Fong Law Group

2023 AARP Report Recommends Supports for Family Caregivers

Many older Americans choose to have their family members care for them as they age. Despite the comfort a familiar face may provide, there is a significant cost for the loved ones who sacrifice their time, and often their upward economic mobility, to ensure that they can secure proper care for their senior parent.

In a report issued in March 2023, AARP stresses the importance of supporting family caregivers in their financial, emotional, physical, and professional lives. The analysis gives a glimpse into the experiences of family caregivers and also offers recommendations on policies, practices, and programs – across public as well as private realms – that policymakers should consider enacting or enhancing in support of caregivers and the individuals who are in their care.

How Much Does It Cost to Be a Family Caregiver?

Being a family caregiver can come at a great financial cost. The average cost of caregiving has risen exponentially in the past several years, and the trend is expected to increase more over time.

In its report, AARP estimates the value of family caregiving in 2021 at $600 billion dollars in unpaid contributions – up from $470 billion dollars in 2017.

The monetary value of caregiving is not the only cost of care. For family caregivers, some of the intangible costs of included:

• spending an average of 18 hours per week to tend to the needs of their loved ones
• facing higher risks of chronic loneliness, which may have negative health effects
• neglecting their own self-care

What Are the Major Issues in Family Caregiving?

According to the AARP report, by 2034, the population of people over 65 will outnumber the population of children under 18. With this historic shift, the researchers suggest that the impact on family caregiving will become even more prominent in several key areas:

The Need for Tailored Support for Diverse Caregivers and Their Families

Family caregivers across diverse cultures, ethnicities, sexual orientations, and gender identities often face concerns about access to support that is specific to their community. Ensuring that affordable, inclusive, readily available policies and services are in place to meet these needs of these caregivers will continue to be critical.

Direct Care Workforce Shortage

Amid a shortage of professional caregivers that only worsened during the COVID-19 pandemic, AARP notes that the turnover rate among the direct care workforce averages between 40 percent and 60 percent each year. Failing to recruit and retain a dedicated workforce in caregiving as the aging population grows will inevitably add to the burden carried by unpaid family caregivers.

Economic Impact on Working Caregivers

Most family caregivers – nearly two-thirds of them in 2019, according to AARP – hold a full- or part-time job in addition to caring for their loved ones. These workers often take an economic hit because they need to split their time between their jobs and their home responsibilities.

Without such supports as telecommuting, paid leave, and respite care, they may have no choice but to call out of work, turn down promotions, or even leave their job altogether to dedicate themselves fully to providing care. This can then mean additional financial stress as well as adverse effects on their career and future earning potential.

A Growing Sandwich Generation

In 2019, about 30 percent of older Americans were living with their children or grandchildren. The so-called “sandwich” generation represents those who are responsible for caring for their children and their aging parents at the same time, while also working. These caregivers, who are likely to report more emotional and financial pressure, now tend to include workers across an ever-expanding age span – from 35 to 64.

Recommendations

The AARP’s report recommends specific policies and practices to support family caregivers going forward. These recommendations to policymakers include the following:

• Including family caregivers in planning and decision making across health care settings
• Improving access to respite care for family caregivers
• Ensuring that publicly funded programs and supports for caregivers are inclusive, culturally appropriate, and designed to meet the needs of diverse populations
• Offering family caregivers a tax credit
• Expanding protections for workers who rely on the Family and Medical Leave Act and related state programs while providing long-term care for family members, including instituting paid leave for working family caregivers
• Allowing for other programs that pay family caregivers
• Improving Social Security benefits for people who provide long-term care services to family members

Additional Resources

Having a care plan in place for your loved ones in advance may help decrease the financial costs and other stresses associated with paying for long-term care for aging adults. Your elder law attorney can help you create a comprehensive long-term care plan that will address the costs associated with tending to the people you love. 

Bill Advocates for Seniors Who Seek At-Home Medicaid Care

Seniors who need assistance with everyday activities such as dressing, bathing, and eating are eligible for Medicaid Long-Term Services and Supports (LTSS). Unfortunately, hundreds of thousands of people who qualify for these services – but wish to receive them in their homes or a community setting – end up on extended waiting lists.

In many cases, these seniors then find themselves with no choice but to live in nursing homes or other institutional facilities for months, or even years, if it is the only way they can access the day-to-day support on which they rely.

A piece of legislation focused on meeting the needs of this population of older adults has recently been reintroduced to Congress by U.S. Sen. Bob Casey (D-PA) and U.S. Rep. Debbie Dingell (D-MI).

Aging in Place: When You Want to Live Independently

Living at home as you grow older can have a positive impact on your physical and emotional health, as well as on your wallet. According to one 2022 study, aging in place includes such benefits as the following:

• Maintaining a sense of independence and autonomy in one’s community
• Living in a familiar setting
• Enjoying a more fulfilling social network
• Decreasing feelings of loneliness
• Saving on the cost of long-term care facilities

Where Does the Medicaid Waiver Fit Into HCBS?

Older adults qualifying for Medicaid LTSS who wish to receive services in their home or community generally must wait to be granted a waiver before Medicaid will cover the cost of their home care.

As each state administers its own Medicaid system and waiver program, the wait time can vary depending on where you live. The income and asset thresholds for waiver programs can also differ from state to state, as can the types of home care that are covered.

These are among the main reasons why you may want to consult with your elder law attorney, who knows the rules and regulations specific to the state where you reside.

Home and Community Based Services (HCBS) Access Act

The Home and Community Based Services (HCBS) Access Act, originally introduced in 2021, seeks to secure for these seniors a real choice between receiving care at home or in an institution.

A one-page PDF summary of the HBCS Access Act outlines six specific steps that the proposed legislation is designed to provide:

• Enhanced Medicaid funding for HCBS
• Grant funding for states that would develop their capacity to serve individuals who prefer to receive home care
• Resources for states meant to ensure professional caregivers have stable jobs and wages
• A stronger workforce in home care
• Training for family caregivers
• Improved methods for evaluating the quality of HCBS

According to a 2021 report from Justice in Aging, 25 of the 50 states spend twice as much on institutional care as on HCBS for seniors and people with disabilities.

In addition to seniors eligible for Medicaid LTSS, many people with disabilities would benefit from the legislation if it is passed.

Support From Others

Sixteen U.S. representatives are co-sponsoring the HCBS Access Act, and numerous advocacy organizations for older adults have endorsed the legislation as well.

“I’m helping introduce the HCBS Access Act, which expands Medicaid HCBS funding that will help ensure Americans don’t have unnecessary delays in accessing the care they need,” U.S. Sen. Jeanne Shaheen (D-NH), one co-sponsor, said in a news release about the Act. "This bill is an important investment not only in the accessibility of care, but also in creating better jobs for home care workers and support for family caregivers.”

Earlier this year, Sen. Casey and Rep. Dingell also reintroduced a related bill, the Better Care Better Jobs Act. The goals of this legislation are to boost funding for HCBS, make millions more individuals on Medicaid eligible for these services, and create new jobs for home care workers.

Because Medicaid can be such a complex system to navigate, be sure to consider consulting with your elder law attorney.

What Is a Health Savings Account? Will Medicare Affect Mine?

A health savings account may help you save money on medical expenses, depending on your insurance type. If you are eligible, you can use your health savings account (HSA) to cover certain medical costs, according to HealthCare.gov.

How Does an HSA Work?

If you have a high deductible health plan, you can contribute to an HSA and use the untaxed money to cover medical costs, decreasing your total medical expenses.

High deductible health plans typically have lower monthly premiums than other insurance plans. However, individuals may pay more for medical services before coverage starts, per HealthCare.gov.

What Do Health Savings Accounts Cover?

You can use an HSA to pay for deductibles, copayments, and coinsurance.

Examples of typical expenses for which you can use a health savings account include:

• Acupuncture
• Ambulance costs
• Doctor visits
• Hearing aids
• Medications
• Psychiatric care and psychological therapy
• Certain long-term care services

However, you generally cannot use money from an HSA for monthly insurance premiums, unless you receive Medicare, health care continuation coverage, or unemployment compensation.

For long-term care insurance, you may be able to pay your premiums through a health savings account.

The Benefits of Health Savings Accounts

The advantage of using a health savings account is that funds are not subject to federal taxes when you contribute or withdraw money to pay for qualified medical expenses. You can also earn tax-free interest.

Should you have money left over in your account at the end of the year, it rolls over. The funds stay active, remaining in your account until you need them. Even if you change jobs or retire, you can keep your HSA.

In some cases, you can use your health savings account to cover your spouse’s and dependents’ medical expenses, even if they are not on your plan.

Health Savings Account Rules

2023 Contribution Amounts

The Internal Revenue Service sets contribution limits on HSA’s.

• For 2023, individuals can contribute up to $3,850, and families can put up to $7,300 into a health savings account, Investopedia reports.
• People who are 55 and older by the end of the tax year can make an additional $1,000 catch-up contribution.

Other Insurance Types

Other insurance plans can disqualify you from contributing funds to an HSA.

• Individuals with dollar-first insurance plans – in which the insurer takes care of its share of an included service before the insured individual pays deductibles or copayments – cannot put funds into a health savings account for their outstanding health care fees.
• Those on Medicare cannot add money to health savings accounts, though they can withdraw capital from their accounts to pay medical expenses that Medicare does not cover. While people using health savings accounts typically cannot use the funds to cover monthly premiums, there is an exception for Medicare beneficiaries.

Penalties

Although health savings accounts have several advantages, they also impose restrictions on how you use your money.

Taking money from your account for nonmedical or unqualified expenses before you reach 65 results in a 20 percent tax penalty. The 20 percent tax penalty for ineligible withdrawals does not apply if you are 65 and older. Still, you must pay income tax.

Opening a Health Savings Account

There are several ways to open an HSA.

• Employers can offer them, with the employer and the employee jointly funding the account.
• Some health insurance companies provide health savings accounts with high deductible health plans.
• Banks and financial institutions offer accounts for individuals.

How Does Medicare Affect Your Health Savings Account?

When you enroll in Medicare, you can no longer contribute pre-tax dollars to your health savings account. To put untaxed money in an HSA, you must have high deductible health insurance without additional disqualifying coverage, such as Medicare. Once you have Medicare, you can no longer add tax-free funds to your account.

After you enroll in Medicare, however, you can still access your health savings account. One of the advantages of health savings accounts is that they are vested. As a Medicare beneficiary, you can continue using untaxed funds to cover the medical expenses your insurance does not bear, such as deductibles, coinsurance, and copayments. You cannot, however, use tax-free money to pay for Medicare supplemental insurance.

While the Internal Revenue Service (IRS) prohibits people from using untaxed capital for high deductible health insurance plan premiums, the rule differs for Medicare. When you enroll, you can use your HSA to pay your Medicare premiums without taxes.

Withdrawing Money From Your HSA

People over 65 can withdraw funds from their health savings accounts for nonmedical expenses. Although these withdrawals are no longer tax-free, older adults do not incur the 20 percent tax penalty the IRS imposes on younger people taking funds HSA’s for ineligible expenses.

Since medical costs tend to increase with age, many prefer to keep their money in their health savings accounts to cover eligible medical expenses tax-free.

Delaying Medicare Enrollment

Some people with health savings accounts enroll in Medicare when they initially become eligible, forfeiting the ability to make HSA deposits for Medicare’s coverage. Others delay enrollment in order to continue making health savings account contributions.

• According to the Journal of Accountancy, only individuals with employer-sponsored high deductible health insurance as their primary coverage can continue adding to their health savings accounts past retirement age by delaying Medicare enrollment.
  
  Individuals with private insurance, continuation of health coverage (COBRA), or a health care exchange cannot fund their HSA’s after reaching retirement age.
   
• People who continue to work at small companies after becoming eligible for Medicare must enroll in the program immediately to have any health insurance coverage.
  
  Per MedicareInteractive.org, Medicare must be the primary insurance for those working at companies with fewer than 20 employees. Since the small employer’s health plan does not have to pay until after Medicare contributes, these individuals risk losing health coverage if they delay enrolling in Medicare. Deferment also results in a late penalty.
   
• Those with health insurance from businesses with 20 or more employees can put off Medicare enrollment and continue placing funds into their health savings accounts. Because the company insurance would remain the primary insurer when they join Medicare, they can continue receiving health insurance coverage without Medicare.

Individuals who wish to delay enrolling in Medicare should not accept Social Security payments. This is because Social Security automatically registers beneficiaries for Medicare Part A, rendering them unable to make HSA deposits.

Medicare and the IRS recommend that people who have delayed enrollment after becoming eligible should cease health savings account contributions six months before joining Medicare to avoid a tax penalty. A six-month lookback period applies, as Medicare’s coverage is retroactive.

If you have an HSA, whether you should delay Medicare enrollment depends on your situation. The decision could significantly impact your finances. Speak to your elder law attorney to learn more about your options for your health savings account as you approach retirement age.

How Medicaid's Money Follows the Person Program Aids Seniors

Congress established the Medicaid Money Follows the Person (MFP) Program to provide states with federal funding to help seniors who are receiving care in institutions but want to live at home.

However, it is not a permanent program and is due to expire in September 2027. Advocates have pushed for Congress to make MFP permanent, ensuring that states have funding for seniors who wish to return home from long-term care facilities.

What Is the Medicaid Money Follows the Pereson (MFP) Program?

MFP was established in 2005 to increase Medicaid enrollees’ access to home- and community-based services (HCBS). In part, its goal is to allow seniors to avoid nursing homes and other institutions, and instead receive care in their own homes and communities if they choose. Other beneficiaries of the program include people with disabilities.

MFP allows the Centers for Medicare and Medicaid Services to remove the restrictions that are placed on how funds are allocated for long-term services. It increases the use of HCBS services instead of long-term services and support.  

How Does MFP Help Older Adults?

Throughout its existence, MFP has helped seniors who otherwise would have been institutionalized maintain control over their lives by providing a chance at independent living. In the nearly two decades since the program began, MFP has helped more than 107,000 people move from a nursing home or a long-term care facility back into their home. One evaluation found that MFP results in greater life satisfaction among participants.

Returning home from an institution is a tall task for most seniors. A major concern is the lack of staff to take care of an individual’s medical and personal needs. In many cases, seniors must rely on family members. MFP helps ease the burden of transitioning from care facilities back home.

Examples of the type of support MFP provides seniors as they move back home typically include:

• Help paying for groceries
• Short-term transitional housing
• Security deposits for rental homes and apartments
• The cost of necessities for setting up a home (e.g., stair-lifts, wheelchair ramps)

Can MFP Help Seniors Secure Housing?

The federal government funds the Medicaid Money Follows the Person program. Medicaid is prohibited from paying for housing directly. MFP allows states to use money from the program to pay for case management and transitional support services for seniors.

To address the needs of low-income seniors, state governments have used MFP funds to partner with housing authorities and developers to ensure more housing options are available for seniors who want to live independently.

Will the Medicaid Money Follows the Person Program End?

MFP has been a Medicaid demonstration program since 2008. Demonstrations are used to determine whether programs should become permanent. More than 40 states and territories currently are a part of MFP.

However, Congress has inconsistently funded MFP. The uncertainty about whether the program will have long-term funding has made it difficult for states to budget, so over time some states have been opting out of the program entirely. If MFP expires in 2027, many more seniors will be forced to live in long-term care facilities, losing the independence they desire.

It remains to be seen whether Congress will make the program permanent. If it does, states will have a set amount of money to increase seniors’ ability to live on their own as they age.

Learn more about the program at Medicaid.gov. For further guidance, speak to your elder law attorney.

Protecting Spouses of Medicaid Applicants: 2023 Guidelines

The Centers for Medicare & Medicaid Services (CMS) has released the 2023 federal guidelines for how much money the spouses of institutionalized Medicaid recipients may keep, as well as related Medicaid figures.

What Are Spousal Impoverishment Rules?

Spousal impoverishment is a concern for older couples when there is one spouse who requires long-term care and applies for Medicaid.

Before the federal government enacted spousal impoverishment protections, many healthy spouses faced poverty when their partners needed long-term care. The spousal impoverishment rules are based on the idea that spouses will provide for each other.

Community Spouse Resource Allowance

In 2023, the spouse of a Medicaid recipient living in a nursing home (called the “community spouse”) may keep as much as $148,620 without jeopardizing the Medicaid eligibility of the spouse who is receiving long-term care.

Known as the community spouse resource allowance (CSRA), this is the most that a state may allow a community spouse to retain without a hearing or a court order. While some states set a lower maximum, the least that a state may allow a community spouse to retain in 2023 will be $29,724.

Monthly Maintenance Needs Allowance

Meanwhile, the maximum monthly maintenance needs allowance (MMMNA) for 2023 will be $3,715.50. This is the most in monthly income that a community spouse is allowed to have if their own income is not enough to live on and they must take some or all of the institutionalized spouse's income.

The minimum monthly maintenance needs allowance for the lower 48 states will be $2,288.75 ($2,861.25 for Alaska and $2,632.50 for Hawaii) until July 1, 2023.

In determining how much income a particular community spouse is allowed to retain, states must abide by this upper and lower range. Bear in mind that these figures apply only if the community spouse needs to take income from the institutionalized spouse.

According to Medicaid law, the community spouse may keep all their own income, even if it exceeds the maximum monthly maintenance needs allowance.

The new spousal impoverishment numbers (except for the minimum monthly maintenance needs allowance) take effect on January 1, 2023.

Home Equity Limits

In 2023, a Medicaid applicant’s principal residence will not be counted as an asset by Medicaid if the applicant's equity interest in the home is less than $688,000. States have the option of raising this limit to $1,033,000.

Pros and Cons of a Medicaid Asset Protection Trust

A Medicaid Asset Protection Trust (MAPT) is one option a person may consider to protect their assets from Medicaid and nursing homes or long-term care.

A MAPT is an irrevocable trust created during your lifetime. The primary goal of a MAPT is to transfer assets to it so that Medicaid will not count these assets toward your resource limit when determining whether you qualify for Medicaid benefits.

However, creating an irrevocable trust comes with a certain lack of control over the assets you transfer to this trust. Before making such a significant decision, consider some pros and cons to see if this long-term care strategy is right for you.

Benefits of a MAPT

1. You Can Still Benefit From the Assets of a MAPT

Although transfers of assets to a MAPT cause you to relinquish your ownership and control of them, the finality of the arrangement is not as harsh as it sounds.

In creating a MAPT, you select a person (trustee) who manages the trust assets for your benefit. So, if you transfer investment accounts to the MAPT, you can still receive the income generated from these investments. If you transfer your home, you can still live there. In exchange for giving up control of your assets to a MAPT, your assets no longer count against you for Medicaid eligibility purposes.

2. Your Assets Are Safe From Medicaid and Other Long-Term Care Creditors

Once your assets are in a MAPT and other criteria are met, Medicaid can’t seize them or ask you to spend them down to pay for your nursing home or long-term care costs. These assets also are not subject to Medicaid’s estate recovery program.

As a result, your heirs can benefit from the assets without the interference of Medicaid or liens it could otherwise file against your estate after you pass.

3. You Can Choose Your Beneficiaries

A MAPT also functions as an estate planning tool. This is because you can designate who receives what remains of the trust upon your passing. The beneficiaries you choose will receive the assets per the terms of the trust agreement, and the chances of a probate court getting involved are diminished.

In addition, you may be able to retain what is called a “limited power of appointment.” This allows you to change who the beneficiaries of the MAPT will be, should your wishes or family circumstances change.

4. Assets Are Protected From Your Beneficiaries’ Creditors

Even though you can designate a MAPT’s beneficiaries now, those beneficiaries do not have full access to the trust’s assets because of how it is structured. This also means their creditors do not have access to it. And, if your child is a beneficiary and is going through a messy divorce, neither does their spouse. You can also designate how bequests to beneficiaries can be used.

5. Protection From Capital Gains Taxes

A properly drafted MAPT preserves the full capital gains tax exclusion on the primary residence (currently $250,000 per spouse). Later, when a person’s beneficiaries sell the home, it would be valued at the market price at the date of gifting and not at the original purchase price. This can avoid or significantly minimize the capital gains tax that your heirs may owe.

Drawbacks of MAPTS

1. Timing Is Everything

For a MAPT to function as intended, it needs to be created in advance to avoid the Medicaid lookback period. In most states, this is five years for nursing home or institutional care. In some states, there may also be a lookback period for community Medicaid care (home aides, local programs, etc.).

If less than five years have elapsed since you created your MAPT, you may still be responsible for some or all of your long-term care costs until sufficient time has passed.

2. Income From MAPT Is Countable by Medicaid

Although assets in a MAPT may not be “countable” by Medicaid toward your resource limit, these assets may still generate income. If this income is payable to you, it may cause you to exceed the income limit permitted in your state.

If this happens to you, you may have other options, such as utilizing a pooled income trust, or may decide you will contribute partially toward your care.

3. Giving Up Control Is Non-Negotiable

A trust will not qualify as a MAPT if you retain control other than the limited power of appointment that may be permitted in your situation. You must accept that a person you select to act as trustee will manage the trust, distribute funds and income from the trust, and also be the effective owner of the assets.

In addition, creating a MAPT but not transferring assets to it is ineffective. You need to fully commit to the concept for it to benefit you.

4. Setting Up a MAPT Is Costly

Creating and implementing a MAPT is a complex legal task requiring many hours of work and expenditures made on your behalf. In addition, because MAPTs are tied to individual state and federal laws, the expertise of a qualified Medicaid attorney is essential.

You should expect that this expertise comes at the cost of several thousand dollars or more. However, your potential savings could be exponentially greater for you and your family. For this reason, the price is often well worth it.

5. Potential Effects on Care

It’s important to realize that while the MAPT strategy is designed to preserve assets and wealth, it assumes that a person will rely on Medicaid to pay for a portion of their care. However, Medicaid does not cover all facilities. For example, many assisted living facilities are not licensed as assisted living programs and only accept private pay residents. Thus, relying on Medicaid could affect the choice and quality of care a person may receive.

The pros and cons discussed above are not exhaustive, and there may be other ones that apply to your situation. Investing in a MAPT is a highly fact-specific process, and MAPTs are not suitable for everyone.

You should speak with your attorney to discuss how a MAPT may affect other benefits you receive, your overall estate plan, its tax consequences, and whether it is right for you.

After a Dementia Diagnosis: Preparing for the Future

A diagnosis of dementia, a category of diseases affecting memory and thinking that includes Alzheimer’s disease, can feel overwhelming and upsetting. You might worry that you will lose control over your life and ability to make your own decisions. Fortunately, receiving a diagnosis of dementia or Alzheimer’s does not mean that you cannot execute legal documents or make decisions about plans for your future finances and health care.

People with dementia can execute legal documents to plan for their futures when they have the mental state — or capacity — to do so. Capacity refers to your ability to understand the contents of a legal document, such as a will, and know the consequences of executing it. If you know who your family is, understand your assets, and comprehend your will, you can execute a valid will and plan for the distribution of your estate after your death, provided you understand what you are signing and its effect on your life.

The following can help you in planning where you wish to live, what kind of care you receive, and what happens to your assets if you get severely ill or pass away.

Health Care Power of Attorney

Consider appointing a health care agent to make medical decisions if you become incapacitated. You can name a health care agent using a health care power of attorney, sometimes called a medical power of attorney or a durable power of attorney for health care. Your health care agent can make medical choices if you can no longer do so.

Picking someone you trust, such as a responsible child or spouse, or another family member, can give you peace of mind that they will have your best interests and desires in mind when they make decisions. For instance, dementia patients who prefer receiving in-home care can express this wish to their agent.

In the power of attorney document, you can also state your intentions regarding health care and limit your agent’s capabilities if you wish.

Living Will

For an added layer of protection, you can also draft an advance directive or living will that states your desires regarding medical treatment if you are unable to communicate with your physician. Your living will can express whether you want treatment to prolong your life.

Financial Power of Attorney

Using a financial power of attorney, known as a power of attorney for property, you can select a trusted individual to handle your financial affairs if your disease progresses such that you can no longer make financial decisions. Your financial agent can manage your money and pay bills on your behalf, but they cannot use your money for themselves.

In the power of attorney for property document, you can restrict your agent’s powers. For instance, a person might specify that the agent can manage personal accounts, but not sell the family home.

Long-Term Care Planning

After a dementia diagnosis, consider whether you would like to receive long-term care at home or in a facility, and whether you intend to apply for Medicaid or long-term care insurance. If you want to apply for Medicaid, you might need to prepare your finances to become eligible.

Last Will and Testament

Making a last will and testament, also known as a will, can help ensure your assets go to your family and friends when you pass away. You can determine how much of your money each beneficiary will receive and make bequests to individuals. For example, if you have items of sentimental value, you can leave them to specific people. Without a will, your assets will transfer to your heirs according to the law in your state.

Meet with you attorney to discuss your plans for your future. For additional support and to learn more about Alzheimer’s disease and related disorders, reach out to your local Alzheimer’s Association chapter.

What Are Medicaid Asset Protection Trusts?

Medicaid imposes strict rules on how much money and assets an applicant can have. To qualify for Medicaid, you must fall under the asset limit, which is $2,000 in most states.

Even with greater than $2,000 in assets, however, you may be able to get on Medicaid by establishing a Medicaid Asset Protection Trust (MAPT). When you put your assets in a MAPT, Medicaid will not count the money in the trust toward its resource limit.

Using Medicaid Asset Protection Trusts to Transfer Assets

After you create a Medicaid Asset Protection Trust, you no longer own the assets within it, allowing you to qualify for Medicaid following the five-year lookback period. People who are currently healthy but plan to go on Medicaid in the future might choose to use this Medicaid planning strategy.

It is essential to understand that MAPTs are irrevocable: Once you make the trust, you cannot change your mind and take those assets back. Your trust must be irrevocable for you to qualify for Medicaid because it means that you no longer own or control these assets.

In contrast to MAPTs, many types of revocable trusts, such as family trusts, are often ineffective in preparing for Medicaid. Having the power to revoke your trust would allow to retain control over your assets, and Medicaid would count the contents of your trust as part of your resources.

Creating a Medicaid Asset Protection Trust

Three parties are involved in a MAPT: the grantor, the trustee, and the beneficiary. When you make a trust, you become the grantor, the person who places assets into the trust. The trustee manages the trust, and the beneficiary — or beneficiaries — will receive your assets.

If you want your MAPT to ensure you qualify for Medicaid, you must name someone other than yourself or your spouse as the beneficiary. Designating yourself as the beneficiary would mean giving yourself assets, which Medicaid would count toward its asset limit.

You can, however, select your children or parents as beneficiaries. Using a MAPT, you can also make sure they get those assets when you pass away.

What Can You Place in a Medicaid Asset Protection Trust?

As part of your Medicaid planning strategy, you can place many types of assets in a MAPT, including:

• Checking and savings accounts
• Stocks and bonds
• Mutual funds
• Certificates of deposit
• Real estate that is not your primary residence
• In most states, your home

Although many states allow you to place your home in MAPT so that it will not count toward Medicaid’s resource limit after five years, Medicaid regulations vary by state. In Michigan, for example, placing your home in a MAPT will not prevent it from counting toward the asset limit.

Benefits and Drawbacks of Medicaid Asset Protection Trusts

Medicaid Asset Protection Trusts offer several benefits to individuals planning to apply for Medicaid:

• MAPTs preserve generational wealth, safeguarding assets for family members.
• After you pass away, the state cannot take your assets from your beneficiaries to reimburse them for your long-term care, as MAPTs avoid probate.
• Since nursing home fees can be exorbitant, MAPTs can save your family money, as they let you qualify for Medicaid once the lookback period has ended.

The drawbacks of MAPTs include the following:

• Once you establish a MAPT, you forfeit the control and use of your assets. If you need money, you will not be able to draw from the trust.
• The fees associated with preparing a MAPT can be costly, ranging from $2,000 to $12,000.

Speak with your attorney to learn about how using a Medicaid Asset Protection Trust could help you plan for your future.

Miller Trusts Can Help You Qualify for Medicaid

Many seniors find themselves in need of Medicaid to pay for their long-term care but are surprised to learn that their modest monthly income may disqualify them. The reason for this is that Medicaid is a “means-tested” benefit. In other words, you must not have income exceeding certain thresholds in order to qualify and receive Medicaid benefits. For example, in New Jersey, the monthly income limit for nursing home or community-based services is $2,523 for individuals and $5,046 for married couples.

Medicaid expects all of an applicant’s monthly income, besides a monthly personal needs allowance and Medicare premiums, to go toward nursing home costs. So, what if you have more income and other expenses? A Miller Trust may help you resolve this dilemma.

A Miller Trust is a Medicaid planning tool that can assist you in meeting the income limits and qualifying for Medicaid. Unlike other planning tools, Miller Trusts do not have specific disability or age requirements.

How Does a Miller Trust Work?

If your income exceeds Medicaid’s income limit, you can deposit the amount of your excess income into a Miller Trust – also referred to as a “qualified income” trust. Once it is deposited into this trust, it is not counted as income by Medicaid. However, to qualify, a trust must be irrevocable, which means you cannot cancel or change it. Once you put money into the trust, you cannot get it back directly. However, the trust can pay certain expenses on your behalf.

A Miller Trust is a good option for any Medicaid applicant needing long-term care services, whether at home, in their community, or in a skilled nursing care facility. This trust is created by the applicant, a guardian, or a person with a properly drafted power of attorney. A trustee is chosen to manage the trust and the income deposited. Anyone other than the Medicaid applicant can serve as a trustee.

Once the trust is set up, the trustee establishes a bank account to receive excess income from the Medicaid applicant. The income can only be used for certain expenses. For example, it may be used to pay the personal needs allowance of an individual in a nursing home, Medicare premiums, bills not covered by Medicaid, or supplement costs of a nursing home.

Another requirement of a Miller Trust is that the applicant’s state Medicaid agency will be the beneficiary of any remaining funds in the trust upon the death of the Medicaid applicant. The amount the state receives is limited to the total value the state paid in long-term care on behalf of the applicant. Any amount remaining after this payment may go to a person the applicant chooses.

Medicaid Income Cap

You should be aware that not every state allows Miller Trusts as a method to qualify for Medicaid. Currently, only about 25 states, known as “income cap” states, permit it. Other states do not impose an income limit for nursing home care, and so there is no need for a Miller Trust in these locations. For example, in Massachusetts, you would pay all your income, minus certain deductions, to the facility, and Medicaid would pay the remaining cost.

Before creating a trust, it is important to speak with an elder law attorney to ensure this option is right for you. If you live in a state where this is not allowed, there may be other options, such as pooled income trusts, which serve a similar purpose.

For guidance in Medicaid planning, consult your attorney.

Are You Missing Out on Benefits? Identify the Programs Available to Seniors Like You

Older adults have access to hundreds of federal and state benefits programs. Many retirees meet the requirements for these aids, yet do not know they are eligible and miss opportunities to receive assistance. Others can feel overwhelmed by complex application processes.

BenefitsCheckUp, the National Council on Aging’s online resource, helps elders identify the federal and state assistance programs for which they are qualified. The database is free to access, and the National Council on Aging ensures personal information people enter into the website remains confidential.

The resource provides older people not only with individualized reports of the assistance programs that cover them, but also the details they may need on each program before applying, including contact information for the agencies administering the assistance.

How to Obtain an Eligibility Results Report

To get personalized Eligibility Results detailing the benefits programs to which you may apply, enter your information into the database on the BenefitsCheckUp website, starting with your ZIP code. Then select the programs that interest you, which offer support on any number of services, including:

• Health care and medication
• Food and nutrition
• Housing and utilities
• Aging in place and in-home care
• Income
• Disability services
• Long-term care, such as skilled nursing facilities
• Discounts and activities
• Tax help
• Crisis, legal, and general assistance
• Veterans’ programs

Once you enter details such as your date of birth and marital status, BenefitsCheckUp generates a report outlining the specific programs accessible to you, and identifies what other information each program requires.

The Eligibility Results reports have several user-friendly features:

• If you make errors filling in details or want to provide additional information, the website allows you to go back and revise your answers.
• After the website creates an individualized Eligibility Results report, you can save it as a PDF and email it to yourself or a loved one.

Family and Caregivers Can Use BenefitsCheckUp to Assist Their Loved Ones

Family members or caregivers of older adults can also use BenefitsCheckUp to help their loved ones learn about benefits programs. They can enter an individual’s information into the website on their behalf and get a report, which they can use to support their loved ones in applying for state or federal benefits.

This easy-to-use resource can help older adults and their families alleviate the stress associated with applying to state and federal benefits programs. Visit the BenefitsCheckUp website to use the tool.