Elder Law Update – November 14, 2007

LEGALLY AND EFFECTIVELY PROTECTING YOUR ASSETS FROM A LONG TERM NURSING HOME STAY

1.     Amounts Spouses of Nursing Home Medicaid Recipients may keep are modestly increased.  The Centers for Medicare and Medicaid (CMS) has released the 2008 federal guidelines for how much spouses of institutionalized Medicaid recipients can keep.

In 2008, the spouse of a Medicaid recipient living in a nursing home (called the “community spouse”) may keep as much as $104,900 without jeopardizing the Medicaid eligibility of the spouse who is receiving long term care, before further petition.

Meanwhile, the maximum monthly maintenance needs allowance for 2008 will be $2,610.  This is the most income that a community spouse is allowed, before further petition.

* * * * *

2.     Ruminations on Top Seven Financial Planning Tips:  Here are some of our favorites:

– Have a Durable Power of Attorney for Property that enables someone to make financial decisions for you, and engage in Medicaid asset protection planning for you.  Remember, when you are out of money, you are out of options.

– Have an updated Will.

– Have a Power of Attorney for Healthcare that enables someone to make healthcare decisions for you, and in this document indicate your end of life wishes so that someone else does not have to make that decision for you.  Remember Terry Schiavo!

– Have long term care coverage as part of your health insurance.

– Participate fully in 401(k) or SEP- type plans.

– Have an idea of what your projected income at retirement will be from Social Security, pensions, etc.

– Have enough liquidity as an emergency fund for at least three to six months of cash flow.

* * * * *

3.     The Wisconsin Court of Appeals found that a Community Spouse whose wife was in a nursing home was not liable for his wife’s nursing home costs because the court interpreted the legislature’s intent as to protect the Community Spouse from being impoverished by Medicaid requirements for coverage of nursing home care.

This should be distinguished from a recent case in Illinois, where the Illinois Appeals Court indicated that federal law did not preempt a state law that required Community Spouses to contribute all income in excess of their Minimum Monthly Needs Allowance ($2,541.00) for the support of their institutionalized spouse.

* * * * *

4.     Continuing Care Retirement Communities (CCRCs) are gaining in popularity in the United States.  These CCRCs offer a wide continuum of care, from independent living all the way to skilled care nursing facilities.

Contract for these facilities vary, but most contracts can be life contracts or fee-for-service contracts, which is more of a pay-as-you-go arrangement.  The choices are confusing.  You should have a qualified lawyer review these contracts before signing them.

* * * * *

5.     Recently a U.S. District Court held that requiring a Medicaid applicant toreside in-state for a period of time before state Medicaid benefits are determinedis a violation of the fundamental constitutional right to interstate travel guaranteed under the U.S. Constitution.

* * * * *

6.     Long term care coverage is an important part of financial planning. The flexibility of long term care coverage and the options that you can obtain greatly vary.    The elements of coverage that will affect the cost of these policies is as follows:

– Your age and health.

– The  amount of benefit you select.

– The length of period for which you wish to have benefits (for example, 3 years, 5 years, lifetime).

– The waiting period (or elimination period) before the benefits pay out.

– Inflation protection.

– Whether the contract has a shared or joint feature, where one policy may be available for two spouses.

* * * * *

7.  Tax Implications of Tax Qualified Policies.  In general, there are two types of long term care policies that are available: tax qualified policies and non-tax qualified policies.  In 1996, the IRS began treating tax qualified long term care insurance policies as deductible medical expenses under the Internal Revenue Code.

* * * * *

8.  Self-employed individuals may deduct 100% of the eligible premium for a qualified long term care insurance policy if the business pays the premium and the individual is not covered by a long term care insurance policy maintained by the individual or spouse’s employer.

Mission Statement

Our firm is dedicated to the legal and effective protection of our clients’ assets from taxation, as well as planning for Medicaid asset protectiondue to a long term nursing home stay.

“Educate to Motivate”

Anthony B. Ferraro

Attorney-CPA

The Law Offices of Anthony B. Ferraro, LLC

5600 N River Road, Suite 764

Rosemont, IL 60018

PH(847)292-1220

abferrarolaw@abferrarolaw.com

abferrarolaw.com

Note: Pursuant to federal regulations imposed on practitioners who render tax advice (“Circular 230”), we are required to advise you that any tax advice contained herein is not intended or written to be used for the purpose of avoiding tax penalties that may be imposed by the Internal Revenue Service.

This document is for discussion purposes only and is not intended to be, nor should it be, considered as legal advice.  You should never attempt Medicaid planning, Estate planning, Probate, or Estate and Trust Administration without the advice of competent legal counsel.