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Medicaid, Estate Planning, And Incapacity Planning
Things You Should Know
The cost of long term care and medication can easily exceed $6,000 per month per individual. Even in lower cost long term care situations, the cost often exceeds $2,000 per month.
Ten years of long term care at these rates, thus, ranges between $240,000 and $720,000.
In addition, if a person is not able to handle his or her own affairs, the cost of a protective proceeding such as a guardianship or a conservatorship can range between a few thousand dollars, and many tens of thousands of dollars.
Privacy concerns may also become an issue, given the requirements of court filings in guardianships and conservatorships.
Even solutions designed to avoid the need for public disclosure in court records which are open to the public may not resolve privacy concerns. This is particularly true given the new Oregon Uniform Trust Code, which has broad ranging requirements concerning disclosures of information to beneficiaries or potential beneficiaries of trusts.
It can be very important to consider these things when preparing for a person’s possible incapacity, as a properly constructed trust or power of attorney, drafted with a view to preserving confidences, may be able to reduce many of these problems.
Proper planning can also reduce the negative effects of long term health care costs, Medicaid spend down requirements, and Medicaid reimbursement which may be sought by the state after the death of a Medicaid recipient.
Not all negative consequences can be eliminated in all cases. A skillful elder law attorney can help to alleviate many of these problems, however, particularly if given proper time for planning and for the implementation of relevant strategies.
It is important to remember that the law which affects such matters changes rapidly and often unpredictably. Perhaps even more important than the changes in Oregon trust law that came into effect on January 1, 2006, are changes to Medicaid law which resulted from the federal Deficit Reduction Act of 2005, which was signed into law on February 8, 2006.
Among other changes caused by this new federal law, the look back periods for uncompensated transfers which may render one ineligible for Medicaid have increased from three years to five years. If a person has made an uncompensated transfer during the five year period prior to an application for Medicaid, a period of ineligibility which may extend far longer than five years will likely result. At current figures, for example, an uncompensated transfer of $300,000 would result in a period of disqualification extending for almost four years. A $500,000 uncompensated transfer would result in a period of disqualification lasting over six years and four months.
Another factor to consider is that, under the new federal legislation, if a person becomes ineligible for Medicaid because of an uncompensated transfer, the period of ineligibility often does not begin to run at the time the gift is made. Instead, the period of ineligibility often begins to run when the person applies for Medicaid, and would be eligible for Medicaid (medically and financially) except for the fact of the transfer. To translate this into English, if a person makes a transfer that makes them ineligible for Medicaid, the ineligibility period often starts when the person is essentially broke (or when the only assets left are assets which could have been saved from Medicaid spend down, mostly for the benefit of the well spouse).
Even a smaller transfer, of, say $40,000, can result in a period of Medicaid ineligibility at just the time when Medicaid is needed most, under the new federal legislation. At present, such a transfer would result in over six months of Medicaid ineligibility, which would begin only when the person was otherwise qualified, and had completed his or her Medicaid spend down (and likely had no assets to pay for care during this period of ineligibility).
This can present a particular problem if the property cannot then be transferred back to the person in need of Medicaid.
Ways of addressing these problems are starting to emerge. These solutions may work only for some individuals. Even those individuals who cannot benefit from these emerging strategies need to know about these issues, and consider their options, so that they do not find themselves in a situation where they or their spouses are ineligible for Medicaid at a time when the money to pay for long term care is long gone.
Individuals also need to consider their options carefully in other regards, making sure to plan for the future in ways that suit their needs, making sure that privacy and confidential information is protected as best as may be possible, ensuring that relatives who may not be worthy of trust are not able to seek conservatorships or guardianships over a person, setting up well drafted and comprehensive powers of attorney that are tailored to a particular person’s situation rather than being highly generalized, preparing wills and/or trusts, and making plans for the medical future, with properly completed Advance Directives for Health Care, Physician Orders for Life Sustaining Treatment, and the like, as may be appropriate in each individual’s situation.
NOTE: The above touches on only some of the issues about which one should be aware in elder law situations. If any of these situations apply to you, however, you may benefit from legal advice from a lawyer who is well versed in elder law matters, Medicare and Medicaid issues, estate planning, wills, trusts, guardianships and conservatorships or similar matters. The above should not be considered legal advice, nor should it be taken as a statement of the only time that one might benefit from consulting a legal or other professional.
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