WHO NEEDS TO PLAN FOR LONG-TERM CARE AND WHEN?

NURSING HOME RESIDENT LOSES MEDICAID IF HE INHERITS PROPERTY

Question: I have been reading more and more about the need to plan for future health and long-term care; however, I am only 43 years of age and am in good health. When should I begin planning, and what should I do?

Answer: In our view, you should start the health care and long-term care planning process as early as possible, especially if: 1) you are over age 40; 2) you have parents who are age 62 or older; 3) you live in one of the 29 states that makes children responsible for their parents' medical care; 4) you have a disabled child, whether you are divorced or not; 5) you are divorcing; 6) you are divorced and are paying long-term support to a former spouse; 7) you are over age 45 and are remarrying; or 8) you have a history of Alzheimer's Disease in your family.

What should you do? Understand that the only ways to pay for long-term care are 1) out of your pocket, 2) long-term care insurance, or 3) Medicaid after you have become basically impoverished. Understand that if you remarry and have a premarital agreement that says you are not responsible for your spouse's obligations, this agreement is not binding on the state -- meaning that if your spouse enters a nursing home, your assets can be tapped for this care. And understand that if you are over age 65, Medicare will only pay for nursing home care in limited circumstances for a limited period of time.

You and your family members should seek the advice of a qualified attorney in your state who can explain to you the rules in your state and, at a minimum, you should sign appropriate durable powers of attorney and durable health care powers of attorney that are designed for your specific circumstances. We do not suggest that you rely on forms, kits, or computer programs for documents that are this important. And, lastly, we suggest that you look into long-term care insurance as a way to either fully or partially fund long-term care.

Question: My father, now age 78, was in a nursing home for nearly three years as a private pay patient before my mother could get him qualified for Medicaid by "spending down" to $75,000, her house, some old furniture, and a car. Since the beginning of his illness, she spent in excess of $150,000. Wanting to leave the rest of her property to the nursing home, my mother went to her lawyer and signed a will that cut out my father and left everything to me, my brother, and my sister. When my mother died earlier this year, we admitted her will to probate, sold the house, and began to distribute the funds when we were told by the State that my father's Medicaid was being terminated because he was entitled to one-third of my mother's $300,000 estate and did not make a claim for his share. Although our lawyer says he can fight the decision, it appears to me that we will be spending good money after bad -- even though I still don't understand how this system works. Can you explain what happened here?

Answer: Even though your mother thought she was "cutting your father out," as a married individual, your father had a statutory right to elect against the will and take one-third of your mother's estate. In the eyes of the Medicaid folks, the decision of your father -- or his guardian -- not to file his claim to one-third of your mother's $300,000 estate is treated as if your father had $100,000 and gave it away. In other words, if there are assets to which an individual is entitled but does not receive because of action or inaction on his part, he is deemed to have received the asset and then given it away -- thereby disqualifying him from Medicaid.

Although we believe that you are wise not to pour any more money down a sink hole by fighting a battle you can't win, it seems to us that 1) your mother should have been informed of the probability of this result by the lawyer who prepared her will and 2) your mother should have sought advice about how to avoid this most unintended result.