Two retired married couples, long-time friends, Bob & Carol, Ted & Alice, experienced very similar health care crises. They responded differently with radically different results.
Bob’s wife, Carol, sustained a massive stroke, rendering her severely paralyzed. After a brief hospitalization, Carol transferred to Dirty Pines Nursing and Rehabilitation Center for short-term rehab. Thirty days later, with no significant improvement in her condition, Carol’s therapy was abruptly terminated, and with it, the Medicare payments for her nursing home care. She was forced to remain at Dirty Pines indefinitely. Fortunately, the friendly staff at the nursing home helped Carol swiftly qualify for Medicaid benefits to pay for her care. Most of the couple’s estate consisted of their home and Bob’s IRA. Bob was allowed to keep his home because it was his principal residence. He was also permitted to keep his IRA (but not Carol’s). Bob subsequently sold his home. Since he and Carol co-owned the home, he had to pay half of the home sale proceeds to Carol, causing her to forfeit Medicaid eligibility. Her money quickly evaporated under the $15,000 monthly cost of her care.
Planning Tip: The home and assets of a married nursing home resident who seeks Medicaid benefits should be transferred to the healthy, so called “community spouse” at or before a benefits application is filed. Transfers to a spouse do not incur a Medicaid transfer penalty in the form of a period of ineligibility for benefits. While this alone does not establish Medicaid eligibility, it is a good first step.
Alice’s husband, Ted, fell and broke his hip. He also entered Dirty Pines for rehab and, as with Bob’s wife, Carol, became a long-term resident there. Alice sought the assistance of an elder law attorney to qualify Ted for Medicaid. With help from their attorney, the couple’s non-exempt assets were preserved for Alice via purchase of a Medicaid-compliant annuity. Their home, although exempt, was transferred to Alice, who also changed her Will to disinherit Ted. Alice died shortly after Ted qualified for Medicaid. Since Ted’s name was no longer on the Deed, it by-passed Ted and went instead to their children. Ted remained on Medicaid.
Planning Tip: At-risk assets of a married couple, that is, nonexempt assets that can be accessed to pay for nursing home care, can be protected with the help of a qualified elder law attorney. The measures involved are complicated and the process can be stressful. But professional assistance can avert impoverishment and preserve financial security.
Stanley Vasiliadis, an attorney with the law firm of Vasiliadis Pappas Associates, observes: “Sadly, many married couples facing long-term nursing home care fail to seek the assistance of an elder law attorney. Consequently, they unwittingly and needlessly forfeit a substantial part of their estate, often leaving the spouse of a nursing home resident impoverished and the children deprived of an inheritance.”
For more information and assistance in connection with your long-term care planning contact the lawyers at Vasiliadis Pappas Associates.
