Of all the challenging aspects of the Alzheimer?s journey, often the most confusing part for families is the financial piece of the puzzle. There are so many rules and restrictions, so many bills to pay and documents to draw up; all while trying to protect loved ones and the funds they?ve got. Most of the time, a family will have been doing their best to provide care for their loved one, but in spite of their best efforts they reach a point where they just can?t do it anymore. When this time comes, families/caretakers begin to realize the inevitability of nursing home care. They begin to look into facilities, and into costs. In Kansas City, they?ll find that memory care averages 6 to 6,500 dollars a month. They look at that figure and think, ?how are we ever going to afford to pay 60-70,000 dollars a year for nursing home care?? They also come to understand that once their loved one is spent down to the Medicaid limits, they will only be allowed to keep a monthly allowance of $62 in Kansas and $30 in Missouri. They realize this and think, ?our entire life savings is going away, and my loved one isn?t going to have anything extra left over to care for him/herself.? Inevitably, as this realization hits, they come to us at the Elder and Disability Law Firm and ask the question they think holds the most potential for easing their worries??Can I give my money away??
The answer to this question used to be pretty simple, but not anymore. This is because on February 8th, 2006, a new law called the Deficit Reduction Act or DRA was signed into effect. Everything that happened before that date follows the old rules, but everything that happened on or after it is subject to the new ones.
Let?s consider how this would have worked before the DRA came into being?because once you understand how it used to work, you can understand how it works now.
Under the old laws, pre-DRA, the state would say that nursing home care cost a certain amount of money, say $3,000 a month. The state would then say that if someone makes a gift, chooses to give their money away, for every one month?s cost of care that they give away they can?t apply for Medicaid for a month. So let?s say that a family chooses to gift $30,000. If the state has set nursing home cost at $3,000/month, the state would instruct us to divide that gift by the average cost of care?in this case $30,000 divided by $3,000, equaling ten. That ten would mean a ten month penalty period in which that person could not apply for Medicaid, and that ten month period would begin immediately from the date of the gift. So say that the family still had $50,000 left after the gift, they would simply use those funds to private pay for care until the penalty period was up and Medicaid could be applied for. It was a great way to set aside funds and protect some of the life savings of the Alzheimer?s patient.
But on February 8th 2006, the game changed considerably. President Bush signed the DRA, and the rules were rewritten. Under the new laws, the state now asks if any gifts have been made, either money or property, in the last five years. They then go a step further and say that if anything has been gifted in that time, unless you are already in a nursing home and spent down to the Medicaid limits, and unless Medicaid application has already been made, then that gift still creates a penalty period, but the penalty hangs around for that five year period. Before the DRA the penalty that gifting created began right away. Now, the gift would still create the penalty, but the period would not start to count down until you were in a nursing home, spent down to almost nothing, and applied for Medicaid. Additionally, the states have raised what they consider the average cost of nursing home care is; in Kansas and Missouri the cost can generally be considered around $4,000 a month, so gifts are now divided by that larger number, but the problem is that the penalty will still hang around for five years.
It?s at this point in the explanation the people are generally shaking their heads?it does sound awfully confusing. So what?s the bottom line?
The bottom line is this: in lots of cases there are still ways to protect moneys, even if you already have a loved one in a nursing home, but you certainly need the help of an Elder Law attorney to walk you through the process; because even though it used to be fairly simple, now there are some major hoops that need to be jumped through. With good legal advice and an Elder Law attorney who knows the ropes, you can save?as a rule of thumb?45-50 cents on the dollar. You never want to be out of money or out of options, and by properly setting things up you will have arranged it so that even if your loved one does need care, they will never be out of either thing, money or options, because you will have taken the proper steps.
Tags: alzheimers, Gifting, Medicaid
Source: http://www.kcelderlaw.com/blog/kansas-and-missouri-medicaid/can-i-give-my-money-away/
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