Say that an 82-year-old was recently diagnosed with Alzheimer's. His 78-year-old wife takes care of him. They have $1 million in retirement funds and want to set up a trust fund for their children who have disabilities. If the father needs long-term care, will his wife have enough to care for herself and the children?
nj.com’s recent article, “How to help Mom when Dad has Alzheimer's,” advises that those in this or similar situations can benefit from meeting with an elder law attorney about special needs trusts and other benefits planning.
In many states, the average daily cost of nursing home care is more than $450. Money from a long-term care policy can help in stretching other available resources to privately pay for long-term care, if necessary. Medicaid might also come into play.
Medicaid is a needs-based program which has income and asset limitations that are applicable before an individual can qualify for assistance. There’s a penalty on any transfers made within five years of applying for Medicaid. The penalty is the number of months that a person will be ineligible for the program. The penalty period begins to run only after an individual enters a nursing home and would otherwise be eligible for Medicaid—not at the time of the transfer. During the penalty period, Medicaid won’t pay for the nursing home. The senior is on his or her own, and private funds must be used.
Gifts and sales, to the extent they’re less than for fair market value within five years of applying for Medicaid, are also subject to a penalty. Therefore, it’s important that seniors and their families understand the consequences of transfers made by a parent for the children within the five-year look back period and the potential imposition of a penalty period, during which Medicaid funding won’t be available after assets are spent.
Talk with an experienced elder law attorney about Medicaid and determining parents’ eligibility.
Reference: nj.com (December 7, 2017) “How to help Mom when Dad has Alzheimer's”