Special Needs, Disability And Long-Term Care Planning

Certified elder law attorneys (CELAs) do not limit their practice to a specific area of law, but rather to the legal needs of the over-55 and disabled population, including long-term and disability care at home or in a facility. Families with special-needs children have different goals to protect them when parents are infirm and unable to provide care or are deceased. These planning issues must be addressed by creating special-needs or disability trusts as well as by establishing post-death protection in the parents' wills.

Special Needs And Disability Planning

Medicaid has carved out exceptions and exemptions for the special-needs and disabled population that parents should implement. Two examples:

A. Consider a grandparent/parent with a disabled or special-needs grandchild/child. The Medicaid law allows establishment of a "sole benefit" trust for the special-needs individual for life. The funds establishing that trust do not place any public benefits at risk for the grandparent/parent, should Medicaid be needed for long-term care, nor for the child. This trust is exempt from the five-year Medicaid look-back rule.

B. Long-Term Care Planning: If an individual suffers a catastrophic illness and has exausted their coverage Medicare, then the need for long-term care arises. Long-term care and current Medicaid coverage can be rendered at home, in an assisted living facility or in a skilled nursing facility. Typically, the cost of that care must be privately paid before the individual is eligible for public benefits or Medicaid. The current cost of private, 24/7, at-home health care is approximately $7,000 per month; an assisted living facility is $8,000 per month and nursing home care is $12,000 per month. These staggering costs will diminish the lifetime estate of the infirmed individual and his or her spouse unless long-term care and financial planning is instituted to guard against medical impoverishment.

The basic rule to become eligible for public benefits is quite simple: You spend down 100% of your funds on medical costs first, and when you're down to your last $2,000, you become eligible for Medicaid. This improverishment doesn't have to happen ! There are legal planning tools available whereby an individual does not need to exhaust his or her entire lifetime estate as a precondition to qualify for Medicaid. This is not to say that you can "beat the system" and not need to privately spend down to attain a quality level of care rather than have no family choice as to the facility or location. Instead, with our counsel, you have control that your "fair share" requirement before Micd eligibility will not be 100%. A true statement would be there is no question you will be able to preserve or shelter resources but merely how much.

Therefore, what "self-help" private financing options are available to address the cost of long-term care before Medicaid:

Long term care insurance — You place the responsibility for payment of long-term care on an insurance company, shocked and unaware that their retirement insurance plan of Medicare and supplements will not address long term long term care needs. We advice them that the three goals of retirement planning are to minimize income and death taxes, achieve high rates of return on thier retirement investments, and preserve assets from long term care spend down without losing control. Retirement has changed radically over the past several decades in americ. Years go, you expected to work most of your life for a single, large employer and you then would count on a pension in addition to your social security upon retirement. Today, in all likelihood, you may be financing retirement on money you saved through IRSs, 401(k)s and investments. pension are now the exception rather than the rule. However, the LTC insurance market faces instability with costly premium increases and major insurances leaving the market.

  1. Other public benefits — The availability of the Veterans Affairs Aid and Attendance benefit, noted elsewhere on this website, is separate and distinct from Medicaid eligibility and in 2017 offered monthly benefits ranging from $1,155 per month to $1,792 per month to qualified applicants. Also, consider PTR (senior tax freeze) for home real estate taxes and PAAD (Pharmaceutical Assistance for the Aged and Disabled), which reduces drug co-pays to $7, without monthly premiums.
  2. Use of home equity to pay for care — Many clients have substantial equity in their homes with the ability to access a line of credit to pay for long-term care. There are also reverse mortgages, although they have substantial costs. Finally, there are Medicaid exemptions for caregiver children or disabled children that place the home beyond the reach of medical spend-down prior to eligibility and are not subject to the Medicaid five-year look-back.
  3. Tax benefits — A chronically ill individual can qualify to allow the total long-term cost of home care, assisted living or nursing home care to be fully deductible for income tax purposes.
  4. Use of your IRA or retirement plan or appreciated investments can offset the income tax impacts if used for tax-deductible long-term care expenses.
  5. Although there is a five-year look-back and potential five-year penalty of ineligibility for Medicaid due to transfers, there are several exemptions from the transfer/penalty rules when the client exercises "self help" planning. Reliance splely on government public benefits to pay for care will not work.