By Attorney Thom L. Cooper
In our practice we have a number of farm clients. A consistently high priority for these clients is making sure that the farm stays in the family. Typical characteristics of our farm clients: (1) They have worked hard all of their lives and plowed most of the profits from the farming operation back into improvements, equipment and purchasing additional ground. (2) They tend to be asset rich and cash poor. (3) They are good businessmen with respect to their farming operations. (4) They have also given a great deal of thought about how the farm should be passed to their heirs.
HOWEVER, one of the things many farmers rarely consider is the impact to the farm of a catastrophic health situation, like a nursing home stay. Many times our farmers have heard that the farm is “an exempt asset” and therefore not subject “sale” or “spend down”.
While it is true that the farm is an exempt asset if it is associated with the home, the farm is not protected from Ohio Estate Recovery Liens. Estate Recovery Liens are placed on a farm for the amount the government pays for any nursing home care or in-home medical care and related services. For example, if the farmer’s wife would go into a nursing home and the government pays $6,000 per month for four years for her care, a $288,000 lien is attached to the farmer’s property.
There are ways to avoid these liens but preplanning is essential now more than ever. If you are interested in learning more about how to make sure your farm is not subject to one of these liens and stays in your family, you are invited to come in for a free consultation where we will discuss the techniques available to save your farm.
By Daneen Cline
Louise is 78 and has been a resident in a nursing home for 18 months. Her daughter, Pat, has spent all of Louise’s assets to pay for her care and knows that she now must make a medicaid application for her mother. The nursing home provides Pat with the application form and a list of documents she will need, but she must attend the face to face interview with the caseworker at the Department of Job & Family Services. She assembles the required documents, meets with the caseworker and is surprised to find that she is pleasant, seems to understand the situation Louise is in and wants to help. After the caseworker gathers all the information about Louise’s assets she asks about any asset transfers Louise made in the past 5 years. Pat tells her that almost 3 years ago her mother gave each of her 4 grandchildren $30,000 as a gift. At the end of the appointment the caseworker told Pat that her mother was financially eligible for public assistance but the gifts she had made were considered to be improper transfers and because of them, the State of Ohio wouldn’t pay her nursing home bill for 24 months.
As a result, Pat was forced to move Louise to the County Home with the cost being covered by Louise and her daughter Pat.
Louise made one of the most common mistakes there is, she gifted money without knowing what the consequences would be if a health situation occurred. Public Assistance regulations do allow for gifting, but there are penalties associated with them. To gift assets successfully it is important to know what those penalties are and how and when they will be applied. Before gifting is done, a qualified Elder Law Attorney should be consulted to implement a plan that takes into consideration the possibility of a health crisis as well as one that conforms to the necessary regulations.
In a June 4, 2009 Cleveland Plain Dealer Article, Ohio Speaker of the House Armond Budish advocates that Ohioans utilize nursing home planning to save their assets. Budish likens nursing home planning to tax planning as a way for seniors to save their assets. Budish states that, “It puts a greater burden on the government, but there is nothing wrong with doing it because the law allows it. . . . Congress recognized that people shouldn’t lose their savings before being covered by Medicaid and that’s why it created the options to move assets. People should be able to avail themselves of the protections that Congress has set up.”
Read full article
If you would like to follow Speaker Budish’s advice to preserve your assets, our firm can help.
The attorneys at The Thom L. Cooper Co. have the experience and expertise to answer all of your questions relating to Elder Law and Estate Planning, including:
- Will I outlive my money if I need nursing home or assisted living care?
- How can I get veterans benefits or other benefits to pay nursing home costs / assisted living costs?
- Do I need long-term care insurance?
- How can I avoid paying too much in taxes?
- What are the best ways to preserve my assets?
- How can I leave the most to my children and grandchildren without losing control of my finances?
Medicaid is a benefits program which is primarily funded by the federal government and administered by each state. Sometimes the rules can vary from state to state. One primary benefit of Medicaid is that, unlike Medicare (which only pays for skilled nursing), the Medicaid program will pay for long term care in a nursing home once you’ve qualified. Remember, Medicare does not pay for treatment for all diseases or conditions. For example, a long term stay in a nursing home may be caused by Alzheimer’s or Parkinson’s disease. Although the patient receives medical care, the treatment will not be paid for by Medicare. These stays are called custodial nursing stays. Medicare does not pay for custodial nursing home stays. In that instance, you’ll either have to pay privately (i.e. use long term care insurance or your own funds), or you’ll have to qualify for Medicaid.
Why Seek Advice for Medicaid?
As life expectancies and long term care costs continue to rise, the challenge quickly becomes how to pay for these services. Many people cannot afford to pay $6,000 per month or more for the cost of a nursing home, and those who can pay for a while may find their life savings wiped out in a matter of months, rather than years. Fortunately, the Medicaid Program is there to help. In fact, in our lifetime, Medicaid has become the long term care insurance of the middle class. But the eligibility to receive Medicaid benefits requires that you pass certain tests on the amount of income and assets that you have. The reason for Medicaid planning is simple. First, you need to provide enough assets for the security of your loved ones — they too may have a similar crisis. Second, the rules are extremely complicated and confusing. The result is that without planning and advice, many people spend more than they should and their family security is jeopardized.
One of the things that concerns people most about nursing home care is how to pay for that care. There are basically four ways that you can pay the cost of a nursing home:
1. Long Term Care Insurance – If you are fortunate enough to have this type of coverage, it may go a long way toward paying the cost of the nursing home. Unfortunately, long term care insurance has only started to become popular in the last few years and most people facing a nursing home stay do not have this coverage.
2. Pay with Your Own Funds – This is the method many people are required to use at first. Quite simply, it means paying for the cost of a nursing home out of your own pocket. Unfortunately, with nursing home bills averaging between $5,000 and $6,600 per month in our area, few people can afford a long term stay in a nursing home.
3. Medicare – This is the national health insurance program primarily for people 65 years of age and older, certain younger disabled people, and people with kidney failure. Medicare provides short term assistance with nursing home costs, but only if you meet the strict qualification rules.
4. Medicaid – This is a federal and state funded and state administered medical benefit program which can pay for the cost of the nursing home if certain asset and income tests are met. Since the first two methods of private pay (i.e. using your own funds) and long term care insurance are self-explanatory, our discussion will concentrate on Medicare and Medicaid.
In a recent review of the Ohio Records, it has come to our attention that Medicaid Estate Recovery Liens been filed against real property, in which you may have an interest! The State of Ohio Department of Job and Family Services has filed this lien/affidavit in an attempt to recover the Medicaid Benefits paid on behalf of the deceased.
In the past our office has been successful in resolving many of these liens to our clients’ satisfaction. Of Course, every case is different, and specific results will depend upon the specific factual and legal circumstances of each case. If you are interested in finding out more about Estate Recovery Liens we encourage you to visit our website at liens.cooperelderlaw.com.
The Medicaid Estate Recovery program applies to all individuals who received any services for which Medicaid had paid and those services were rendered after the recipient reached the age of 55 who are deceased and not survived by a surviving spouse, minor child or adult disabled child.
One of the most common misconceptions of the estate recovery program is that a recipient must be a resident of a nursing home for at least six months before being subject to estate recovery. There is in fact no minimum time for receiving service, either nursing home care or home and community based services. This confusion results from an old rule where a nursing home resident is asked to sell the homestead if there is not a community spouse or other exempt situation after six months.
