Medicaid Planning Strategies For Individuals Throughout Staten Island
For a large portion of the population, Medicaid planning is an important part of comprehensive estate planning and elder law. When you work with the experienced, knowledgeable attorneys at Merlino & Gonzalez, you can count on two things:  You will be advised about how best to protect your assets and  You will be treated with compassion and respect. As most of us are well aware, long-term care in New York and New Jersey is expensive. Those who have the means can pay their own way into assisted living facilities, and even pay for extra help when necessary, since Medicaid will not pay for living accommodations in such establishments. Even in nursing home/rehab facilities, Medicare and private insurance will cover only short stays that have been deemed medically necessary for recovery from surgery or a debilitating illness.
When long-term care is required for those with more limited assets, home health care and/or nursing homes are most often paid for by Medicaid, a different form of government medical assistance than Medicare. Home health care and nursing homes, too, are very expensive — home healthcare typical costs $20 per hour, translating into more than $25,000 per year and nursing homes typically average at least $100,000 annually.
In the vast majority of cases, private health insurance policies and Medicare do not cover long-term care. If you are eligible, however, Medicaid will foot the entire bill, saving you a small fortune. While a few people purchase long-term health care plans — which are also very expensive and often don’t pay for as much care as policyholders are led to believe — most people who require long-term care depend on Medicaid. In fact, more than 70 percent of New York and New Jersey nursing home residents receive Medicaid assistance.
Medicaid Eligibility & Planning in New York & New Jersey
In order to be eligible for Medicaid in New York State or New Jersey, you must either have a very low monthly income ($825 in 2017) and $14,850 in total assets and/or be physically or mentally disabled. Under certain circumstances, you can receive Medicaid while retaining possession of your moderately priced home and car.
When your income is too high for you to be eligible for Medicaid, the Excess Income Program will allow you to qualify by “spending down” your income on approved medical expenses. Once you spend enough on medical expenses to get below Medicaid income limits, you will qualify for the benefits. The spend-down process, however, is very complicated and difficult to keep track of. In many cases, people forego benefits they desperately need because of the stress involved in pursuing them through the maze of the spend-down procedure.
Even more disturbing, if you are a senior citizen who has become ill or disabled, requiring round-the-clock nursing home care, unless you have pre-planned for Medicaid, you will be required to transfer the bulk of your assets and income to the nursing home before Medicaid will kick in. Furthermore, Medicaid recipients in nursing homes are entitled to keep only $50 per month for personal expenses; the rest of their income will be used to pay for the nursing or home healthcare.
This Is Where Merlino & Gonzalez Comes In
Planning for Medicaid is one of the most significant services we provide. Just as we understand the ins and out of taxes and probate, and the most effective ways of avoiding them or minimizing their costs, we are adept at setting up your legacy in such a way that, if and when the time comes that you need full-time nursing care, you and your family will have the financial shield you need.
It should be noted that Medicaid itself does have provisions to prevent “spousal impoverishment.” If only one member of a married couple needs long-term care services, Medicaid will not require the other spouse to give up all assets and income so that the spouse needing care can qualify for benefits. Our attorneys can clarify for you precisely how such stipulations will affect you and your loved ones. More importantly, we can plan your estate so that irritating, complex spend downs will not be necessary.
Medicaid Estate Recovery
The rules of Medicaid stipulate that if you are over 55 and receive long-term care through Medicaid, or if you are permanently institutionalized before you turn 55, your state’s Medicaid program will have a claim against your estate after your death for the amount that the state spent on your care. This is called Medicaid Estate Recovery. Our attorneys can prevent this eventuality, too, so that the assets you worked so hard to accumulate will not be absorbed by the government after your death.
Why can’t you just “give away” your assets before you apply for Medicaid?
Unfortunately, although it may seem simple to divest yourself of assets just before you apply for Medicaid, the government has foreseen this possibility and looks back at the past 5 years of your financial transactions. If they see that you have recently gifted a relative or friend with a large sum of money, they will charge you transfer penalties, delaying your eligibility for Medicaid benefits. This will, of course, mean that you will have to use up the amount you have “given away” to pay for your nursing home care so your plan to protect your assets will have been foiled.
Trust in Special Trusts
Merlino & Gonzalez can help you protect your assets so that your future, and the future of your family, remain financially secure, even if you require long-term nursing care. We do this by creating a particular type of irrevocable trust. Many people mistakenly believe that a revocable trust will provide asset protection, but this is not the case.
Because monies in a revocable trust are treated as property owned by the individual and under that individual’s control, revocable trusts are useless in terms of retaining Medicaid eligibility. Even Irrevocable trusts are not always helpful in protecting your assets from Medicaid transfer penalties. When an irrevocable trust contains a discretionary clause established by you or your spouse, and where one of you is a beneficiary, Medicaid will count some or all of the assets in the trust as available to you. Because of these limitations, at Merlino & Gonzalez we create a Medicaid Asset Protection Trust for you, a legally binding method of keeping your money beyond the reach of Medicaid.
Medicaid Planning With An Asset Protection Trust
The cost of nursing home care, even for a short period of time, can consume the life savings of a good many people. Bearing this in mind, we draft an irrevocable Medicaid Asset Protection Trust for you. The purpose of this trust is to allow you retain your assets for your heirs while maintaining eligibility for Medicaid insurance coverage to cover long-term medical care later in life.
Our skilled attorneys are diligent about setting up your Medicaid Asset Protection Trust with precise wording to ensure that your assets will not affect your Medicaid eligibility and can be retained to pass on to your heirs. In order to make certain you will qualify for future benefits, neither you nor your spouse can act as trustee or have access to the trust principal. Once the trustor dies, the trust’s principal passes to the heirs named in the trust agreement. The only catch is that if the trustor or his or her spouse come to require nursing home care, any irrevocable trust income being received at the time must be applied to the cost of the nursing home under Medicaid rules.
Estate planning is all about being prepared for future contingencies. At Merlino & Gonzalez, we not only have studied, but continue to keep current with, all regulations pertaining to Medicaid in New York and New Jersey. Moreover, we always analyze your personal circumstances thoroughly before offering guidance. We understand that every situation is unique and will tailor our recommendations to your finances and your family dynamics. Contact us today to schedule a consultation.
Merlino & Gonzalez help residents of New York & New Jersey with their Medicaid planning needs. Since their primary office is in Staten Island, they receive a lot of clients there as well as in the boroughs of Manhattan, Brooklyn, Queens, & The Bronx.