Very often I receive calls from people desiring assistance relative to their parents. These folks may have already been transferred to a long-term care facility either directly from home or from a local hospital. It is at this time that the children want to protect their parents’ money.
However, all too often children inform me that after their parent entered a facility, they themselves went to the bank and withdrew funds which they are either currently holding or have already been deposited into their own account. The child’s first concern is invariably something such as “what do I do with the money?” or “I believe I am only allowed to keep $10,000.00.”
However, the $10,000.00 sum they have in their heads really has nothing to do with Medicaid planning. What they are thinking of is the maximum annual gift tax amount, which has been raised to $11,000 per donee per year, with a maximum lump sum lifetime amount of $1,000,000. This may be transferred without filing a gift tax return, but it does matter relative to Medicaid planning.
The problem lies in the child’s withdrawal and depositing of the funds in their own account. In fact, withdrawal of any funds without having them re-titled in the parent’s name is in fact a transfer and will disqualify the parent for long-term care expenses. The amount of the disqualification period is based on the average monthly cost of the nursing home amount, which changes annually, but is currently $232 a day in Massachusetts.
Once I determine all the facts, I can provide the family with accurate advice as to exactly how much of the gift should be kept and how much should be returned to the parent. Once all of the information is received, such as the actual cost of the nursing home care, income, current expenses, medical insurance and prescription drugs, a calculation may be made which will codify the amount that may be gifted without causing the Medicaid recipient to be disqualified for a longer period than otherwise would be necessary.
Very often, there may be a caseworker who is assigned from either the hospital or long-term care facility who offers to provide the family with assistance for long-term care planning. However, most of these individuals are engaged by the facility, and therefore do not have the best interests of the recipient at heart. The caseworker’s job is to ensure that the application is correctly submitted and approval is obtained from Medicaid, so that the facility will not lose any months of payment.
In-house caseworkers are not qualified to provide assistance in the process of planning, and very frequently, do not give their “client” the best information for preservation of assets. Sometimes it is best to pay for a short period of time, often times it may require the purchase of an immediate annuity, and at other times, it is important to consider requesting a hearing where the community spouse may be entitled to keep all or a significant portion of the total spousal assets.
Since the institutionalized spouse is allowed to have only $2,000.00, it is important to review all of the available options before making a final decision as to the best plan available for the family.
By: Hyman G. Darling, Esquire
Comments