Jewish World Review June 11, 2003 / 11 Sivan, 5763
Jan L. Warner & Jan Collins
Is there protection against Medicaid costs?
http://www.NewsAndOpinion.com | Q: My husband suffered a stroke at age 62. Five years later, he was diagnosed with Alzheimer's disease. I cared for him at home until my own health began to deteriorate. With our son's help, I placed my husband in a nursing facility and paid more than $5,000 monthly for three years by using my husband's Social Security and pension (which totaled $2,000 per month) and money drawn from his 401(k).
As our resources dwindled, I finally went to our state Medicaid office and was told that, before my husband could qualify for assistance, I had to spend his assets down to $2,000, including his 401(k). I could keep our house and car, but had to reduce my countable assets to less than $60,000, which is the state minimum for community spouses. So, for the next 15 months, I paid more than $5,500 per month for his care to reduce our assets to an acceptable level. He then qualified for Medicaid benefits, but my standard of living was severely diminished because we had planned to use the income from the assets -- which are now spent. I had to stop paying the premiums on his life insurance because I could not afford them.
Then, not six months later, his 97-year-old aunt died and, quite unexpectedly, left him $100,000 and me $60,000. I thought this was lucky, but the Medicaid official said that as soon as my husband was entitled to receive his share of the inheritance, he would be disqualified for Medicaid and would have to go back on private pay until the entire $100,000 was spent. I checked with an estate lawyer who told me that I could use my husband's power of attorney to disclaim his share of the inheritance, and that the estate could just shift his share into my name -- which does not sound exactly right. Is there anything I can do to protect this money which we are now receiving?
A: As you have learned, the "community spouse resource limits" established by Medicaid are insufficient in today's world. Still, because the Medicaid qualification process can be very complex, especially when it comes to protecting the community spouse. If your husband's durable power of attorney contained gifting provisions, and if you had started the planning process earlier, it's possible that a great deal could have been done to protect you.
That said, we suggest you not follow the advice of the estate lawyer. First, by disclaiming his share of the inheritance, your husband has, in effect, made a gift, and will be disqualified from Medicaid benefits for a number of months -- calculated by dividing $100,000 by the average monthly private pay nursing home rate in your state. To further compound this problem, by making a disclaimer, the amount your husband would have received would be put back into the estate and, depending on the wording of the will, you may or may not benefit from it. And to make matters worse, if he disclaims, you would be required to pay for his care and not have the money with which to do it. If he receives the inheritance, you will be required to use up his share and, at requalification, if you are again over the spousal limit, you will be required to spend your share also.
Had your husband's aunt changed her will and left his share in a special needs trust for him -- or had she left the total $150,000 to you -- he would not have been disqualifed.
Depending on where you live, there may be alternatives open to you, so see an elder law attorney in your area. And while you are there, ask how you can plan your estate so that, at your death, the assets you have saved go to your son, and won't again disqualify your husband from benefits.
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JAN L. WARNER received his A.B. and J.D. degrees from the University of South Carolina and earned a Master of Legal Letters (L.L.M.) in Taxation from the Emory University School of Law in Atlanta, Georgia. He is a frequent lecturer at legal education and public information programs throughout the United States. His articles have been published in national and state legal publications. Jan Collins began co-authoring Flying SoloŽ in 1989. She has more than 27 years of experience as a journalist, writer, and editor. To comment or ask a question, please click here.
Long-term care insurance comes up short
Long-term care insurance comes up short