By Kim Boyer
Elder Law News
November 2006
Despite the numerous restrictions the Deficit Reduction Act (hereinafter DRA) has placed on Medicaid eligibility, elder law attorneys are still able to assist individuals and families in developing estate plans to avoid depleting their assets, should they become ill and need long term care.
For those individuals who are already in a nursing home, despite the harsh new rules, elder law attorneys are continuing to help them qualify for Medicaid benefits while maximizing the amount of money they are able keep. Here is an example of a family we were able to assist post DRA enactment. (Names have been changed for privacy).
Betty came into our office in June. Her husband, Frank, had entered a nursing home which was costing the couple over $5,000 each month. Not including their home, their assets totaled roughly $150,000 at the time Frank entered the nursing home in April. Betty was told that she could keep the couple's home as an exempt asset and then once they spent down to approximately $75,000, Frank would qualify for Medicaid.
We advised Betty that she could petition for division of assets and income, and set aside $99,540 to herself as her sole and separate property, called her Community Spouse Resource Allowance ("CSRA"). Starting January 1, 2007, the CSRA increases to $101,640. In addition, she purchased a Medicaid qualified annuity with the additional portion of their assets, with terms of the annuity conforming with the provisions under the new law.
The same month of our initial meeting, a Medicaid application was filed. Thereafter, we received word that Frank was approved for benefits retroactive to the date of application. Betty saved over $75,000, and she has additional income for her life to provide financial security.
Before purchasing an annuity, it is imperative that you consult with someone who understands the new criteria for annuities under the DRA. If structured improperly, the same annuity purchased by Betty could have resulted in an 11 month Medicaid penalty during which Frank would be ineligible for Medicaid.
Please keep in mind that Medicaid planning is very fact-specific and not all of the above planning techniques work in every situation. Before spending down all of your assets, we recommend contacting an elder law attorney knowledgeable in the area of Medicaid laws.
| Nevada Medicaid Numbers for 2007 | |
| Income Cap | $1,869.00 |
| Minimum Monthly Maintenance Needs Allowance (7/1/06-6/30/07) |
$1,650.00 |
| Maximum Monthly Maintenance Needs Allowance |
$2,541.00 |
| Minimum Community Spouse Resource Allowance |
$20,328.00 |
| Maximum Community Spouse Resource Allowance |
$101,640.00 |
| Penalty Divisor | $4,583.00 |
Disclaimer: This information is for general informational purposes only and does not constitute legal advice. For specific questions, you should consult a qualified attorney.
