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Helping Families With Long-Term Care Needs

Sometimes it’s like a bolt of lightening. An aneurysm suddenly disables a 58 year-old wife and turns the lives of her children and her husband upside-down. Other times the progression is more gradual but no less demanding. Alzheimer’s disease may progressively push a family toward the edge where professional, long-term care becomes essential. 

The need for placement in a nursing facility presents a bewildering array of new issues for a family. What coverage is available from Medicare, from the Medicare supplement policy or the employer’s insurance plan? What are the rights of the nursing home resident and the family who wants to demonstrate their own caring and assure quality for the loved one who will now be cared for by people they have never met before? 
These questions have become part of the daily work of lawyers who practice Elder Law. 
Most often it is the family member who is most involved with looking after the well being of the elder who is now incapacitated who seeks out help. What are the legal issues for this person? 

First, the lawyer must help this family member understand what it means to have a fiduciary relationship to the frail family member. Hopefully, powers of attorney were established before the person became disabled. If not, a guardianship may be necessary to provide the type of legal assistance that will be necessary to carry out the complex plan needed to assure safe and affordable care. 

The family member must be advised what their legal obligations are – and what they are not. The family member is generally required by the law to carry out what comes naturally to them anyway: to look out for the best interests of the person who is incapacitated. But “best interests” are not always clear and; certainly, the paths to getting to the best situation for the incapacitated person are often shrouded in a dense fog. 

The lawyer provides clarity by identifying the issues and then helping the client choose the right path among a variety of choices. 

Medicaid eligibility planning is essential for most people with a long-term care need. Approximately 2/3 of the people in nursing homes receive Medicaid. For most, there is no other source of payment for a lengthy stay in a nursing facility. 

Medicaid rules, while complex, break down to 3 basic questions: Does the person have “excess resources?” Has the person made any transfers of assets that would cause a period of disqualification? How will the income of the individual or couple be allocated to care needs versus other needs? 

For married couples, Medicaid rules were amended in 1989 to prevent spousal impoverishment. Under these rules the spouse in the community can retain assets for her own needs. The amount of assets that can be retained is the highest amount computed under 4 different formulas. The only way a family will know whether they are getting the maximum allocation to the community spouse is to have the assistance of a lawyer who knows these rules inside and out. 

Assets can also be sheltered in exempt form. Income-producing real estate is an exempt asset under Medicaid rules in Indiana. Even single individuals who can have no more than $1,500 in cash assets can own farm land or rental property worth tens or even thousands of dollars without having to sell that property. Transfers of assets to children can cause a Medicaid penalty in some cases. 

However, there are a number of exceptions. Last year, significant changes to Indiana law changed the landscape of gifting. Medicaid transfer rules are often talked about but few truly understand them, outside of Elder Law attorneys. 

Changing assets from non-exempt form to an exempt form, such as the purchase of income-producing real estate or the purchase of an annuity will not cause a penalty. 
However, only certain purchases of this type will really help in a Medicaid plan. 
The key is to have expert advice before entering the world of Medicaid. Such advice can be worth tens of thousands of dollars in savings to a family facing this critical need.

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Boomers Resource Guide is a special supplement to the Senior Citizen's Guide