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East Hanover New Jersey Elder Law Blog

Would the Medicaid home care program benefit your loved one?

The Medicaid program provides low-income people with health insurance. It also pays if the patient requires long-term care in a nursing home.

But did you know that Medicare is also available for home care? Run by the state, this kind of program may be a great alternative to a nursing facility if your loved one can qualify.

Can giving a gift affect Medicaid planning?

Many people in New Jersey who are in their elder years want to give their loved ones substantial gifts. This way, they can see their loved one enjoy what would be their inheritance. However, these people may also be planning on utilizing Medicaid benefits to pay for long-term care once they can no longer care for themselves. It is important, then, to understand how gift-giving can affect Medicaid eligibility, so that you can plan accordingly.

In general, to qualify for Medicaid benefits, an applicant cannot have transferred assets of a certain value to another person within the past five years, a period referred to as the Medicaid "look-back" period. If an applicant makes a transfer during that period, that person will be penalized by being ineligible for Medicaid benefits for a certain amount of time. So, giving gifts within the look-back period could be considered a transfer of assets that will be penalized.

Don't panic when a sudden medical crisis leads to a disability

While some people in New Jersey may be fortunate enough to make plans for long-term care while they are still in good health, many find themselves needing long-term care options only after a crisis occurs. For example, a person could unexpectedly suffer a stroke, or they could fall and break a hip, necessitating either in-home health care or care in a nursing home. People in such situations may be afraid that they will lose all the hard-earned assets they accumulated over a lifetime to pay for such care.

There is good news, however. A person does not have to become impoverished to pay for long-term care. Special needs trusts, home equity loans or even reverse mortgages may be options. Medicaid may also be an option. What option is right for you depends on your specific circumstances. No two cases are the same.

How common is the need for long-term care planning?

Some people in New Jersey plan carefully for the care they will need in their old age, but others may find their health has deteriorated quickly and they are in immediate need of services. According to the U.S. Department of Health and Human Services, on average a person who is currently age 65 will have nearly a 70% chance of needing some sort of long-term care before they pass away. On average women will need 3.7 years of long-term care services, while men will only need 2.2 years of long-term care services on average.

Of course, this means that on average approximately one-third of those currently age 65 will never need to utilize long-term care services before they pass away. However, on average 20% of those currently age 65 will need to utilize long-term care services for more than five years. Therefore, long-term care planning can be beneficial for anyone in New Jersey. After all, no one knows what the future will bring.

The costs of long-term care can be expensive

Young New Jersey residents in the throes of their careers and the midst of raising their children may not be able to see far enough into the future to a time when their lives are relaxed. The frenetic pace of everyday life can absorb individuals and cause them to lose focus of the fact that someday they may not want to or be able to work. Retirement is achieved by many individuals throughout the nation, but not all retirees find that they have saved enough money to cover all their long-term costs.

Recent estimates on the costs of long-term care suggest that individuals may need hundreds of thousands of dollars just to provide for themselves for a few years. For example, a private room in a nursing home may cost in excess of $100,000 per year, and many older adults need supportive care for two to five years.

What duties are there regarding guardianship of the estate?

New Jersey courts generally want people to have as much autonomy as possible when it comes to making health care decisions and handling their financial affairs. However, sometimes a person becomes mentally or physically incapacitated to the point that they can no longer make these decisions on their own. Some people, before becoming incapacitated, execute a medical and financial power of attorney, which names the person who is to make these decisions on their behalf. However, in the absence of such documents, the court must assign a guardian to handle the incapacitated person's affairs. Today, we will focus on guardianship of the estate, in which a guardian handles an incapacitated person's financial affairs.

As soon as possible after the guardianship hearing, the guardian must qualify before the County Surrogate. Sometimes, it is necessary to post a surety bond. Guardians must also obtain letters of guardianship and possibly short certificates.

What your estate plan needs other than a will

If you already have a last will and testament in place, that is a good start. But unless you have very little in assets, a solid estate plan should involve much more. There are plenty of other documents and tools that can help you describe your wishes, distribute your assets and protect your interests. 

This may sound intimidating, but it really is not as complex as it may seem. Here are some other estate planning methods to consider after creating a will.

Help is available when guardianship is the only option

It can be difficult to see a loved one's mental or physical capabilities decline over time. Unfortunately, sometimes the situation becomes so serious that a guardian must be appointed. A guardian becomes necessary when the person is incapable of taking care of their own affairs and they didn't designate a power of attorney before they became incapacitated. This is a situation that must be treated delicately and with respect for the incapacitated individual.

In New Jersey, guardianship is seen as a last resort. Rushing the process can not only make it more difficult but can also cause disagreements between the incapacitated person's loved ones, adding more stress to an already difficult time. In the absence of a power of attorney, guardianship is sometimes the only option. When it comes to guardianship, the guardian of the property takes care of an incapacitated person's financial affairs, while the guardian of the person handles their care planning.

Why are special needs trusts important for disabled loved ones?

Special needs trusts are a vehicle that protects assets that can be used to pay for certain needs of a disabled beneficiary. Gifts to the beneficiary, funds from a legal settlement and life insurance proceeds can all be part of a special needs trust. There are several reasons why some people in New Jersey decide to execute a special needs trust.

First, special needs trusts can be a means for providing assets for the support of a disabled loved one both during your lifetime and after you pass away. Second, like other trusts, a special needs trust designates a trustee to manage the funds in the trust and oversee the distribution of those funds to the trust beneficiary. This is useful if the beneficiary cannot manage the trust funds on their own. It can also ensure that trust funds are distributed for the reasons stated in the trust.

Can my estate be subject to Medicaid recovery in New Jersey?

Many people in New Jersey rely on Medicaid benefits to pay for their care needs as they age. However, what they may not know is that upon their death, Uncle Sam may come knocking, seeking recovery from the deceased's estate of what was paid for using Medicaid benefits.

In general, under both federal law and New Jersey law, once a Medicaid recipient passes away, the state will recover the funds from the deceased's estate for all payments that were made using the Medicaid program once the recipient reached age 55. For Medicaid recovery purposes, the deceased's home, bank accounts, trusts and annuities, stocks and bonds and other tangible pieces of property constitute the deceased's estate, even if these assets have been passed on to the deceased's survivors.

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