore this option – but they shouldn’t. In New York, we have the best Medicaid program in the country. It’s worth finding out how it works, and how you can benefit from it. Many people are surprised to discover that they can qualify for very good long-term care, without spending down their savings.

I’ll talk a lot more about Medicaid in other videos on this website.

Download our Community Medicaid Handout

Choose Your Trustee Wisely

This is Strategy #13 from Lamson & Cutner’s publication, “25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs.” Click here to see the other strategies.

Choose your trustee wisely. When an applicant for Medicaid decides to transfer assets into a trust, the trust must be irrevocable. That means you no longer have control of whatever money or assets you place in it. If you could control them, that would indicate they're still yours, and Medicaid would therefore insist that you use the funds to pay for your care.

You'll appoint a trustee to manage the trust and make decisions on investing and disbursing your funds. Choose someone who you are confident has your genuine best interests and welfare at heart. To use an analogy, a trustee is like the president of a corporation. He or she is the boss. If you're going to put your money in a trust, better pick somebody you can count on.

Control is a big issue for many people, especially if they're currently in good health and have their wits about them. However, if you become ill and need home or nursing facility care, at a certain point it's either put the money into a trust or lose it. You'll forfeit the money anyway without appropriate asset protection planning, because under Medicaid regulations all but a small amount of your resources will go to pay for your care. Then you'll rapidly deplete your financial base and end up with nothing.

Considering these factors, you'll be in a better position with a trust strategy and appointing a trustee you have confidence in. There are legal restrictions on all trustees, and there aren't many who would want to run the risk of stealing your money.

In some families, people are not comfortable turning over control of their money and property to a relative or friend, for a variety of reasons. Certainly, if the person you have in mind doesn't have a history of being responsible, it's not a good idea to make him or her your trustee. First and foremost, you must have confidence in the person you select as your trustee.

If you can’t rely on your relatives or friends, you may be able to hire a professional trustee. Retaining a professional trust company is also a good way to avoid conflict in a family, and break a deadlock when there's an argument or concern about who will be the trustee. In addition, trustees have strict legal and fiduciary duties, so you can depend on a professional to have a better understanding of what the law requires. Of course, you'll have to pay a professional trustee. A typical fee would be in the vicinity of 1% of the value of assets managed per year.

We represented a client who unfortunately had very strained relations with her three children. Yet one of the sons was very devoted to her, and had watched over her. The client had to enter a nursing facility for rehabilitation after sustaining a head injury. Although she eventually recovered to a point where it would have been feasible for her to return home, she elected to stay as a permanent resident. Her assets were moved to a protective trust and her son was made trustee, as he was the only one she felt comfortable with managing her significant resources.

We filed a Medicaid application to cover the cost of her nursing home care, and initiated additional planning strategies. The application was approved, providing full payment of the nursing home's services, while a significant portion of her financial reserves have been protected. Her son can now use these funds on behalf of his mother as needed, making her stay there more pleasant. After she passes on, whatever is left can be distributed to her heirs, which would not have been possible without this asset protection planning.

25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs

Long-Term Care Insurance Won’t Necessarily Solve the Problem

This is Strategy #24 from Lamson & Cutner’s publication, “25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs.” Click here to see the other strategies.

Long term care insurance won't necessarily solve the problem. For many people, this is often a wasteful expenditure of funds that could be better used elsewhere. At current rates ranging between approximately $5,000 to $15,000 a month for 8 to 24 hours per day of home health services, and up to $20,000 a month or more for nursing facility care, the policy you'll need for full coverage is going to be expensive. Unless you can afford enough insurance to cover these stratospheric costs, you may require Medicaid assistance anyway.

Download our Community Medicaid Handout

Without asset protection strategies, you'll still be in a situation where Medicaid will force you to spend down your resources to pay for whatever the policy doesn't cover, before they provide benefits. That means eventually you'd be in poverty anyway, and the policy will not have benefited you.

If you're sufficiently wealthy, can afford a large enough policy, and don't intend to avail yourself of Medicaid, long-term care insurance might make sense. Otherwise, you'll get a better return on your money by hiring a competent Elder Law firm to create a plan that allows you to retain the benefit of all of your money, investments, and property or a substantial portion. Medicaid will then pay your home or nursing facility care, and most medical expenses that your Medicare insurance doesn't cover. In that case, why would you need long-term care insurance?

Here is an actual case history that illustrates this point. A number of years ago, a married couple came to us for Elder Law planning, having previously purchased long-term care insurance. Their policies provided coverage of only $163 per day. The husband needed nursing home care that cost $300 per day. Since the insurance left a shortfall of $137 per day, the couple had out-of-pocket costs of over $4,100 per month. They could not afford to pay this amount without rapidly depleting their savings, and jeopardizing the wife’s ability to support herself independently.

The solution to their problem was to qualify the husband for Medicaid using the methods discussed in this Special Report. With the strategies Lamson & Cutner was able to implement for the couple, Medicaid will cover all of the husband’s long-term care expenses. Unfortunately, however, only Medicaid will benefit from the long-term care insurance, which will reduce its costs in paying for the husband’s care. And that means the high premiums that the couple had paid for many years did not help them at all, and all of this money could have been saved.

Here's another case example in which long-term care insurance could not have delivered the range of financial benefits that Elder Law planning was able to. A husband and wife both needed home care. The main source of their income and savings was German war reparations, which are exempt from having to be paid towards the cost of one's own care. In this instance, a six-figure sum was involved. Our firm helped them qualify by first proving to Medicaid that all of their money was from the war reparations.

With all their income and assets secure from Medicaid eligibility requirements that would otherwise force them to pay the bill for the services they needed, the couple was now able to get fully paid home care at no cost to them. All their liquid assets were then transferred to their children without any Medicaid penalty.

The mother subsequently needed nursing facility care. Lamson & Cutner prepared a Medicaid application that allowed her to enter a nursing home penalty free, due to the effective asset protection planning that was done in advance.

Consequently, the couple and their children gained a series of advantages that could not have been duplicated in a cost effective way with long-term care insurance. Not only are all their medical and health care costs fully covered, but in addition their money and assets are safely in the family's possession, shielded from exposure to "spend down" requirements under government regulations.