Is now too soon to begin planning for long term health care costs under Medicaid?
As each of us age, we should be asking ourselves when do we need to start asset planning to protect our important property, in case we need long-term, skilled nursing home care under Indiana Medicaid covered services.
Most commonly, to be eligible for Indiana Medicaid, you must:
- Be a resident of the State of Indiana, and a U.S. citizen or an eligible immigrant
- Demonstrate medical need
- Be an individual age 65 years old or older, be blind or disabled.
- If single, not have monthly income in excess of $674 or assets exceeding $1500, and if a couple not have monthly income in excess of $1,011 or assets exceeding $2,250, subject to change based on the Social Security costs of living adjustments.
If you meet the eligibility requirements and Indiana Medicaid pays all or a portion of your long term nursing home costs, once the Medicaid recipient dies, the State of Indiana will seek to recover from their estate, proceeds equal to the amounts which were paid by Medicaid for medical expenses. The Indiana “Estate Recovery Program” will seek to recover all such medical payments expended on behalf of the nursing home resident after they turn 55 years old. So the older we get, and therefore the more likely we are that we may need long term nursing home care, the greater the likelihood the State of Indiana will come looking after the patient’s death for repayment of those expenses. And the place Indiana will look is at the assets and property owned by the Medicaid recipient at the time of his or her death. This includes real estate and personal property.
In order to avoid the Estate Recovery Program’s attachment of your assets, such as your home, after your death, it sometimes is possible to use an irrevocable trust to take title to your valuable assets, which after the passage of time will no longer be subject to a Medicaid lien attachment. This “look back period” concerning the transfer of your assets for less than fair market compensation is 5 years. The number of months of Medicaid ineligibility incurred by such a less than fair market value disposition is calculated by dividing the uncompensated value of the asset transferred by the average monthly costs of nursing home care.
The reason for doing this asset protection planning sooner rather than later is because since February 8th 2006, such “ineligibility period” now does not begin until you are eligible for Medicaid such as the commencement of nursing home level care. So protecting your assets sooner rather than later, such as transferring the title to your major assets into an irrevocable trust, to start the countdown of time so that later when you need long term Nursing Home, Home or Community-Based Services, your transaction is safely beyond the 5 years “look back period” may be your best asset protection strategy, if you believe you may ultimately need Medicaid assistance to pay for your medical care.
Naturally, each legal action usually has additional consequences which you need to consider. Individuals who wish to review the effects of the new rules on their current estate plans or want to review asset protection options under the new rules should contact Doll & Sievers Attorneys at Law, LLC at (812) 858-5200 or (812) 886-0000 to schedule an appointment.
– Morrie
