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Medicaid Crisis Planning

In our office we handle generally two types of estate planning cases.

The first is what we call “pre-planning,” which is where a person (or couple) wants to plan ahead for their potential need for long-term care and wants to protect their assets. Pre-planning is typically done through the use of an irrevocable trust.

The second type of case we handle is what we refer to as a “crisis case.” A crisis case is a case in which the person or couple had yet to pre-plan, and as a result needs to do something at the last minute to protect their assets. I will try to give a brief overview of a crisis case in this article.

In a crisis case for a single person, we are left with using what is referred to as the “Reverse Half a Loaf Approach.” In this strategy what we are doing is giving the money away, causing a penalty, then we are giving that money back to Mom or Dad every month so that they have just enough money to cover their nursing home bill. Hence the “Reverse” (giving away then back to Mom or dad) and the “Half a Loaf” given the approximate amount of time the person needs to private pay the facility prior to Medicaid eligibility. The following example will illustrate the process.

Say Mom had $60,000. She has now gone into a nursing home and needs nothing. We now have to give Mom’s 60k to the children. In West Virginia, this would be equal to a 10-month penalty because in West Virginia the average cost of the nursing home is $6,000 a month. So in other words, if Mom didn’t give 60k away she could have paid for 10 months before she was broke.

Now Mom has only $100 in checking and no other accounts. Mom’s income is $2,000 a month (Social Security and pension) and her bill at the nursing home is $7,000. This means Mom is short $5,000 every month. What you as the child have to do is give back to Mom that $5,000 shortfall by putting the money back into her checking account, and then writing one check to the nursing home for the full $7,000.

When you do this, you are giving back a portion of the 60k Mom gave away. So really after one month, Mom has only “given” away 55k, because you returned $5,000. So if you recalculate the penalty, Mom now only has a penalty of nine months; however, she has already paid for one month so she is one month into a nine-month penalty. This gets continued each month, so that after the second month she would be two months into an eight-month penalty because she returned another $5,000. This process continues until mom has paid in for the same number of months she has left. So we roughly say it will be half.

The rules and strategies available differ depending on whether or not a person is married or single; however, regardless of the situation it is possible to protect a great deal of a person’s assets.

So do yourself and your family a favor and get informed about the options available, the laws that pertain to Medicaid and remember it is NEVER too late to protect your assets. Don’t be someone’s horror story, call Rokisky, Wilharm, Blair & Rokisky at (304) 748-3200 for a free consultation and meet with an experienced elder law attorney.

Ryan Rokisky is an attorney with the law firm of Rokisky, Wilharm, Blair & Rokisky, which has offices located in Weirton and Wheeling. If you would like to submit a question for publication, e-mail it to rrokisky@rokiskylaw.com


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