Medicaid Planning Lawyers in Newton
Most older people will require long-term care at some point, usually due to an injury like a fall or a chronic health condition like Alzheimer’s disease. These costs add up quickly and, within a few months, can financially devastate middle-class couples. Typically, these families must tap into funds they designated to leave behind for their children, leaving their heirs with nothing. Medicaid planning lawyers in Newton can help avoid this heartbreaking outcome.
If you are concerned that your own end-of-life care might interfere with the assets you have planned to leave to your family, an experienced estate planning attorney can help you make a plan that will maximize protections for your loved ones. Our attorneys at Hollander, Strelzik, Pasculli, Hinkes, Vandenberg & Hontz, L.L.C. can help you avoid losing your life savings to seemingly never-ending medical bills. We will help you take the steps necessary now to protect yourself and your family down the road.
The Ethics of Medicaid Planning in New Jersey
Medicaid planning is clearly legal, but is it “right?” Since many of our clients have this same question, we wanted to address the issue here.
People use similar strategies all the time at the intersection of the law and their money. For example, a person might contribute funds to a 401(k) retirement account, even though putting the money into a taxable savings account would accomplish basically the same purpose. More specifically with regard to estate planning in New Jersey, many individuals opt to place their assets in trusts in order to avoid probate.
At a higher level, healthcare is a property right and not a moral right in the American free market system. So, there is no reason that a person should pay more for healthcare just because the person can pay more, just like there is no reason to pay $500 for a computer that the manufacturer will sell for $300.
Finally, it is important to consider the source of Medicaid planning critics in New Jersey. Many of these individuals have links to the long-term care industry, and they hope to convince people to buy insurance as opposed to relying on Medicaid.
Qualifying for Medicaid in New Jersey
Before discussing some common strategies, it is important to address some preliminary issues, because shining light here often illuminates the Medicaid planning process in New Jersey.
As of 2017, most people must earn less than $2,025 per month to qualify for Medicaid. This qualification is usually not much of a hurdle for most people because if they are contemplating long-term care, they are probably not feeling well enough to work full time.
Typically, the house is a family’s largest asset. A primary residence is usually, but not always, a countable asset. The primary exceptions are:
- Single Individual: If the home’s equity is underneath the ceiling ($560,000 as of 2017) and the individual has the intent to return to the home, the house is exempt. Intent is usually a function of the person’s plans and the medical realities of the situation.
- Married Couple: If one spouse remains in the home, the house is not a countable asset for Medicaid planning purposes, no matter how much equity it has. The same rule applies if there is a minor or disabled child living in the house.
- Adult Child Caregiver: If a natural or adopted child lived in the house with the Medicaid recipient for at least two years and provided care during that period, the homeowner may transfer the home to the caregiving child without penalty. Be prepared to support this claim with medical bills, address on drivers’ license, and other such documents.
- Sibling: If a homeowner’s sibling lived in the home for at least a year prior to long term care admission, the sibling may assume title to the home and it is not a countable asset.
A related exemption is the Community Spouse Resource Allowance, which allows spouses who remain in the house to have up to $120,900 in assets (as of 2017) to pay for their living expenses while their spouse is at a long term care facility.
Even after the house is removed from the equation, many people are still well above the $2,000 ceiling. Fortunately, many other property items are exempt as well. This list includes:
- Personal property,
- Life insurance,
- Home improvements, and
- Retirement accounts.
Caps apply in many situations. For example, the government only allows vehicle and personal property amounts that it considers reasonable.
Effective Medicaid Planning Strategies in Sussex County
One common strategy involves shifting countable assets to non-countable assets. For example, a couple could sell their vacation timeshare and use the proceeds to pay off the mortgage on the family home. A Sussex County elder law attorney can discuss other options with you that will not raise red flags with government auditors.
Irrevocable trusts are even better. Essentially, the couple sets aside their children’s inheritance in advance. As a general rule, the trust must be set up at least five years before the admission to the long-term care facility, so planning ahead is crucial.
Other people use annuities to convert fixed assets into income streams. Annuities are especially good vehicles if other people in the family need an income stream while the person is in a long-term care facility.
Rely on Diligent Lawyers
Medicaid planning is an important element of estate planning. For a free consultation with an experienced elder law attorney in Sussex County, contact Hollander, Strelzik, Pasculli, Hinkes, Vandenberg & Hontz, L.L.C. Our main office is conveniently located in Newton.