My parents are in their early 80s and my father was just diagnosed with Alzheimer’s. My mom is afraid that she will not have enough money to pay for his long-term care, but that she has too much money to qualify for government benefits. What should we do at this point?
“Aging in place” is the generally preferred course of action for our parents’ generation, meaning that they would rather remain in their home as they age. Many people are concerned that they will not have assets sufficient to pay for their care either in their home or a facility. There are options available to New York State residents that can help defray the cost of care, and allow the elderly to obtain assistance without emptying their or their children’s pocketbooks.
Medicaid (not to be confused with Medicare, which provides health-insurance and prescription drugs for the elderly) is a joint federal and state program that is becoming increasingly relied upon as the long-term care solution for the middle class. Contrary to common belief, being on Medicaid does not mean that you receive substandard care. The Medicaid program is simply a source of payment for those who qualify for it.
The Medicaid program is “means based,” meaning that you cannot have assets in excess of a certain amount to qualify. The asset threshold changes each year, and is $14,550 for an individual for 2014.
Assets do not disqualify you from medicaid home care
Many people believe that they are disqualified from Medicaid Home Care because they are over the maximum $14,550 Medicaid asset allowance. This is a misconception. First, an applicant’s home is an “exempt resource” and does not count toward the maximum. Second, certain transfers can be made in anticipation of Medicaid, which would not necessarily disqualify an applicant from Medicaid Home Care Services. People commonly cite the “five-year look-back,” but do not know that the look back applies only to nursing home care and not home care in New York State. Many are also unaware that retirement accounts are exempt and do not count toward the threshold.
There are various ways of transferring assets in order to qualify for Medicaid. This is often necessary where a parent is “house rich,” but cash poor, and wants to avoid selling their house in order to obtain care. The methods are too many and too complex to list here, but these transfers can be accomplished and, in many cases, can yield a favorable result to help keep a parent in his home while providing him with care. You should always consult with an attorney before transferring your assets.
Income does not disqualify you from receiving Medicaid home care
There is an income limitation on Medicaid applicants. The income limitation for a single applicant for 2014 is $809 to $829. Many people are under the false assumption that their income is too high to allow them to qualify for Medicaid. Wrong again!
In New York State, eligible applicants can employ what is called a “Not-for-Profit Pooled Trust.” The Pooled Trust operates similarly to a “flex account” that you might have through your employer at work to pay for qualified medical expenses. With a Pooled Trust, your income in excess of the threshold gets sent to the Pooled Trust organization (a non-profit organization that “pools” excess income from many other people). You are the beneficiary of that excess income and it can be used to pay qualified expenses. As a result, your income is reduced sufficient for you qualify for Medicaid Home Care services, while allowing you to still reap the benefit of the excess income. There is an annual fee for the Pooled Trust, and thus there should be enough excess income to justify payment of the annual fee. In addition, your bills (only bills in the beneficiary’s name) must be submitted to the Pooled Trust each month for payment. Lastly, the Pooled Trust is not a savings account. Any assets that are remaining in the beneficiary’s account at the beneficiary’s death revert to the Pooled Trust. It is important to use as much as possible in the Pooled Trust each month.
In short, if one or both of your parents are concerned about the cost of long-term care and implementing long-term care solutions, a consultation with an elder law attorney is invaluable. The best time to start planning for these situations is before your parents become ill or injured, but even if you have not done so, it might not be too late.
Alison Arden Besunder is the founding attorney of the law firm of Arden Besunder P.C., where she assists new and not-so-new parents with their estate planning needs. Her firm assists clients in Manhattan, Brooklyn, Queens, Nassau, and Suffolk Counties. You can find Alison Besunder on Twitter @estatetrustplan and on her website at www.besunderlaw.com.
