“No Long-Term Care Insurance, No Problem”

“No Long-Term Care Insurance, No Problem”

Do you have long-term care insurance or Medicaid? Did you know that you may be among the 55,000 people that the State of Illinois provided long-term care (LTC) to last year through their Healthcare and Family Services Department? Do you own a home and want to make sure that your designated heir receives the property as you have expressed? 

Planning for end-of-life care is extremely important. Nursing home care is expensive, but with the right planning, seniors can avoid losing everything they’ve worked for. Attorney Ashante Travis of The Barclay Law Group tells us how. 

If you have Medicaid and must go to a nursing home, Medicaid can recover the money it spent on your care by claiming your home as an asset. This can sometimes be avoided by planning in advance. However, Medicaid has a 5-year look back period that might cause penalties if you have made large transfers of property. 

Generally speaking, Medicaid treats the transfer of title to a recipient’s home like the transfer of any other appreciating asset. If a recipient disposes of assets for less than fair market price, he or she may be penalized, thus becoming ineligible for Medicaid LTC assistance. If the person transfers assets within a specified period (the so called 5-year look-back period) prior to applying for Medicaid LTC, denial of coverage will begin at the time the transfer was made and will last for as long as the uncompensated value of the gift would have covered the private-pay cost of nursing home care; transfers of assets prior to the look back date are not penalized.

According to Attorney Ashante Travis, there are still some exceptions to this rule. She states, “What many people do not know is that gifting strategies or asset transfers can help protect savings, if done properly. For most of us, our homes are our most valuable assets. To protect your home, you might consider placing the property in an irrevocable trust - but you could also gift it to your spouse without penalty.” 

In some cases, the transfer of title to a home does not incur a Medicaid penalty. Medicaid recipients can transfer sole ownership of their homes to their spouses without penalty. The spouse is then free to do as she or he wishes with the property without adversely affecting the provision of Medicaid LTC services to the recipient.

Recipients can also transfer their homes without penalty: to a child who is under the age of 21 or blind or permanently disabled (at any age), a sibling who has an equity interest in the home and was residing there for at least 1 year prior to the applicants need for LTC; or a child of any age who was residing in the home at least 2 years prior to the applicant’s need for LTC and who provided care that permitted the applicant to reside at home

rather than in an institution.

Thank you, Attorney Travis, for this useful information.

    

Bye for now,

Bren


QUIZ: What’s the difference between Medicare and Medicaid when it comes to nursing home care?

Answers to last week’s quiz: An accelerated benefit rider(clause), also known as an accelerated death benefit rider or living benefit, allows a life insurance policyholder to receive a portion of their life policy’s death benefit before they die. This happens if the policyholder is diagnosed with a terminal illness or other qualifying condition.

Get more detailed answers to last week’s QUIZ question or for broad questions that you may have, please call me: 773-817-0601 or 773-819-1700

Disclaimer: The illustrations presented in this column are not, nor are they intended to be, legal, financial, or any other licensed professional advice, you should contact the licensed professional of your choice for advice on your individual situation.


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