Elder Law Attorneys and Estate Planning
It’s common for seniors to meet with an attorney to develop an Estate Plan, complete with a Living Trust, Wills, and Powers of Attorney. These documents are often necessary to ensure that there are no tax or inheritance issues later on, but sometimes they also keep a senior from qualifying for Medicaid.
Most often, when creating a trust, an estate planning attorney will complete a Revocable Living Trust. This type of trust enables the estate to avoid probate, yet allows for a person to make changes at anytime. If the senior remarries, he’s able to add his wife to his estate if he chooses. However, what the attorney may not realize is that, because it’s revocable it’s considered to be an asset that’s available to pay for nursing home placement. Instead of protecting the senior’s assets for his heirs to inherit, the estate plan ensures that he’ll spend all of his money on his care.
Before the Deficit Reduction Act of 2005 was enacted, any money that was given away (gifted), transferred to a family member, or otherwise made unavailable for a senior to use to pay for his care meant that he wasn’t eligible for Medicaid for up to three years from the date it was “gone.” Medicaid set the penalty period using the amount the senior would have spent on his care if he had been in a nursing home from the start. For example, if the average private pay rate was $5,000 per month and the patient gave away $60,000, he wouldn’t be eligible for 12 months from the date that he gifted the money.
After the DRA was passed, however, the lookback period for eligibility was extended to up to five years from the date the money was gifted – and the penalty period starts the date the senior applies for Medicaid and is otherwise eligible. If a senior transferred $250,000 to his son in February 2007 and applies for Medicaid in January 2012, he won’t be eligible for however long the money would last if he were to pay for his care starting in January 2012. Using the $5,000 per month average above, the senior won’t be eligible for Medicaid for 50 months.
It’s important to consider future Medicaid eligibility when completing an Estate Plan. There are legal loopholes to use in order to become eligible for Medicaid while still preserving your assets for your family. Ask your attorney if he’s ever successfully assisted a client in becoming eligible for Medicaid; if he hasn’t, find an attorney experienced in Elder Law. It’s better to use an elder law attorney to create an estate plan than to pay for one to help you change one you already created. It’s possible to shorten or eliminate the time period you’ll have to wait to become eligible for Medicaid.
When looking for an attorney to help with Medicaid eligibility, don’t be afraid to ask how long he has been specializing in Medicaid and what his success rate has been. Ask for references, and if possible interview a couple of attorneys before you choose to allow them access to your finances. Bring an adult child or friend who can help understand (and remember) what the attorney says. Elder law attorneys all have to start somewhere – many attorneys who specialize in elder law start out working closely with an experienced elder law attorney for the first few years – a good idea considering that the intricacies of Medicaid law takes a while to learn.
It is possible to apply for Medicaid and be approved without consulting an attorney. If the senior doesn’t have much money and few assets, an elder law attorney probably isn’t necessary. However, unless the patient is clearly eligible and there are no other issues to be addressed, such as joint bank accounts and other assets, it’s probably worth it to pay the consultation fee (if charged). Many attorneys will offer a free consultation, where they will be able to assess whether there is a need for their help, and might inform the patient and his family that the application is so simple they should be able to do it on their own.
If a patient or family member contacts the local Medicaid office to inquire about eligibility, they might be told if they qualify – but they usually won’t be informed as to what steps they can take to become eligible. Most state agencies will only evaluate the Medicaid eligibility if the application is already submitted. Some states are easier to work with than others when it comes to Medicaid eligibility – it depends upon how many eligibility workers there are and how they interpret the rules. It’s important to remember that a state Medicaid program can’t penalize a person for working with an elder law attorney.
Most people don’t realize that their family member is eligible for Medicaid and pay privately long past the time that they should. They figure that the nursing home staff will tell them if and when the patient is eligible for financial assistance. The nursing home staff doesn’t know the patient’s financial worth unless the family asks – and that’s assuming that the nursing home staff even understands Medicaid eligibility. Nursing homes are required to post the telephone numbers of Medicaid and Medicare program offices, but many don’t offer assistance with the actual applications. They have no incentive to encourage you to apply for Medicaid because the Medicaid rate is often substantially less than the amount that they receive for patients paying privately.
There are other options besides applying for Medicaid yourself or hiring an elder law attorney: there are also private companies that assist seniors in applying for Medicaid, often staffed by former Medicaid eligibility workers. These companies may be able to obtain Medicaid for substantially less than the costs of an attorney, but if there’s any question at all you should seek the advice of an elder law attorney.