Medical Assistance Planning FAQ
Or Can the Nursing Home Take My House?
NOTE OF WARNING:
In early February 2006 Congress made [eliminated] major changes to the “Divestment Planning” tools that have been used by attorneys and financial advisors for many years. [Deficit Reduction Act of 2005.]
As of this writing “Divestment” – the giving away of assets for less than fair market value – is no longer considered a viable tool for planning. We strongly recommend that if your assets are below $250,000.00, primarily consisting of your home, do NOT give any of your assets away to anyone without first talking to an attorney about the many negative outcomes that will befall you.
Please see Andrew Schmidt at Schmidt & Schmidt, S.C. in Wausau, to discuss your pre-nursing home planning needs AS SOON AS POSSIBLE.
Doing the Right Thing for Aging Loved Ones
Most people who visit this page are the children of those likely to go into a nursing home in the near future. Dealing with our parents is at times more challenging than dealing with raising our children.
We love our parents and they love us. But the stresses of making these decisions are so often seen as the last resort, the final step, or the first nail of the coffin. Emotions run high. So high that no one wants to talk about the nursing home, financial assistance, medical assistance Link to Medical Assistance Planning for Long Term Care, Medicaid, assisted living options, COP programs, property divestment, burial instructions, funeral trusts or any other elderly-related subject.
At Schmidt & Schmidt, S.C., our Wisconsin lawyers have firsthand knowledge of nearly every aspect of helping you and your parents make decisions.
A Brief Story
Several years ago, Andrew was sitting at the dining room table with his inlaws and his wife’s siblings. During a discussion on end-of-life planning, one of the siblings asked, “So Dad, where is your will kept?”
You would have thought Andrew had asked his father-in-law to jump over the moon! He would not tell nor would he reveal who drafted it. “Some things are just to be kept private,” he argued. “You’ll find out when I die!” Since then no one has asked a single related question.
This response is so very wrong! Yet it is uttered in about half of the families we assist. If your parents are asking you to take care of them at the end of their lives, when they can no longer take care of themselves or upon their death, their financial and legal affairs would be a lighter burden upon you knowing ahead of time where, what and how critical information is kept.
With a month in a skilled nursing facility costing about $6,700, or $80,400.00 per year, few Wisconsinites have the cash or resources to pay this kind of monthly expense. If your parents have a home, a couple of cars, life insurance, some CDs, annuities, a vacation cabin, and an IRA you will face the obligation of selling ALL of them to pay for skilled nursing care.
We invite you to speak with one of our attorneys. Schmidt & Schmidt, S.C., will create a Medical Assistance Plan that is age, marriage and income appropriate taking into account the huge number of variables each family has. Below are answers to questions:
What Is Medical Assistance Planning?
Medical assistance [MA] covers a wide range of medical services for the income eligible. These medical services are provided by MA-certified providers and facilities. MA long-term care pays for the skilled nursing home care of an MA patient. But to have MA pay for the nursing home the MA patient must have no “assets”. If a person has assets these assets must be spent down or divested before a person can become eligible for MA nursing home care.
This is typically why most elderly seek out an attorney to assist them in qualifying for MA. In order to qualify for MA a person has to have no “assets” or be “broke”. But what “broke” means to MA is not what it means to the average person.
At our Wausau law firm, medical assistance planning involves a detailed review of a client’s assets and income. These are then weighted against the requirements of MA. A Medical Assistance Plan is created for the client. With proper planning and prompt implementation of this plan a person can save thousands to tens of thousands of dollars.
How Do I Become Eligible for Medical Assistance?
To be financially eligible for Long-Term Care Assistance a client will need to show he or she has few assets and little income available to pay for a nursing home.
"Asset Eligibility" means $2,000 or less in cash and no other assets except exempt assets. Exempt assets include:
- Primary residence,
- Personal possessions,
- Wedding & engagement rings,
- Term life insurance,
- Burial funds (depending on program $4,500 on up), or prepaid funeral/burial policy irrevocably paid to a funeral home,
- Tools of trade.
At Schmidt & Schmidt, S.C., these eligibility rules are matched up against a variety of very effective tools that can allow you to retain possession of many of your assets. The degree of retention depends on many factors. The best is early planning.
Will the Nursing Home Take My House?
No. The nursing home does not take your home. But if you use MA Long-Term Care Assistance, a lien (like a mortgage) will be placed on your home to reimburse the state for the money it spent on your care. After your death this lien will have to be paid. This means the house will then have to be sold to pay this bill.
A Last Will and Testament cannot stop a lien from being placed against your house. A Durable Power of Attorney will not stop a lien. Nor will a revocable trust stop a lien. There is little one can do as they are moving in to a nursing home to prevent a lien from being placed on the house.
Advanced planning is VERY CRITICAL. Do not hesitate. We have seen tears, heard some bad words and have felt powerless when family members ask us what they can do to prevent the “nursing home from taking the house” after mom or dad have been admitted.
At Schmidt & Schmidt, S.C., we know what you can do to keep your home in your family. With all of the variables present in each family a quality Medical Assistance Plan will be presented to you for your consideration.
Will My Spouse Have to "Go Broke" Too?
The answers presented above focus on a single or unmarried individual. When one of a married couple needs MA Long-Term Care then a new set of rules is applied to the scenario. The person going into a nursing home is called an “Institutionalized Spouse” and the other person is called the “Community Spouse”. The institutionalized spouse generally follows the guidelines set above. Meaning he/she will have to be "broke."
The Community Spouse does not have to be broke or “impoverished”. But on the other hand the Community Spouse cannot be a millionaire in his or her own name. Typically the Community Spouse can retain the marital residence, a significant amount of cash assets, his/her IRAs, and sufficient assets to ensure a nice monthly income.
Your Medical Assistance Plan created at Schmidt & Schmidt, S.C., will clearly address the needs of a married couple with an eye toward keeping as many of the family assets in the family.
Can My Children Participate?
With your written permission we would be very glad to discuss, inform and/or educate your children on what you are planning to do.
It is foolish to exclude your children or your caregivers from this process. To do so could mean thousands of dollars not given to your family, and a great deal of anguish over missed opportunities.