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Caregiver Agreements and Considerations.

Asset Protection Planning, Elder Law, Estate Planning, Family Business , ,

Caregiver agreements are often used in the Medicaid context so that a family member can be paid for their services to a loved one and the payment would not be considered a gift.

In the Medicaid context, payments to family members are considered to be a gift for love and affection, unless there is a clear agreement written prior to services being rendered, preferably signed by the parent receiving the care as well as the child giving the care.

The caregiver agreement will set forth all of the terms of the transaction, including what services will be provided, where will they be provided, how will they be provided, and other typical contract languages.

The significance of this agreement is that the Department of Human Services (DHS) will look at the transaction as an arms-length transaction between third parties and not among family members.

This means that the payments to the child will not be considered a gift, and, therefore payments will be allowed to be counted as a “for value” transfer as part of a legitimate spend-down and not a gift that will trigger a penalty period for Medicaid purposes.

The biggest question that arises in regards to caregiver agreements is what the parent should pay for services. This is often a very difficult question because there are certainly competing interests at stake. For the parent receiving the care, they genuinely would like to pay full market value and as much as they can without there being a penalty created. This will legitimately reduce the value of their estate, but benefit the child who is providing services for their care on a daily basis.

On the other hand, if there are other children who are not providing the care they often feel slighted or that the other sibling is receiving more than their fair share.

This is very difficult because the children who are not providing the care want the amount to be paid to be the least amount possible to potentially raise the amount that will be left for them and their siblings to share.

However, if the parent does not spend down their assets legitimately, the money can be lost to long-term care costs, and there may not be anything left for anybody.

This inheritance rub is one of the most difficult things involved with a family caregiver because of the potential conflict that it may create among the family members.

At the end of the day, fair market value is generally set in, in this context, by what other professionals and people are charging for similar services. As long as you can stay within the realm of what others are charging for similar services, the Department of Human Services will not raise a red flag. However, that does not mean that other children or other family members may not question the motives of their family member providing the services and the amount of the payment.

We believe it is important to have all parties abreast of the information and informed so that we can potentially avoid unwanted conflict in the future. We always advise the advice of a professional to assist with these potential implications, and ensuring that the agreements are written properly to comply with DHS and Medicaid standards.

If you are looking for advice in regards to estate planning, please call our office at 717-845-5390 or click the link here and we will contact you.

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Why to use Bellomo & Associates for Medicaid Instead of Doing it Yourself

Asset Protection Planning, Elder Law, Estate Planning , , ,

When it comes to filing an application for Medicaid, the process can be quite daunting.  Hiring a professional at Bellomo & Associates can relieve the pressure on everyone. 

To qualify for Medicaid, you must be determined both medically and financially qualified.  To be medically qualified, you must be assessed by the County Area Agency on Aging and the family or Nursing Home physician.  Becoming financially qualified is the tricky part.  For Community Based Services your monthly income cannot exceed the yearly income limit established by Pennsylvania. For skilled Nursing Home Care your income needs to be below the Cost of Care for that facility.  In addition, you must provide statements for the previous five years for all accounts, verify all transactions over $500, and document all closed accounts. 

How can we help preserve excess assets if you sell the home or car, or even if you transferred or gifted assets?   This is done by a process that follows the rules for Medicaid qualification.  We will review the financials and determine what can be done to get Medicaid approval. 

A single person can have one house, one car, and up to $2,400*,  or possibly as much as $8,000* depending upon their income,  in all accounts.  If you have resources within those limits but have transferred assets for less than Fair Market Value or given a gift over $500, you will not qualify.  You are penalized and must pay privately during this period.  We can help determine the penalty period and establish how the payments to the skilled nursing care will be paid. 

A married couple can have one house, one car, and assets are divided in half with the maximum protected at $130,380* for the Community Spouse, this is the Resource Allowance.  As of 2021 the Community Spouse’s retirement accounts are exempt from the Resource Allowance calculation.  If you file for Medicaid and have assets over the established Resource Allowance, you will be denied Medicaid, and will need to spend the excess over that amount, then refile.  Most likely the excess will be paid to the Nursing Home or private care.  This is another time way Bellomo & Associates can help protect assets and assist in obtaining financial eligibility for Medicaid.

Bellomo & Associates can potentially assist in qualify a single person that has excess assets, has previously made gifts and perhaps even leave a legacy for their beneficiaries. We can also protect the excess assets for the Community Spouse so that the Community Spouse can maintain the same lifestyle and the family legacy.  Requesting help from the team at Bellomo & Associates will ease the process and help preserve what you worked so hard to earn.  

If you are interested in learning more about Medicaid crisis planning, please call our office at 717-845-5390, or click the link here to RSVP to our upcoming workshop to learn more about it.

 

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With premiums increasing drastically, should I keep my long-term care insurance?

Asset Protection Planning, Current Affairs, Elder Law, Estate Planning, Family Business , , ,

This is a question that I receive on a regular basis in my estate planning and elder law practice. By way of full disclosure, I am not a licensed insurance agent and I am not licensed to be able to sell long-term care insurance or any other insurance product. I am an attorney with approximately 20 years of experience in estate planning and elder law and I happen to be a Certified Elder Law Attorney under the authorization of the Pennsylvania Supreme Court. While I am not the person who will sell the products, I am certainly an individual who has been advising numerous clients over the years and definitely believe in the benefits of a long-term care policy and what they can provide. We have done numerous other logs about long-term care insurance and the benefits of said policies.

When long-term care insurance first gained popularity, many companies completely missed out on the actuarial tables and in predicting what people were going to need. Because of this drastic miscalculation, most of the companies who originally were in the markets for long-term care insurance are no longer there. The few standing companies that are left are trying to figure out ways to make up for the mistakes of the past. Because of that, they are often forced to increase premiums and decrease benefits. Although these companies do have to get permission from the insurance board, it is not a very difficult proposition and in most cases, they will almost always be able to receive permission. The most difficult part is that individuals have been paying into a plan for a number of years and now are learning that they’re going to have to decrease their benefits and even then they may have to increase the premiums that they are paying. It is heart-wrenching to have to provide guidance in these situations and ultimately I always encourage them to bring in their financial professionals to try to make the decisions.  This is as much about the numbers and common sense as it is about the emotion involved. This becomes very easy for us to get disgusted and upset about what is occurring, but it is a cold, harsh reality of the miscalculations that were made in the past.  In some instances increasing premiums and decreasing benefits is the only way some of these companies will survive. 

My best advice to any and all people who are faced with this dilemma is to write out the pros and cons and to try to make the evaluation and determination about numbers and as little as possible about the emotion of the situation. It is too easy to get hung up on the principle of the manner, but the truth is principals are expensive and cause wars. Make the best decision for you and your family based upon the information that you have in front of you. Long-term care is not going away and dropping the policy out of spite is not going to help anyone. 

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Stretching & Protecting Wealth

Asset Protection Planning, Elder Law, Estate Planning , ,

My estate planning and elder law practice have given me insights into these topics that I never thought possible. I encounter questions on a daily basis in my practice, how can an individual get the most out of retirement and how do you stretch your money and protect your wealth for future generations?

I am an estate planning and elder law attorney who happens to have a Masters in Laws and Taxation as well as being a Certified Elder Law Attorney under authorization of the Pennsylvania Supreme Court. However, more than any class or degrees I have received, representing numerous families over the years and watching their decisions, and in some cases mistakes, has really provided me the most prevalent insight into these questions and their answers. 

 I firmly believe it is very important to work with a financial professional to assist you during your working  or earning years, as well as heading into your retirement years. Although it is possible for some people to “do it alone,” I’m a firm believer in hiring professionals to provide assistance in their area of expertise.

The small fee you will pay will be far worth it in the long run versus what you would save in the short term. Having a financial professional and a plan for retirement, not only how to get there, but also how you will live during retirement — is imperative. Stretching your money during retirement is similar to when you were saving for retirement, being disciplined and having a goal in mind. 

 The one piece that no one ever wants to talk about is the cost of long-term care and how we’re going to pay for it. Although none of us really want to receive long-term care in our home or in a nursing facility, statistically it is a likely possibility that we need to consider.

Long-term care in a nursing home will cost anywhere from 10,000 to $12,000 a month. And in home care, depending on the amount of care that is being received, can cost anywhere from between $17,000 to $20,000 a month. This care is often necessary and needed but if there isn’t a plan in place, it can devastate a family pretty quickly and wipe out all of their savings. 

The most obvious way to pay for long-term care is to simply self-insure, make certain you have enough in assets or investments to cover the cost. I find this to be a very difficult proposition, not only because it is impossible to know ahead of time how much care you are going to need, but also the cost of the care in the future is very unpredictable. I remember at the beginning of my career the cost of a nursing home was around $5,000 a month, and now it is well over $10,000 and in some cases in our area $12,000.

I honestly don’t think it is out of the realm to predict the cost will more than double in a short period of time. But the people who were planning to self-insure, it was certainly a shock to them when they finally got to the point of needing it, and learning that we were closer to $12,000 a month. Although this can be possible for the wealthy individuals, it is not typically possible for the middle class, since they cannot accumulate enough wealth to absorb $12,000 a month in costs. The other thing to remember is that often times one spouse is the caregiver for another spouse, and when the well spouse ends up needing care himself or herself, both spouses end up in the nursing home to the tune of $25,000 a month. It would be very difficult to self-insure this kind of need. 

Another option is long-term care insurance. I am not licensed to sell insurance and have done numerous blogs on the topic of long-term care insurance. I am a big fan in general of the insurance because I love that it could keep an individual in their own home for as long as possible. If you are looking at long-term care insurance policies, I would definitely look at a rider that will pay for in home care.

Pennsylvania has products that are hybrid policies which are life insurance policies, as well as having the riders that provide for in-home care or nursing care. Pennsylvania also participates in the partnership plan, which will allow an individual who has a long-term care policy to exempt an amount of assets equal to the amount of benefit that they have received. I am a big fan of both of these, and if an individual is able to afford it, I believe it is absolutely a good investment. You certainly want to talk to an agent to determine if it is something that is possible for you and your loved one, as well as whether it is financially doable. 

In many cases self-insuring or long term care insurance is not an option, for a myriad of reasons, but often times we are stuck with a situation where a spouse does not have any way to pay for the long-term care, and they are reliant upon the crisis rules. Currently in the state of Pennsylvania, the crisis rules are very favorable, and will allow us to protect 100% of the assets for the spouse in the community. If you are interested in learning more about Medicaid crisis planning, please call our office at 717-845-5390, or click the link here to RSVP to our upcoming workshop to learn more about it. 

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Meet the Team: Deb Pingel

Asset Protection Planning, Elder Law, Estate Planning , , , ,

Deb Pingel a Wisconsin Native joined our team in 2020. Customer Service has been instill in Deb for her whole life. From babysitting, helping elderly through church, to customer service, Deb is in the front of the line to help others. Most recently she managed the online shopping at a local grocer, helping get groceries for the customers that were not comfortable shopping during the pandemic. Having a history of Medicaid Planning on the annuity side will bring another great dynamic to the Medicaid team. Deb loves being a wife, mother to her children as well as her fur babies. Deb received her Degree from UW-Milwaukee in Science and Arts.

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