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Landmark Medicaid Case Confirms Secrets in Qualifying for Medicaid Immediately

Posted on: March 27, 2017 at 9:06 pm, in

Even when you or a loved one are faced with nursing home care, there is something you can do to protect your money.

Set up a Personalized, Court-Tested Medicaid Trust now in only a few hours
One of the biggest myths of Medicaid planning is that nothing can be done if nursing home care is just around the corner. After all, Medicaid has a five year look-back period, so your accumulated wealth is as good as gone, right? Well, not so fast. There is something you can do.
Medicaid doesn’t want to pay for medical expenses of people who can pay for them on their own. They also don’t want people giving away their wealth in order to qualify. So Medicaid invented the 3 year look-back which quickly became the 5 year look-back. What this means is that Medicaid can go back through 5 years of your records to see where your money went. If any was given away, either to a person, a charity, a trust or a relative, they can choose not to qualify you for Medicaid. You then have to pay out of pocket expenses.
So if you can’t give away your money, you are stuck, right. Not exactly… you can sell your money and get paid back in installments with interest. Medicaid can still adjust the amount they will pay to compensate for this “income”, but the rest will be safely waiting to be paid to whomever you designate after your death. You may have just saved the bulk of your estate for your children and grandchildren!
If this sounds too good to be true, it’s not. The instrument that is used is commonly called a Medicaid annuity. One can purchase a Medicaid annuity which has specific language included in the contract for the monthly payments such as a clause that states that it is non-transferrable and cannot be cancelled. This makes it untouchable by Medicaid and, more importantly, an exempt asset for qualification.
Several states have tried to get around this Medicaid workaround, but have failed, the most recent being North Dakota who tried to deny the Geston’s coverage [Geston v. Olson, 857 F.Supp 2d 863 (2012)]. In North Dakota, Mr. and Mrs. Geston were trying to plan for their future as Mr. Geston had just entered a nursing home. They had not yet applied for Medicaid but had gone to the social service board for an asset assessment. The board determined that they had exceeded the statutory limit (to qualify for Medicaid) by $586,000. The Geston’s must have done some research into what was countable and what were exempt assets because they began to spend on exempt items. Basically, countable assets are everything but the exempt assets. Exempt assets include things like a home, household goods, burial funds, cars, retirement funds and non-marketable assets.
The Geston’s decided that they would take some of their $586,000 and spend it on a bigger home, a new car and prepaid burial services, with still left them over $400,000. Not wanting to spend it all on health care leaving little left for their future heirs, the Geston’s bought a Medicaid annuity which would pay out $2,734.65 a month for 13 years, most likely long past Mr. Geston’s life expectancy leaving the balance for .
North Dakota denied the Geston’s application. The department reasoned that the remaining value of the annuity was a countable resource. The Geston’s took the state to court. The lower court granted the Geston’s summary judgment (without even the need for a trial) because North Dakota’s denial of benefits was stricter than the federal rules and in order to get Medicaid funding, states had to agree not to be more restrictive than the federal rules.
North Dakota then appealed the summary judgment. The state threw everything they had at the Gestons, citing missing language in the code, the definition of annuity, and finally, a Hail Mary saying that this undermines the purposes of the program. The state tried to lump the Medicaid annuity in with retirement annuities even though that was not the language used. The court came back and said that the lawmakers knew what language they were using, there was no missing language, and annuity was clearly defined. They went on to insinuate that if the state thinks a Medicaid annuity undermines the purpose, they can bring it up with the lawmakers, not the court.
The Geston’s won and so did the Medicaid annuity. Estate Street Partners can help to determine whether this tool or a different tool will help protect your assets.

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Understanding Medicaid Eligibility: Avoid the Confusion

Posted on: March 27, 2017 at 9:05 pm, in

Understanding Medicaid Eligibility Provisions and Rules

Set up a Personalized, Court-Tested Medicaid Trust now in only a few hours
We can design, for you, an IRREVOCABLE TRUST with an INDEPENDENT TRUSTEE that can IMMEDIATELY qualify your MEDICAID ELIGIBILITY. At the end of our design, you will NOT own any assets.
Medicaid is an entitlement. So long as individuals meet the legal eligibility provisions, they are ENTITLED to Receive Medicaid Benefits. You must legally own nothing.
For people seeking admission to a nursing home, the NURSING HOME MUST provide (orally and in writing) and prominently display written information about how to apply for and use MediCARE and MediCAID benefits. The nursing home, must also provide information to receive refunds for your previous payments covered benefits.
Ever since Medicaid was introduced during the mid-1960s as a key element of Great Society programs, state expenditures on items such as infrastructure, education and other public services to maintain economic competitiveness have been constrained by rapid growth in state Medicaid obligations. The Patient Protection and Affordable Care Act (ObamaCare) enacted in March 2010 expands states’ Medicaid funding burdens yet again by mandating health insurance coverage among those already eligible for Medicaid but not enrolled in it. It also expands eligibility for Medicaid benefits to additional categories of people and to those with incomes both above and below the federal poverty level (FPL).
– Source: Estimating ObamaCare’s Effect on State Medicaid Expenditure Growth: A Study of Five Most Populous U.S. States by Jagadeesh Gokhale,Senior Fellow, Cato Institute.
Nursing home care can be very expensive. Most people who enter the nursing home begin with a short hospital stay, then transferred to a nursing home for re-habilitative skilled care services, which ultimately ends in their becoming permanent nursing home residents, because they cannot go back home.
MediCARE covers skilled nursing facility care for a limited time after a 3 day qualifying hospital stay for some medical condition. MediCARE part “A” covers the first 100 days.

Nursing-Home covered under Medi-[CARE] Part “A”

Short-term nursing home care expenses are covered under MediCARE for less than 100 days.
  1. The trigger – is your hospital stay of at least 3 days, or longer, primarily to pay for your re-hab services for some medical condition requiring high skilled care, and
  2. Days 1 – 20 is paid for by MediCARE Part A, and
  3. Days 21 – 100 the patient is responsible for a co-pay of approximately $133/per day, and
  4. Moving forward, you pay 100% unless you have Long Term Care Insurance, or you qualify for Medi-[CAID].

What is MediCAID?

MediCAID pays for care for about 7 out of every 10 nursing home residents. Medicaid is a joint Federal and state program that pays for certain health services and nursing home care for older people with limited income and resources. If you qualify, you are ENTITLED to get help to pay for nursing home care and/or other health care costs.

What is MediCARE?

MediCARE on the other hand is for hospital and doctor care for individuals over the age of 65.

Assets Subject to MediCAID Spend-Down:

Eligibility for qualified MediCAID payments to your nursing home, varies from state to state. Eligibility for Medicaid is determined by your available resources that are subject to spend-down: cash, savings, checking, CDs, stocks, bonds, mutual funds, IRAs, 401Ks, 403(b), TIAA-CREF and other retirement accounts, cash value life insurance, annuities, cars, farm equipment, machinery, commercial real estate, etc. IN SHORT: your available resources available for payment of your own nursing home expenses is everything that can be converted to cash.

Assets Not Subject to Medicaid Spend-Down

Resources NOT available for your Medicaid spend-down are: your personal possessions, such a clothing, furniture, jewelry, one motor vehicle without regard to value, second auto – to the extent it’s medically required for transportation of the Medicaid participant or family member providing for such purpose (each state may have different rules) – prepaid funeral plans, small amounts of life insurance, assets that are not easily accessible such as a lawsuit in progress or other property that cannot be liquidated.

How Much of Your Assets are Protected from the Medicaid Spend-Down: Married or Single?

For married spouses, the residence is protected up to $500,000 of equity (some states $750,000), if you are single the residence is up for grabs with some exceptions such as the Medicaid patient/resident can prove that there’s a reasonable likelihood of being able to return to the home, and other similar nuances i.e. disable child living in the home, or another relative living in the spend-down means that you must first pay for your own nursing home and other qualified medical expenses down to your last-remaining $2,000, before your state begins to pay. NOTE: It’s STRONGLY ADVISABLE that you consult with a COMPETENT Certified Medicaid Planner. You’d be enormously surprised at the number of “self-proclaimed experts” that are incompetent. Since your nursing home costs are unpredictable and nobody knows your length of stay, good planning shapes good decisions.
In preparing for battle I have always found that plans are useless, but planning is indispensable.
– Dwight D. Eisenhower (1890 – 1969)


Your Personal Residence: When the State Cannot Put a Lien on Your Home

  1. The state cannot put a lien on your home if there’s a reasonable chance you’ll return home after getting nursing home care or if you have a spouse or dependents living there.
  2. The state cannot take, sell, or hold your property to recover benefits that are correctly paid for nursing home care while you are living in a nursing home. The state cannot recover on a lien against a person’s home if it’s the residence of the person’s spouse or sibling with an equity interest and was residing in the home at least one year prior to your nursing home admission.
  3. The state cannot lien your home if you have a blind or disabled, or a child under the age of 21 living in your home. NOTE: protection of your home is a highly contested and dynamic litigation frontier. States are aggressively filing motions to recover their costs, if there’s any perception of avoidance.

Reducing your assets, first: Community Spouse Allowance

A spouse who is not in a nursing home (community spouse) may keep joint assets up to $109,560 and a monthly income allowance. The Community Spouse Resource Allowance (CSRA) is equal to one-half of the couple’s combined countable resources, valued once (snapshot) at the time the institutionalized spouse permanently enters the nursing facility. However, the CSRA cannot be more than a set amount, as adjusted annually for inflation ($109,560 effective in 2011), and it cannot be less than a fixed amount, also adjusted annually for inflation ($21,912 effective in 2011). You need to check with your state of any exceptions and you need to understand the “snapshot” of your assets on the date the spouse is permanently institutionalized. Laws and rules are complex and the field is fraught with land mines. People who ask for our advice, almost never take it, because it was free.

Spousal impoverishment Rules of Medicaid

Federal laws prohibit community spouses (spouses not in the nursing home) from losing all of their income and assets to pay for nursing home care for their spouse. When one spouse enters the nursing home and applies for Medicaid, his/her eligibility is determined under what is called the “spousal impoverishment” rules.
Spousal impoverishment helps make sure that the spouse, still at home (community spouse) will have resources available, money needed to pay for living expenses by protecting a CERTAIN amount of the couple’s total available resources, as well as at least a portion of the nursing home resident’s income, for the use of the spouse who is still at home.
Do you want the state government to tell you how you are going to live?
Resolve not to be poor: whatever you have, spend less. Poverty is a great enemy to human happiness; it certainly destroys liberty, and it makes some virtues impracticable, and others extremely difficult.
– Samuel Johnson (1709-1784) British author.

Medicaid is an Entitlement: For the Reckless and Lazy?

Laws, laws, laws…rules, rules, rules. How you can avoid depression from the Medicaid spend-down rules? In America, risky behavior is rewarded. The man who spends every nickel he ever earned, and was not motivated to work hard and save for the rainy day, lives a wreckful life with drinking, smoking, womanizing, recreational drugs and more, is rewarded by quick eligibility to nursing home care, because he is legally entitled. Medicaid is an entitlement. By not having a nickel to his name, he’s entitled. The one who worked hard, did not go to a fine restaurant, did not drive a luxury car, did not overspend his limits with his credit card, is punished for living a frugal life in his sunset years. This is his justice?
“If it were not for injustice, men would not know justice.”
– Heraclitus (540 BC – 480 BC)



“I live in Alexandria, Virginia. Near the Supreme Court chambers is a toll bridge across the Potomac. When in a rush, I pay the dollar toll and get home early. However, I usually drive outside the downtown section of the city and cross the Potomac on a free bridge. This bridge was placed outside the downtown Washington, DC area to serve a useful social service, getting drivers to drive the extra mile and to help alleviate congestion during the rush hour. If I went over the toll bridge and through the barrier without paying the toll, I would be committing tax evasion. If, however, I drive the extra mile and drive outside the city of Washington to the free bridge, I am using a legitimate, logical, and suitable method of tax avoidance, and I am performing a useful social service by doing so. For my tax evasion, I should be punished. For my tax avoidance, I should be commended. The tragedy of life today is that so few people know that the free bridge even exists.”
– Supreme Court Justice Louis D. Brandeis (1856 – 1941)

Tip to MediCAID: Do Not Own Any Assets with the Ultra Trust® Irrevocable Trust

By definition: when it comes to MediCAID eligibility, if you have no assets, you qualify. You are ENTITLED for paid nursing home medical care. You understand this, right?
Therefore, if you plan ahead, when the seas are calm, you can implement a plan of no assets titled in your name or jointly with your spouse. A perfect example of planning is from the recent Apple founder – Steve Jobs. In the last days of his life, he designed a plan to eliminate probate and eliminate estate taxes, with an uncanny ability to control his amassed wealth, beyond his grave.
It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.
– Steve Jobs (1955 – 2011), BusinessWeek, May 25 1998
We can design, for you, an IRREVOCABLE TRUST with an INDEPENDENT TRUSTEE that can IMMEDIATELY qualify your MEDICAID ELIGIBILITY. At the end of our design, you will NOT own any assets.
Our Ultra Trust® when executed and timely implemented, will avoid probate, eliminate estate taxes, protect you from frivolous lawsuits, and qualify you for Medicaid benefits, plus, you will be able to control your assets from your grave.
There are risks and costs to a program of action. But they are far less than the long-range risks and costs of comfortable inaction.
– John F. Kennedy (1917 – 1963)

Learn more about how to hide your assets from Medicare:

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Medicaid Asset Protection: Countable Assets in Satisfaction of the Mandatory Spend-Down

Posted on: March 27, 2017 at 9:05 pm, in

What are the Countable Assets & Non-Countable Assets in Medicaid Spend-Down?

Set up a Personalized, Court-Tested Medicaid Trust now in only a few hours
I’m certain, that if you are over the age of 65, you have participated in a few seminars, talked to a few people, professionals and otherwise, and informed yourself of the new confiscatory rules of Medicaid, the 60 month look-back, and have become wide awake to the fact that if you don’t spend the time now, to sharpen your axe, you will become the primary payer of your nursing-home costs, right down to your last $2,000.
The government provides very little information and does NOT promote website knowledge to help you make smart decisions. I know this because, we bought the telephone number 1-877-21-MEDICAID (1-877-216-3342) and we were absolutely overwhelmed with phone calls. In fact, up until a couple of years ago, it was illegal for any advisor to offer fee-based information about how to plan for Medicaid.

Laws Surrounding Transferring Assets for Purposes of Obtaining Medicaid

As part of a 1996 Kennedy-Kassebaum health care bill, Congress made it a crime to transfer assets for purposes of achieving Medicaid eligibility.
Congress repealed the law as part of the 1997 Balanced Budget bill, but replaced it with a statute that made it a crime to advise or counsel someone for a fee regarding transferring assets for purposes of obtaining Medicaid.
This meant that although transferring assets was again legal, explaining the law to clients could have been a criminal act.
In 1998 then Attorney General Janet Reno determined that the law was unconstitutional because it violated the First Amendment protection of free speech, and she told Congress that the Justice Department would not enforce the law. Around the same time, a U.S. District Court judge in New York said that the law could not be enforced for the same reason.
Accordingly, the law remains on the books, but it will not be enforced.
I don’t make jokes. I just watch the government and report the facts.
– Will Rogers (1879 – 1935), quoted in Saturday Review, Aug. 25, 1962

Countable Resources to Pay for Your Own Medicaid:

The short definition: everything “you own” or “you own jointly with your spouse” that you can spend or convert to cash, is “countable” towards your responsibility to pay for your nursing home care, till you die, then the state enabling acts will collect, what’s left.
Cash, checking, savings, CDs, government bonds, mutual funds, retirement accounts, IRAs, 401Ks, 403b, TIAA-CREF and other retirement accounts, cash value life insurance, annuities, tax deferred annuities, any car beyond the 1st car, trucks, boats, farm livestock, equipment, and machinery, land, commercial real estate, “everything.”

What are “Not Countable” Assets in Medicaid Rules:

Your personal possessions, such a clothing, furniture, jewelry, one motor vehicle without regard to value, second auto – to the extent its medically required for transportation of the Medicaid participant or family member providing for such purpose (each state may have different rules), prepaid funeral plans, small amounts of life insurance, assets that are not easily accessible such as a lawsuit in progress or other property that cannot be liquidated. For married spouses, the residence is protected up to $500,000 of equity (some states $750,000), if you are single the residence is up for grabs with some exceptions such as the Medicaid patient/resident can prove that there’s a reasonable likelihood of being able to return to the home, and other similar nuances i.e. disable child living in the home, or another relative living in the home. It gets even more complicated, but the purpose of this dissertation is not for you to become the expert in Medicaid exclusions. The purpose is to “open your eyes” to what your elected officials are doing to suppress your life-time’s work.
It has been observed that a pure democracy if it were practicable would be the most perfect government. Experience has proved that no position is more false than this. The ancient democracies in which the people themselves deliberated never possessed one good feature of government. Their very character was tyranny; their figure deformity. Alexander Hamilton (1755 – 1804), Speech on 21 June 1788 urging ratification of the Constitution in New York.

How to “Plan Out” of These Restrictive Quagmire of Medicaid Laws

…I don’t like to think of laws as rules you have to follow, but more as suggestions.
-George Carlin (1937 – 2008)
Previously stated, it’s illegal to advise around Medicaid laws; it’s on the books, just not enforced.
The best way and the only significant effort that pays big dividends is NOT TO FALL IN THIS TRAP. If you own nothing, then you don’t fall in this trap. This quicksand of perplexing laws is designed to confiscate. If you own nothing, then government gives you more than you deserve. Or you deserve to own nothing and therefore should be at the mercy of government. Government rewards risky behavior. If you saved nothing, spent everything, and in fact you owe more money than you could possibly earn, you shall be rewarded with every possible government give-away, and bankruptcy.

How to Legally Own Nothing with Regards to the Medicaid Spend-Down

Assets owned by a “THIRD PARTY FIDUCIARY” are not available for the satisfaction of YOUR LIABILITY, no matter who’s the creditor – including any government or quasi-government agency, state or federal. Assets owned by someone not related to you by blood or marriage, are not owned by you – period.
The “someone” can be a legal entity established under law. An IRREVOCABLE TRUST with an INDEPENDENT TRUSTEE, not related to you by blood or marriage is a third party fiduciary.
Assets owned by a THIRD PARTY belong to the THIRD PARTY and are not available to “your creditor” in satisfaction of debts created by you.

The Trustee as Independent Person (i.e. Third-Party Fiduciary)

The TRUSTEE must be an INDEPENDENT PERSON, not related to you by blood or marriage. There must a true and perceptive legal independence between you and the legal fiduciary obligation created by the Trust agreement. You must be willing to “divorce” yourself from your money.

Avoiding Fraudulent Conveyance of Medicaid Asset Protection

Assets transferred to your Irrevocable (Third Party) Trust must be in EXCHANGE of equal value in order to avoid FRAUDULENT CONVEYANCE claims by past, present, or future not-yet-born creditors. You would not give your assets to a third party without adequate and full consideration; that would be fraudulent. In other words, fraudulent conveyance is avoided when you give me $100,000 and in exchange, I give you $100,000 of goods or services. If I gave you less, then it would be fraudulent to the extent you received less than equal consideration.
If I only had an hour to chop down a tree, I would spend the first 45 minutes sharpening my axe…
– Abraham Lincoln (1809 – 1865)

Learn more about how to hide your assets from Medicare:

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Medicaid Annuity Cases: Non-Assignable, Irrevocable Assets

Posted on: March 27, 2017 at 9:05 pm, in

This article continues in the examination of cases in which Medicaid annuities are being used. The state continues to argue that this is not an allowed practice and that the spouse in need of Medicaid should be declined benefits. However, the courts are upholding the rulings that the annuities cannot be considered available resources.

Three Cases to Support Using Medicaid Annuities Part 2

Set up a Personalized, Court-Tested Medicaid Trust now in only a few hours

Vieth v. Ohio Department of Job & Family Services (Vieth v. Ohio Dept. of Job & Family Services (Ohio Ct. App., 10th Dist., No. 08AP-635, July 30, 2009))

The Vieth couple had $300,000 in assets that were countable when Mr. Vieth entered a nursing home. To reduce the countable asset amount, Mrs. Vieth made the decision to purchase annuities. She bought two, one for $127,000 and the other for only $14,000. Based on the Ohio code, the state concurred that the couple met all requirements because the annuities were considered to be Medicaid compliant. However, when it came time for Mr. Vieth to apply for Medicaid, he was denied because an “improper transfer of assets” had been completed. This was in reference to the annuity purchases that were made by his wife.
Although the Medicaid agency later noted that the laws were changed by the Deficit Reduction Act and annuities and the purchase of an annuity would not be treated as an improper transfer; however, the department maintained that the methods of calculation of the CSRA (Community Spouse’s Resource Allowance) were not changed. This means that the way spousal resources would be treated in regards to eligibility for Medicaid remained the same, regardless of the changes to the law. This is why the applicant was denied, stating that the money that was used to buy the annuities were over and above the limits of the Community Spouse’s Resource Allowance; thus, the assets would be considered countable assets when determining Medicaid eligibility.
Due to these discrepancies, the court studied several cases that involved annuities, including the mentioned James v. Richman case. The court found that there was no legitimate support for the Medicaid department’s arguments. It remained irrelevant that the money used to buy the annuity was over the limits of the CSRA so that the annuity income would be used to increase the income for the community spouse. The one thing that was considered was that the annuity was in compliance and met all rules and regulations that were set forth by the federal DRA law. These requirements include:
  • The annuity is irrevocable
  • It is non-assignable
  • It is based on the owners life expectancy and is actuarially based
  • It will provide equal payments during the annuity term
  • There will be no balloon payments or deferrals
  • The state will be named as the beneficiary subsequent to the surviving spouse
The rules of the state of Ohio will not be considered in this case because they are not consistent with the federal laws regarding the use of Medicaid compliant annuities.

Lopes v. Starkowski

This case was heard by the U.S. District Court in Connecticut which approved the purchase of the Medicaid annuity. Mr. Lopes resided in a nursing home at the age of 85 and had $1,600 in assets. His wife’s assets totaled $340,000. Instead of spending down her assets, Mrs. Lopes purchased an annuity that had a premium of $166,220. This purchase allowed Mr. Lopes to be eligible for Medicaid because she spent down the assets when she made the purchase.
The state initially requested evidence that would prove the annuity was non-assignable. The reason for this was because if the annuity does have the ability to be assigned or transferred, it may have increased value and would then be deemed a countable asset. A letter was provided by the insurance company that sold the annuity. But the state DHS (Department of Human Services) continued to argue that the stream of income could be sold off even though the actual annuity could not be sold or transferred. The state even went so far as to find an individual that would be willing to purchase the rights to annuity payments that were held by Mrs. Lopes. She refused to sell the income and the state went on to deny the application for Medicaid.
Even though Mrs. Lopes could have sold her rights to the income from the annuity, the court held that she would then be breaching the contract terms and, as a result of this breach, this would make her able to assign the income stream as a non-countable asset. The court also held that when treating an assignable income as an asset, it would not be consistent with the federal laws. The federal laws state that, “no income of the Community Spouse shall be deemed available to the institutionalized spouse.” The court then pointed out that the DHS translation could open the Pandora’s Box to states’ recharacterization of various income sources and deeming them as assets, including Social Security income. This would result in violation with the statutes that have been given in regards to the approval of Medicaid benefits. The court also states that the statutes referring to Medicaid compliant annuities are a “generally permissive attitude” on behalf of Congress aimed at “carefully constructed annuities.”
Contact Estate Street Partners at (888) 938-5872 or (508) 429-0011 if calling in the Boston, MA, area. Find out more about Medidcaid complaint annuities and how you can avoid the Medicaid spend down.

Read more on Medicaid asset protection and Medicaid planning:

Learn more about how to hide your assets from Medicare:

Read more articles on irrevocable trust asset protection:

Medicaid Compliant Annuity: Irrevocable Annuity

Posted on: March 27, 2017 at 9:04 pm, in

Many states will argue that when a community spouse is the owner of a Medicaid annuity, then that annuity and all income it produces should be deemed as an available resource. The Courts disagree, stating that there is no way for the owner to access the cash in the irrevocable annuity, therefore rendering it an unavailable resource that should not be considered when determining Medicaid eligibility. The following case is based on these arguments.

Three Cases that Support the Use of Medicaid Annuity

Set up a Personalized, Court-Tested Medicaid Trust now in only a few hours
In recent times, there have been many cases in which Medicaid departments in states are counting Medicaid annuities as forms of available assets. They are also treating the purchase of these annuities as a transfer of assets that can incur penalties. Many of these cases have been fought and the Medicaid applicant is favored. The result is that the states are found to not be following the federal statutes. There are three cases in particular that have followed this particular trend.

James v. Richman (547 F.3d 214 (3 Cir. 2008))

Mr. James had been placed in a nursing home located in Pennsylvania and he filed an application for a resource assessment. This is in assessment that is taken where the state Medicaid agency will determine how much of the assets owned by the couple are required to be spent before the spouse residing in the nursing home is able to qualify for Medicaid and also assesses how much of the couple’s assets can be preserved. To reduce the amount of assets, Mrs. James made a $250,000 purchase. She bought an immediate irrevocable annuity. The annuity was set up so that Mrs. James would receive monthly amounts for eight years. With the annuity, she would receive around $3,000. In the contract, it was stated that the annuity could not be “surrendered, transferred, collaterally assigned, or returned for a return on the premium paid.” Since the contract was irrevocable, there would be no cash awarded upon its surrender and the owner of the annuity cannot amend the contract.
With the remaining assets, Mrs. James purchased a new vehicle. Even after these assets had been spent down, Mr. James was still not approved for Medicaid. The reason for the rejection was the $250,000 annuity and its availability. The Medicaid agency claimed that the argument for the rejection was based on the fact that the amount of assets that was in excess of the CSRA (Community Spouse’s Resource Allowance) must not be converted to income for the spouse (i.e the community spouse) that was not in the nursing home by purchasing any Medicaid annuity with the intention of benefitting the community spouse.
The state defended itself by providing a statement from the CEO of J.G. Wentworth, Michael Goodman. The company’s primary services were buying annuities and Mr. Goodman described Mrs. James’ annuity as sellable and transferable in spite of the contract’s position of non-assignability and irrevocable status. However, the Court cited the SSI (Social Security Income) Program Operations Manual System, also referred to as POMS. The Court ruling held because Mrs. James did not possess any legal prowess that would allow her to sell or market or transfer the annuity. This meant that the annuity was in no way an available resource. Mrs. James would not be able to access the cash value of the annuity without breaking the contract, so the annuity could not be counted as an available resource.
In return, the Medicaid agency defended their position, saying that even if she could not access the cash in the annuity, she would still be able to assign her rights pertaining to the annuity payments. The court did not support the argument from the state and said that there is no statutory ground for such a theory and if they were to use this argument it would subvert the MCCA (Medicare Catastrophic Coverage Act of 1988) regulation which asserts “no income of the Community Spouse shall be deemed available to the institutionalized spouse.” The court also stated that its sole job was to implement the intentions of Congress that is mirrored in statutes and the courts’ views of the intention of the Medicaid rules do not count.
Contact Estate Street Partners at (888) 938-5872 or (508) 429-0011 if calling in the Boston, MA, area. Find out more about Medidcaid complaint annuities and how you can avoid the Medicaid spend down.

Read more on Medicaid asset protection and Medicaid planning:

Medicaid Compliant Annuities

Posted on: March 27, 2017 at 9:04 pm, in

With the increasing need for nursing care among seniors, many people are wondering how they will ever be able to cover the cost of care. Medicaid requires you to spend down assets to almost noting in order to become eligible. It is possible to reposition current assets into a Medicaid compliant annuity. This annuity would not be considered a countable asset and the individual needing care would then qualify for Medicaid to help pay for nursing home costs.

Medicaid Compliant Annuity for Medicaid Asset Protection

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The vast majority of people in the country are unaware as to what a Medicaid compliant annuity actually is and to make things even more difficult, there are many advisors who are not familiar with these either. It can be nearly impossible for an advisor or a financial planner to give sound advice without knowing how these annuities work.
The reason few people know about these annuities is because in 2006, the Deficit Reduction Act drastically reduced the ability for these annuities to be used. In addition, even when they were being used, there were very few insurance companies that would sell them to clients.

Medicaid Annuity for Asset Protection

This type of Medicaid annuity is created in a different manner and is called a Single Premium Immediate Annuity (SPIA).

Requirements of the Single Premium Immediate Annuity (i.e. Medicaid Compliant Annuity):

The aspect that makes this type of annuity different from all others is that it is required to pay out for the entire length of the individual’s life expectancy. There are no other options available. In addition, Medicaid compliant annuities must:
  • Be irrevocable and it must also provide payments that are made in equal amounts.
  • The Medicaid complaint annuity cannot be assign to another.
  • Not allow for balloon payments.
  • Include the primary beneficiary as Medicaid.
  • Is required to be actuarially fair. Actuarially fairness is based on the statistics computed when calculating insurance risks and premiums.

Medicaid Compliant Annuity Benefits for Medicaid Asset Protection Planning

If your parent is a senior and preparing to enter into a nursing home because of failing health, you need to know how to receive some type of financial aid to offset the cost of the nursing care that will be provided. The only way in which a senior will be eligible for financial aid is to have no assets, or assets that are considered to be “not countable”. A countable asset would include any type of stock or mutual fund, and even an IRA would be seen as a countable asset.
If this is a case of a married couple and the couple has assets that exceed $109,560, they will not be eligible for Medicaid financial aid. They will be required to deplete their assets until they are eligible a process called Medicaid spend down or nursing home spend down.

Countable Assets in Medicaid Asset Protection Planning

When determining eligibility for financial aid from Medicaid, it is important for clients to be aware of what assets will be counted and which ones will not. A Medicaid compliant annuity would not be a countable asset and thus is helpful for asset protection. This is why repositioning current assets into an annuity that is compliant would be beneficial for any client seeking to become eligible for aid.
For many years, it has been believed that the well spouse would have to live on nothing and find a way to survive. Since there is a requirement to spend down all assets, this usually left the well spouse with few, if any financial resources. However, in 2009, a case in the Circuit Court of Appeals made a huge difference. The court confirmed that all money that was in a combined asset base between married couples could be used for an income annuity for the spouse that did not require care (i.e. the well spouse). This holds true as long as the guidelines are followed. As long as an annuity is compliant with Medicaid asset protection, it will not matter if the annuity is greater than the limited amount of assets that are allowed which is $109,560.
This was great news to many aging couples. It means that assets could be repositioned into an annuity that was compliant and those assets would not be countable when determining financial aid eligibility for a spouse that requires nursing care even if you have not completed the Medicaid planning you should have with an irrevocable trust. An irrevocable trust is still helpful at this late stage because it limits the nursing home payments to 5 years, eliminates probate, and eliminates estate taxes.
Contact Estate Street Partners at (888) 938-5872 or (508) 429-0011 if calling in the Boston, MA, area. Find out more about Medidcaid complaint annuities and how you can avoid the Medicaid spend down.

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Medicaid Planning Annuities

Posted on: March 27, 2017 at 9:04 pm, in

Medicaid planning with annuities is an asset protection that many families overlook. In these cases, some people may face critical need situations in which they need to find a way to become eligible for Medicaid immediately. One way to do this is to purchase a Medicaid compliant annuity to deplete countable assets, thus allowing the individual to become eligible.

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Some families may not even be familiar with critical need asset protection using Medicaid annuities, so let’s first take a moment to explain what this really is. These people did not consider the future and never took the time to plan ahead. Often times, these individuals are going into a nursing home and will need some immediate assistance regarding Medicaid asset protection planning.
This is actually a common occurrence. In fact, more than 99% of individuals we speak with do not know much about Medicaid planning at all. To make things worse, about 95% of asset protection attorneys and financial planners are unfamiliar with this type of planning. So if few people are knowledgeable about Medicaid planning, what can an advisor or planner do when their client needs immediate Medicaid asset protection planning? There are a few options, including:
  • Beg naiveté and admit to not knowing anything about Medicaid planning
  • Inform their client that Medicaid planning is not needed and they should instead simply give in, be a “good” US citizen and fork out all their hard-earned money to the government.
  • Call around and get a referral to an advisor who has the necessary information and can help plan for the client.
  • Educate yourself about Medicaid asset protection to help your family or client.

How to Plan with a Medicaid Compliant Annuity

While this method will not solve all problems, it is a possible way for people to receive help when they are in urgent need for Medicaid assistance. The example below will explain how to use a Medicaid compliant annuity in a situation of urgent need. The Medicaid annuity in this case will not be considered to be a countable asset, so this may allow the individual to apply for Medicaid immediately and qualify.

Example of a Medicaid Compliant Annuity

Let’s use an example of a single 65 years old man. Mr. Ephraim currently has $75,000 in cash and owns his own home. Before he can apply for assistance, he will contribute his money into an annuity that is Medicaid compliant. This will allow him to qualify for assistance and his care will be paid for at a set rate from Medicaid. For Medicaid assistance, Mr. Ephraim can only have $2,000 in cash so, in this instance, he qualifies. We will say that Medicaid will pay $3,000 every month for his care since it will be at the reduced Medicaid price. We will also make the assumption that he is receiving $500 each month from Social Security.

Without Buying Medicaid Compliant Annuity

If Mr. Ephraim did not purchase the annuity, he would not have been eligible for Medicaid. If this were the case, his $75,000 would have been used to pay for nursing care in addition to using his Social Security checks of $500 per month. Based on the assumption that Medicaid care would have cost around $5,000 each month (he does not receive the Medicaid discount since he didn’t buy a Medicaid annuity), Mr. Ephraim would be eligible for Medicaid after a period of 16.5 months (16.5 x $4,500 = $75,000). $4,500 every month would be used from his $75,000 and $500 a month is paid by his Social Security. After his money is gone, he would then qualify for Medicaid, which would then pay only $2,500 each month towards nursing care. This amount is based on $3,000 (at the now Medicaid reduced price) for the cost of nursing care minus the $500 he receives in Social Security every month.

When Buying a Medicaid Annuity

When buying a Medicaid compliant annuity, Mr. Ephraim would immediately qualify for Medicaid. If we went further to assume that the annuity would produce $500 a month in income, the aid from the state would equal $2,000 a month. This is calculated as: $3,000 a month for nursing home costs at the reduced Medicaid price minus $500 of annuity income minus $500 from Social Security income = $2,000 paid by Medicaid aid.

Medicaid Estate Recovery with No Medicaid Complaint Annuity

Now, if Mr. Ephraim died in five years, the state would begin to look for Medicaid estate recovery. If he had no Medicaid annuity, the state would try to recover $108,750 from the assets of Mr. Ephraim’s home. This number is based on $2,500 in Medicaid assistance over a period of 43.5 months.

Medicaid Estate Recovery with Medicaid Complaint Annuity

With the Medicaid compliant annuity, the state Medicaid program spent $2,000 each month for a period of 60 months. So the Medicaid estate recovery would be $120,000. Recall that with the Medicaid annuity, Mr. Ephraim would have immediately qualified for assistance; therefore, he had 60 months of Medicaid aid. Recall, furthermore, $3,000 was the cost of nursing home and we minus $500 of annuity income and minus $500 of Social Security income = $2,000 of Medicaid assistance per month.
However, it is required that the state is required to pursue the annuity payments to be made entirely before they can touch other assets, such as Mr. Ephraim’s home. In this case, a life expectancy table is used to determine what is left for payments on the annuity. The life expectancy for Mr. Ephraim was 81.5. He died 11.5 years early, so this is what is owed on the annuity.
This breaks down to being 138 months. Take those months and multiply it by the annuity monthly payment of $500 and the total is $69,000 that will be paid to the state for Medicaid estate recovery that will come from the annuity directly.
So from the initial amount of $120,000, we will take away the $69,000 from the annuity. The amount remaining is $51,000. This is the amount by the state for the Medicaid estate recovery that will come from the assets of Mr. Ephraim’s home.
The end result is that the annuity saved the clients estate. Even though Mr. Smith spent his cash in the annuity, the final amount that was recovered from the total estate was $57,750 less ($108,750 paid from his home assets if he had no Medicaid compliant annuity minus $51,000 paid from his home assets if he had Medicaid annuity = $57,750). This is important information to know because these annuities are a way for clients to protect assets after they die.
For more information on Medicaid planning by purchasing a Medicaid annuity please call us Estate Street Partners at (888) 429-0011 or if calling in the Boston, MA, please call (508) 429-0011.
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Irrevocable Trusts in Medicaid Asset Protection Planning

Posted on: March 27, 2017 at 9:03 pm, in

Protecting your assets in Medicaid planning should involved an irrevocable trust before applying for Medicaid

Irrevocable Trusts for Protecting Assets in Medicaid Planning

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While transferring assets is a great way to protect your assets and gain eligibility for Medicaid, there is a major disadvantage to asset transfers. When you transfer an asset, you basically give it away. This means that you no longer have control over that asset. Even when you transfer an asset to a trusted family member, they can run the risk of losing the asset or spending it for their own behalf. A better solution is to place the asset in an irrevocable trust. A trust is a legal entity in which one person is named a trustee. The trust holds legal title to the assets. Those who benefit from the trust are known as the beneficiaries. The named trustee must follow all rules associated with the trust. In some cases, the assets in the trust can be counted against Medicaid resource limits. This is why it is imperative to be aware of all rules and regulations regarding trusts and Medicaid eligibility.
It is also important to know the difference between an irrevocable and a revocable trust. A revocable trust can be changed or rescinded by the individual who created the trust. Since the trust can be changed, Medicaid considers this kind of trust to be an asset. All assets that are in a revocable trust will be considered when determining Medicaid eligibility. In short, when planning for Medicaid, revocable trusts are not useful tools.

Income-only Irrevocable Trust in Medicaid Asset Evaluation

Irrevocable trusts of the “income-only” version cannot be changed after they have been created. This type of trust is usually drafted so that the income from the trust can be paid to you for life. The principal cannot be applied to benefit either you or your spouse. When you die, the principal is then paid to your heirs. This allows the funds to be protected while giving you the opportunity to use the income from the trust for living expenses. The principal in this type of trust is not considered a resource for Medicaid asset evaluation purposes. However, if the situation changes and you move to a nursing home, the income from the trust will have to be paid to the nursing home. This is one of the disadvantages to an income-only irrevocable trust. Unless the trust is set up correctly, you are also not allowed access to the funds in a trust if you should need them for other purposes. This is why you should always have another source of funds aside from income from the trust.

Special Testamentary Power of Appointment – Step-Up Basis of Property

It is possible to place property in a trust. When doing this, you and your spouse will not be able to obtain payments of income, but could take loans from the trust. The trust must be set up so that your children will benefit from the trust income. If the trust contains property that has increased in value, the grantor, the creator of the trust, can retain a “special testamentary power of appointment.” This allows the beneficiaries to receive the property upon your death. The receipt of the property will come with a step-up basis.

Testamentary Trusts in Medicaid Planning

The testamentary trusts are created under a will. There is a specific Medicaid rule that provides safety for these trusts if the trust was created by a deceased spouse with the intention to benefit the living spouse. The assets in these trusts are considered available to the Medicaid applicant, but this is only the case when the trustee has an obligation to pay for the Medicaid applicant’s support. If the payments are left to the discretion of the trustee, they are not considered available. This is a good tool to utilize when planning for Medicaid. These trusts allow community spouses to leave funds for a surviving spouse that is in a nursing home. The funds are then used to pay for services that are not covered under Medicaid.

Supplemental Needs Trusts

There are certain exceptions by Medicaid regarding transfers that are made for the benefit of a disabled person under the age of 65. If you have a child, relative or friend that is under 65 with permanent disabilities, you can transfer assets. This is true even if you are already in a nursing home. It is important for these trusts to be properly structured. If done right, the funds that are in these trusts will not be considered owned by the beneficiary and will not be considered when determining Medicaid eligibility. However, if the disabled person dies, the state is required to reimburse funds from Medicaid that have been spent on behalf of that disabled person.
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Medicaid Planning: Transfer Assets for Medicaid Eligibility

Posted on: March 27, 2017 at 9:03 pm, in

Transfer your assets in Medicaid planning to become eligible for Medicaid

Transfer of Assets in Medicaid Planning

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There is a period of non-eligibility for Medicaid for those who have recently transferred assets. The DRA was enacted in 2006. For transfers that were made prior to the enactment, Medicaid officials will only look at any transfers that were made within 36 months of the Medicaid application. If transfers were made after the enactment of the DRA, there is a look-back period of 60 months. This period determines how long you must wait to become eligible for Medicaid after the transfer was made. The formula is based on the amount that was transferred. It takes the total amount transferred and divides it by the average monthly cost of nursing care. For example, if $100,000 was transferred and the nursing costs are $5,000 per month, the waiting period, or penalty period would be 20 months. There is another rule that is involved with the look-back period. The penalty period will not begin until the individual has moved to the nursing home, has spent down their assets to be eligible for Medicaid, has applied for coverage and has been approved for the coverage but not for the transfer.
When making transfers, it is very important to be aware of these rules and time frames. This information will help you better plan your Medicaid asset protection. Make sure that all transfers are done prior to the time of needing nursing care. It is suggested that if you are considering transferring your assets, you do so as soon as possible. This will eliminate any waiting when Medicaid coverage is needed. If transfers are made within the five year look-back period, the penalty time could actually extend past five years. This will depend on the amount of assets that were transferred.
There are many factors to consider when making transfers. You should take into consideration the estimated cost of nursing care you will need, the transfer penalty in the state in which you reside, your current and projected income and other living expenses. The main goal of the DRA was to try to eliminate any planning. The best solution is to contact an elder law expert or contact us (Estate Street Partners) to assist you with Medicaid planning and asset protection transfers.
You should also be aware that transfers could have tax consequences if not done correctly. If you transfer the assets to your children, they will be responsible for all taxes. If the value of the asset appreciates, there could be serious consequences. Your children will not receive the tax break that they would if they had received the assets through your estate. This is another reason why it is so important to carefully plan any transfers.
Another common concern is how to handle owning a home. It is possible for an individual to be in a nursing home, receive Medicaid and still own a home. However, it is much easier to transfer the home to a spouse that will not be in the nursing home or even better, an irrevocable trust. Transferring it to a spouse allows the spouse to have complete control over the asset and will allow him or her to sell the property after Medicaid has been approved for the other spouse. At this point, it is wise for the spouse to change their will, removing the nursing home spouse. This will protect the assets. Otherwise, if the spouse dies, all of the assets will go to the spouse in the nursing home. This may affect Medicaid eligibility and will force a spend-down of assets to maintain Medicaid benefits. Contact us at for further expert advice and consultation on these matters.
There are certain transfers that are exempt from the look-back period. After going into a nursing home, it is possible to transfer assets to your spouse, a child who is disabled or into a trust for the benefit of someone under the age of 65 with a permanent disability. You may also transfer your home to children under the age of 21, to a child that resided in the home for two years prior to you being placed in a nursing home or a sibling that has an equity interest in the home. The sibling must have lived in the home for one year prior to you entering the nursing home. These types of transfers are allowed and there will be no penalty regarding Medicaid eligibility.
If you have any concerns about how to transfer assets or if a transfer is your best option, contact an asset protection expert or contact us (Estate Street Partners). They will have all the information you will need to make an informed decision. Keep in mind that transferring assets sometimes means you lose control of those assets. In rare cases, it is better to spend your own savings and wait to apply for Medicaid benefits until the transfers are all in place. Again please consult an expert.
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Eligibility for Medicaid Benefits: Medicaid Asset Protection

Posted on: March 27, 2017 at 9:03 pm, in

Become eligible for Medicaid from prudent Medicaid planning and asset protection strategies

Eligibility for Medicaid

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Planning and properly setting up your estate for Medicaid eligibility can reduce your fear of ending up in a nursing home because meeting Medicaid requirements can save on average a eighty-five thousand to one hundred and fifty thousand dollars. Typically, the annual cost for nursing home care ranges between $85,000 and $150,000. This placement and change in life means many things. It causes the loss of personal autonomy and can come with a hefty financial obligation.
Many people pay for these costs from their personal savings. This results in the depletion of all savings and assets. Who is eligible for Medicaid? Only after your assets have been depleted does one get eligibility for Medicaid benefits. There is an advantage to paying for the nursing home with your own money. It allows you to choose where to live and it can eliminate having to deal with state bureaucracy. The disadvantage is the huge expense. This is why careful planning is so important.
Medicaid asset protection for your estate is possible. A long-term care insurance policy could possibly help achieve this, but it not the best way to protect your assets. Whether you are receiving Medicaid or Medicare benefits, it is important to take proper planning steps to make sure you are receiving all of the benefits you are entitled to as early as possible.

Medicare Part A

Medicare Part A is something that every aging person should be familiar with. This part of Medicare will cover up to 100 days in a skilled nursing facility per illness. The catch is the actual definition of a skilled nursing facility. In fact, due to the strict guidelines and varying definitions, very few people are actually entitled to these 100 days. The end result is that Medicare ends up only paying for 9% of all nursing home care in the country.

Medicaid – What is it?

Medicaid is the only way to obtain long-term medical care in the United States. Most people are required to pay nursing home costs out of their own savings until they have reached the financial eligibility for Medicaid. Medicare and Medicaid are often confused. It is important to understand that these are two completely different programs with different benefits. Medicare is the health insurance granted to those who receive Social Security. It is an entitlement program that could be compared to PPO’s and HMO’s like Blue Cross Blue Shield and United Healthcare. Medicaid is a form of welfare and is largely based on income. To be eligible for Medicaid, you must not earn more than the specified amount in a one month period – in most states the absolute maximum income level is $2,300 per month.
Medicaid is administrated by individual state governments, but is reimbursed by the federal government and thus most states rules are very similar but different. Each state has its own form of Medicaid, often called by different names. The state operates the program, but all programs must conform to specific federal guidelines. This means that Medicaid rules and regulations differ in each state, which can cause a lot of confusion. The best thing to do is contact your state to find out exactly what the eligibility rules are and what benefits are offered through the program. These programs change often so it is important to always have the most up to date information available.

Using Medicaid Asset Protection for Eligibility

One way people plan for Medicaid is by distributing their assets before they require the benefits from Medicaid. When this is done, individuals will be able to qualify for Medicaid faster than if they had to spend down their savings and deplete assets. This is why planning for Medicaid can be difficult. It is nearly impossible to know when you will need long-term care. However, planning for this care is one of the most important things to do. An asset protection plan is one way to go about planning. These plans will reallocate your assets and transfer money, making you eligible for Medicaid when the time comes.
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