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Planning For An Aging Parent In North Carolina

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Planning for one’s own potential long-term care needs is something few of us do, and typically only when it comes time that either mom or dad can’t live by themselves do we then try and figure out how to handle that dilemma. While there may be no easy choices, it is far better to be proactive and ahead of the curve than try and play catch up after the fact.

Communication is the Key

Since this issue impacts all members of the family across generations, everyone has a strong interest in addressing the specifics. Who initiates the discussion is far less important than the fact it becomes a topic of discussion. A couple of good questions to address are:

  • Have your parents made any long range plans?
  • Are there financial resources available from your parents? How about from you or your siblings?
  • Is staying in their home an option with either daily or live-in care?
  • Can your home accommodate one or both of your parents if necessary?

These are just some of the questions that must be answered, and as indicated, the sooner the better. A threshold issue is understanding the finances involved in elder care.

The Numbers

Since 2004, the Genworth Cost of Care Survey has studied long term planning costs. The most current data for monthly costs of various care options:

  • Home health care – around $4000
  • Adult day care – around $1500
  • Assisted living facility – between $3000 – $4000
  • Nursing home care – between $7000 – $8000

The Options

  • Insurance – It can truly be said of insurance that it is something you need to have but hope to never have to use. For long term care insurance, the earlier a policy is taken out and the healthier the applicant is, the lower the costs. One option to consider is if mom and dad cannot afford the premiums, perhaps the kids can. This is certainly a less expensive option than the monthly out-of-pocket costs as indicated above.
  • Public programs – Unfortunately, Medicare does not offer long term care as part of its program. For those with very limited income and few assets, Medicaid may be an option. For those who have honorably served our country, the Veteran’s Administration has certain benefits available.
  • The Family – Unfortunately, for too many people, the burden of long term care falls on the family. It’s not so much the individuals offering the care don’t want to help, more often it’s the high cost borne by the caregiver. Caregivers often need to reduce their own hours of work or stop altogether, which can have a long range negative impact on their own retirement security.

An estate planning attorney can assist you not only in financial matters involving the disposition of your estate after you pass, but also in establishing and maintaining a high quality of life in your sunset years.

Approved for Medicaid: What if Your Loved One Receives an Inheritance?

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inheritance medicaid

One of the most dreaded possibilities following Medicaid approval is a change in the Medicaid recipient’s situation, and one of the most common changes is the receipt of funds from the estate of a deceased family member.

In a previous post, we discussed the need for any at-home spouse to update their estate plan to ensure that any assets passing to a spouse in care are done so in a manner that will not jeopardize the ongoing Medicaid approval of the in-care spouse.  However, even if the at-home spouse takes care of things, there are always situations that can arise.  One of the more common ones involves the in-care spouse receiving an inheritance from a parent or child.

If an inheritance is received, the first thing to do is contact your Elder Law attorney if you worked with one.  If you didn’t there are some important things to remember:

  • You have thirty days in which to report the receipt of assets to the Department of Social Services where Medicaid was applied for. If you fail to report within thirty days, you may be responsible for reimbursing the State for funds expended on behalf of the Medicaid recipient while they were ineligible.
  • If the amount is small and can be spent on the needs of the Medicaid recipient, be sure to complete the spending prior to the last day of the month in which the inheritance is received.
  • If the amount is large, you still may be able to spend it down before the last day of the month. Consider prepaying for the individual’s funeral in full or paying off any outstanding obligations.
  • If there is an at-home spouse, consult with your Elder Law attorney about transferring the inheritance to the at-home spouse.
  • Do not give the money away to others – it will cause a period of ineligibility.
  • Do not sign a renunciation of your interest in the inheritance (or on behalf of the individual) – a renunciation is considered exercise of control over the asset which Medicaid views as a gift.

If, at the end of the month, the individual still has more than $2,000.00, they will need to pay privately for their care until they are back below $2,000.00.  Again, an Elder Law attorney will be able to guide you through this process in a manner that is beneficial for the Medicaid recipient and, if possible, for his at-home spouse, but do not wait – take affirmative steps to address the situation.

Approved for Medicaid: What If You Are the At-Home Spouse?

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Many North Carolina Medicaid situations involve a spouse needing care and health spouse that can still live at home. During the Medicaid application process, there are steps that an at-home spouse will need to take to ensure that he or she is protected to the fullest extent possible from any adverse Medicaid claims.  However, following the in-care spouse’s approval for Medicaid, the at-home spouse should take some additional steps.

Adjust Your Estate Plan

If you work with an experienced Elder Law attorney, he or she will likely encourage you to change your estate plan in conjunction with the Medicaid application and spend down.  The reason is that if the at-home spouse dies before the in-care spouse, the assets that were shifted to the at-home spouse for Medicaid qualification purposes may end up going right back to the in-care spouse. If that happens, not only will the in-care spouse lose Medicaid coverage, but all of those assets are now subject to spend down and claims for estate recovery.

Unfortunately, changing your estate plan may not be as simple as hopping on LegalZoom and generating a new Will.  The at-home spouse will want to make sure that the assets are disposed of properly and that if the he or she predeceases the in-care spouse, that the assets are retained in trust for the benefit of the in-care spouse in such a manner as to not affect Medicaid eligibility.  If you own real property, you will want to make sure ownership of it is properly structured.  You will want to make sure beneficiary designations are changed. There are a lot of steps that need to be taken, not all of which can (or should) be taken without the guidance of an Elder Law attorney.

Keep Assets Separate

Once the in-care spouse is approved for Medicaid, there will be ongoing redeterminations to ensure that the individual still qualifies for Medicaid.  The important thing to remember here is that unless the at-home spouse also ends up applying for Medicaid, the Department of Social Services that handled the application will not look at the assets of the at-home spouse again.  The at home spouse can receive inheritances and build up assets without fear of needing to go through additional spend down following a redetermination.

However, the at-home spouse needs to keep their assets separate from the in-care spouse.  Do not add the in-care spouse to any new accounts that are opened or property that is purchased.  If it happens, Medicaid coverage may be terminated.

Maximize the Spousal Income Allowance

The at-home spouse is, in certain situations, allowed to keep a portion of the income of the in-care spouse.  However, there is a limit to what can be retained, and if the at-home spouse’s income is large enough, there may be no retention. The determination of how much can be retained is made by the caseworker during the application, but it can also be adjusted throughout.  If the at-home spouse’s expenses increase, be sure to contact the caseworker and request a reassessment of the amount allowed.

Being approved for Medicaid is a relief, but it is important for the at-home spouse to stay aware of the situation and make sure that they are doing everything possible to protect the spouse receiving care and themselves.

Approved for Medicaid: What Are You Responsible For?

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medicaid-approval

 Having a loved one receive a Medicaid approval notice normally provides the family the chance to breathe easily.  However, some responsibilities don’t stop once someone is approved.

A Medicaid Approval/Denial Notice looks like this in North Carolina.  The first section, marked “Approvals”, outlines who has been approved, the program for which they have been approved, the months that are being covered and, most importantly, how much the person covered is responsible for paying to the nursing home each month.  That’s right, even with Medicaid a person may still have to pay something for his or her care.

This amount is called the “Patient Monthly Liability” or “PML”, and it applies to both the long-term care and special assistance programs.  It is based on an individual’s income, but there are certain allowances: personal needs ($20 or $66 per month, depending on the program), supplemental health insurance and, in situations where there is a spouse at home there may be an allowance made for that spouse to keep some of the other spouse’s income.  The PML has to be paid every month, or the person may be discharged from the facility, regardless of Medicaid status.

It is important for spouses to remember that none of their income needs to be paid as part of the PML.  If the PML assigned to the Medicaid recipient exceeds the income of that individual, contact the caseworker for clarification.

The bank account of the Medicaid recipient has to have a balance of less than $2,000.00 on the last day of every month.  Many times clients are concerned because the Medicaid recipient’s monthly income will push the account balance over $2,000.00. That income is supposed to go to either the nursing home or the at-home spouse, meaning that it should be leaving the account at some point during the month it came in, so just because the account balance may exceed $2,000.00 at some point during the month is not a problem – it is the end of the month that counts.  If the Medicaid recipient’s account happens to build up to the point that it exceeds $2,000.00 even after payment of the PML or transfer to the at-home spouse, some of that money should be spent of the personal needs of the recipient to bring the balance back below $2,000.00  Failure to keep the person’s “reserve reduced” could result in termination of benefits.

Finally, Medicaid conducts annual reviews of each of its recipients.  These reviews are conducted via mail, and involve reaffirming the person’s eligibility, providing any updates needed, and providing copies of bank statements. These reviews must be completed and returned, or coverage may be terminated.

As outlined above, Medicaid approval does not mean an end to paperwork or responsibility.  If you have questions about approval or ongoing eligibility, please don’t hesitate to contact us.

Common Medicaid planning mistakes

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North Carolina Medicaid planning attorney

There are Medicaid rules that have been implemented specifically to shield and protect the assets of the elderly and those with special needs. People who plan well enough in advance will have more options to aid in protecting their assets. A Medicaid planning attorney will help take the proactive route in planning for long term care and Medicaid expenses of a loved one.

What are some of the most common Medicaid planning mistakes made?

  1. Not Using An Attorney. One of the most common mistakes made in Medicaid planning is attempting to create a plan independent of an attorney. Failure to make a plan with an attorney elevates your risk for errors when planning the care needs and making asset protection arrangements. For example, eligibility needs of the Medicaid recipient can be denied if assets or wealth have been transferred within a certain look-back period.
  2. Waiting Too Long To Plan. Waiting too long to make a Medicaid plan is another common misstep. The earlier the person plans ahead, the more options the person has available to them. Most people think of the issue when the person becomes ill, but the ideal time to plan is before a major event occurs.
  3. Not Using Asset Protection. Not knowing the protections available is another common error made in Medicaid planning. There are all types of asset protection options available such as immediate annuities and spousal allowances that aren’t taken advantage of due to lack of knowledge.
  4. Taking Advice From Non-Legal Experts. While it is good to gather perspective from others, it is often not a good idea to rely on the advice of others where legal matters and assets are concerned. Be wary of advice solicited from others, and always seek the final opinion of a practicing attorney to avoid any costly planning errors.

What is the difference between a Medicaid attorney and estate planning attorney?

Medicaid planning attorneys have expertise in identifying what steps should be taken if the patient becomes incapacitated. The estate planning attorney focuses on the allocation and management of assets when the person dies.

What does a Medicaid attorney actually do?

A Medicaid planning attorney can help you maintain your finances while addressing the expenses associated with caring for a loved one who is incapacitated. The attorney can be instrumental in helping the individual save money. Applying the appropriate strategies will ensure that a loved one is getting the best possible care while existing resources are carefully managed to accommodate future care needs.

Why would you want to use a Medicaid planning attorney?

Care for an ailing loved one is expensive. Care provided for the elderly can be devastating to a household’s finances. In order to make sure that the highest quality of care is available to the individual, careful planning is necessary. A Medicaid planning attorney assists with those matters. They take into account the family’s needs and household finances when completing your Medicaid plan for your loved one.

With all of the applicable laws and protections in place to protect families, Medicaid attorneys can prove to be an invaluable resource. Their in-depth knowledge of the law and their ability to implement the appropriate strategies for supporting the care needs of the patients protects loved ones from financial distress. A disinterested third party can help you make the right calls and avoid any conflict of interest. Medicaid planning saves you money, protects your assets, and elevates the quality of care for your loved one.

What You Need To Know About Wills And Trusts In North Carolina

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Many people don’t realize that almost everyone has an estate, regardless of their wealth. Your estate is considered to be everything that you own such as vehicles, furniture, bank accounts and even your clothing and personal items.

Although it’s unpleasant to imagine something happening to us, it is a fact of life that accidents happen and we grow older. What will happen to all of your property and personal possessions in the event something happens to you? Planning the final disposition of your estate is wise whether you are young or old and especially if there are children involved. Estate planning is not difficult and an estate planning lawyer can advise you in all manner of wills and trusts and can make drawing up a will or trust simple and easy.

Estate planning begins when you draw out a will or a living trust. If you do not have one when you die, the laws of your state will govern the distribution of your estate, even if you always wanted your 100-year-old porcelain doll, given to you by your grandmother, to go to your daughter. That classic car you have put a lot of love and care into was always intended to be your son’s car one day, but will it?

In North Carolina, any person 18-years of age and older can make a will or living trust, and that will or trust will be recognized by law.

Whatever debts you owe upon your death, whether it is a car loan or fees owed for personal services, this will come from the assets of your estate. Once your debt has been satisfied, if you do not have a will or trust explicitly stating your final wishes, the courts will determine who in your family gets what. Most states split assets between a surviving spouse and any children.

You may have wanted to split your assets between your two children and a trusted lifelong friend, but without your wishes being known, the court usually distributes assets according to the laws of your state. If you have jointly-owned assets, these may not be controlled by your will. For instance, if you have a 401(k) or life insurance policy where a beneficiary has been named, it may transfer directly to your beneficiary without being heard in probate.

Many families and professionals of all types prefer Revocable Living Trusts as this type of trust prevents the court from controlling your assets in the event you are incapacitated by having an appointed trustee act on your behalf according to your wishes. These trusts can be changed at any time, and the person you appoint as trustee can also change.

With a will, your assets are distributed how you have stated you wish them to be and once the wishes of the will have been performed, that is the end of it. With a living trust. if you have substantial wealth or inheritance, your children can inherit your wealth at whichever age you wish them to inherit, in the meantime, your assets are protected by the trusted person you have appointed. Perhaps you have a loved one who is horrible at managing money and you don’t feel comfortable giving them a lump sum of your estate but you want to provide for them. You can appoint any person or entity as your trustee, and that person can distribute payments to them over a period of time or for the remainder of their lives.

There are many different wills and trusts and aspects to them that are designated by you so that you can provide for your family and loved ones or even show your love and thoughtfulness. A few of the things that estate planning can involve besides providing wealth include:

  • Instructions for your care in the event you become unable to manage your affairs
  • Name guardians and trustees for minor children
  • Provide for the transfer of your business
  • Minimize the burden of taxes, court fees or other legal fees on your loved ones
  • Provide for pets
  • Provide for disabled minors so that there is no disruption in their government benefits
  • Name the locations of important papers, passwords and other information of this nature

It is always wise to consult with an estate planning lawyer who has the expertise to advise you in the matter of wills and living trusts. One of our experienced estate planning attorneys can help you navigate the laws of North Carolina and are able to advise you of all the pros and cons of each type of will or trust so that you can find the best option for you and your family.