Tag Archives: senior estate planning

The 35%Estate Tax is Peanuts! How About the 100% “Medicaid Tax”?|Chicagoland Elder Law Attorney Anthony B. Ferraro

Why has everybody been so concerned about the Estate tax?

For years,  clients of our office have  been very concerned about the Estate tax. I have reassured many clients over the last couple of  years that the Estate tax will not impact you unless you have more than $5,000,000 ($10,000,000 if you are married).

Now contrast that to the cost of what I call the “Medicaid tax”. The “Medicaid tax” is  the government’s  requirement that you  spend your assets down to $2,000 (as a single person) before you get any Medicaid  help for your  custodial care or long- term care, either in a Supportive Living Facility (similar to an assisted living facility) or an Intermediate or Skilled Nursing Facility.

This terrible governmental  requirement to spend down to $2000 is what I refer to as a 100% Medicaid tax. Because, effectively you have to be down to zero assets before you get any assistance with maladies that require custodial care, such as dementia, Alzheimer’s, Parkinson’s, MS, ALS, COPD,  muscular dystrophy, etc.

Therefore, I politely ask my clients to “wake up and smell the coffee”. Quit obsessing over the effect of the Estate tax. It will not affect most of us.

On the other hand, consider the government-mandated Medicaid spend down of your assets to paltry $2,000 –  this will affect most of us.

Why will this affect most of us? Because, due to the advances of medical science,  most of us are living much longer (thankfully).  However, while we are living much longer, we also need more care as we age. Couple this with the fact that the average cost of a Supportive Living Facility (SLF) is somewhere around $4,000 a month and the average cost of an Intermediate or Skilled Nursing Facility is $6,000 to $10,000 a month, and you have a “perfect storm” scenario that can lead to a Medicaid spend down of your assets to a measley $2,000. And that $2000 has to last you for the rest of your life. This is, in my view, the equivalent of a 100% “Medicaid tax“.

How treacherous is it to be spent down to $2000? Let me give you an example. We recently had a client at our office that needed  abscessed teeth to be removed. Our client was 85 years of age and spent down to $2000. She was told that the only available Medicaid dentist  in Cook County would take her, but it would require her to wait 6 to 8 hours in the waiting room. My client had moderate to severe dementia and could not last 6 to 8 hours in a waiting room. It would have been nice if she had come to me earlier so I could set aside a rainy day fund for her.

A Solution: This would be a legal and ethical  re-allocation of her assets so that she could have funds for things like teeth extraction,  but still qualify for Medicaid benefits.

We had  another client that required hearing aids. Hearing aids cost $6,000.How do you buy them when you’re spent down to $2,000?

So we inform our clients that they should not be concerned about the Estate tax unless they are very, very wealthy. The more likely severe financial impact that will hit most of our clients comes from the devastating cost of long-term care.

Clients have to understand that they must  plan while they still can. Unfortunately, this window can sometimes close very quickly due to the onset of a stroke, heart attack, accident, or some other catastrophic disability.

At The Law Offices of Anthony B. Ferraro, LLC, we are Attorneys and CPAs. We have been serving clients in matters of Medicaid asset protection, long-term care planning, traditional estate planning, senior estate planning, estate tax planning, and estate and trust administration for a combined 45 years.

Today’s environment in which our seniors are asked to fend for themselves and protect themselves and loved ones from Medicaid spend down, taxes, the cost of home care, healthcare, long-term care,  creditors, predators, divorcing spouses, and illness, is very complicated to most of our clients.

But we deal with this every day. And we are just a phone call away.

Consider making the call to our office while you are still are able to plan. Let us provided you with service and guidance that will be essential for your well-being and that of your loved ones.

Let us give you options…

So you don’t go broke the aging process.

 

 

Anthony B. Ferraro

Attorney-MSTax-CPA

The Law Offices of Anthony B. Ferraro, LLC

Attorneys & CPAs

The Elder Law, Estate & Trust and Asset Protection Law Firm

5600 North River Rd.

Rosemont, Illinois 60018

 847-292-1220

www.ABFerraroLaw.com