Medicaid And Protecting Wealth In Retirement

Protecting Wealth in RetirementTipping the Scales in Your Favor

Medicaid and What You Need to Know to Be Prepared

Presented by Steven Stanganelli, MSF, CRPC, CFP ®CERTIFIED FINANCIAL PLANNER ™ Professional

Steven Stanganelli, CRPC®, CFP®CERTIFIED FINANCIAL PLANNER ™ ProfessionalCHARTERED RETIREMENT PLANNING COUNSELOR (SM)

Steve Stanganelli, MSF, CRPC, CFP ®

Steve Stanganelli, a financial advisor since 1999, is a board-certified financial planning professional who has been awarded a five-star quality rating by Paladin Registry, an independent advisor rating service.

Steve’s fee-only financial planning practice focuses on providing practical advice to help clients make smarter financial decisions to preserve and protect wealth.

Steve holds the certification of CERTIFIED FINANCIAL PLANNER ™ and CHARTERED RETIREMENT PLANNING COUNSELOR designation.

Steve earned his Master of Science degree in Finance (MSF) from Bentley College with high distinction and a BA with honors from the University of Massachusetts – Lowell.

Practical Solutions for Everyday Life

Call: 978-388-0020Or 978-621-8268

Or [email protected]

For More Information: www.paladinregistry.com

2Steve Stanganelli, MSF, CRPC, CFP (Call 978-388-0020 for more information)

Educating Professionals and the Public on Estate Planning 3

What You Need to Know for Medicaid Benefits Asset Preservation

• Going 5 years back • Penalties for doing it wrong• Transfers that work • Investments and insurance that can

work

• Beginning requirements to play by the rules


Beginning Requirements to Play by the Rules

1. Medicaid Income & Resource Levels

At the beginning of each year, income and resource limits are set by the federal government. For 2008, the following income and resource levels apply in most states:

A. Monthly IncomeIndividual (at home) $ 725Individual (in a nursing home) up to $ 50Couple (at home)$ 1067

B. ResourcesIndividual $2,000 - $4,350Couple $3,000 - $6,400



B. CS Resource Allowance (CSRA) $ 20,880 - $104,400

C. May be higher by court order or fair hearingD. Institutional Spouse (“IS”) Resource Allowance (ISRA) $2,000 - $4,350

2. Limits on income and on assets for spousesA. Community Spouse (“CS”) income allowance $1,712 - $2,610



If no income limit or cap then spend down ● Contributions toward the cost of care after

deductions of expenses and allowances

3. Income limits of many states Income limit or cap - $1,911

● If over this limit, a special income diversion trust must be created to be eligible● Income diverted to trust, then distributions to pay cost of care


The Impact of New Rules - DRA

2. Different penalty period begins 3. Limit in amount of home equity 4. Certain annuities that work 5. Certain promissory notes that work 6. Life estate limitations7. Income must be calculated first 8. Continuing Care Retirement Communities

(CCRC) restrictions9. Partnership programs between states and

long term care insurance

1. Going back up to 5 years


How the Rules Apply Going Back

• Sliding scale after 2009• Not 5 years until 2011• Start dates vary by states

• Direct transfers = 60 months (5 years)– Trust transfers = 60 months (5 years)

Extension for looking period:• Phase in of 5 year look-back


Harsh Reality of Look-back and Penalty

– No change in Calculation formula– Beginning date of penalty period will prove

harsh– Every day of ineligibility counted

• New penalty period for many states:• Applies to institutional level care


When the Penalty Begins

• At time of application, and/or• During penalty period, and/or• At time benefits commence

• Would otherwise be receiving skilled care if no penalty applied

Penalty begins when:• Individual eligible for Medicaid


Transfers that Work

– Exceptions: spouse, minor or disabled child residing in the home

• Home equity • Limited to $500,000 (or $750,000)


Transfers that Work

• Actuarially sound repayment term • Equal payments during loan term• No deferral or balloon payments• Prohibit cancellation on death

• Promissory notes• Transfer less than fair value unless:


Transfers that Work

• Life Estates–If purchased in another person’s

home:•Must reside there for one year

following the purchase


Transfers that Work

• Income first rule–Applies to spousal planning– Income of the Medicare Advantage

(MA) will be diverted to well spouse to reach Minimum Monthly MainteNance Allowance (MMMNA )


Transfers that Work

• Continuing Care Retirement Communities (CCRC) targeted – Entrance fee may be considered a

countable asset–CCRC entrance application


Transfers that Work

• Long term care insurance partnership program– First determine if state has initiated the

partnership program – Qualifying LTCI protects assets up to the

amount of benefits paid out under the policy when Medicaid needed by owner of policy


Transfers that Work

• Irrevocable, non-assignable• Actuarially sound• Provides for equal monthly payments during

the term of the annuity – no balloon payments, no deferred payments

• State named first beneficiary for single applicant (up to amount paid out)

Annuities may be exempt if the following requirements are met:


Transfers that Work

• Spouse, minor or disabled child may be first beneficiary, state second

• Rules do not apply to retirement annuities or annuities purchased with retirement funds or annuities purchased prior to rule changes

Annuities may be exempt if the following requirements are met:


Transfers that Work

– Spouse of the applicant– Minor child of the applicant– Blind or permanently disabled child of the

applicant– Sibling with equity interest (resided 1 yr)– Caregiver child (resided with parent 2 yrs)

Certain exempt transfers still apply to applicant’s home:


Transfers that Work

• Spousal transfers• Transfers to a blind or disabled child• Transfers to a sole benefit special needs

trust

Certain other transfers of any assets without penalty still apply:

Transfers that WorkA Funeral/Final Expense Trust

A specific purpose insurance product that is irrevocable,

un-assignable and readily available to pay the actual costs of

a person’s final funeral, cremation and related expenses.

Proceeds from such a trust are portable and usable anywhere.

In addition, assets assigned to the trust are protected from creditors and are compliant with Medicaid, SSI and VA benefits.


Funeral Trust Benefits - Summary

• Death benefits are paid to any funeral home so client is not tied to a specific provider

• Excess of actual costs will be returned to the client’s named beneficiary in the estate

• Funds are protected from all creditors, probate, nursing homes, estate taxes and even Medicaid

• Immediately excluded asset in order to qualify for Medicaid

• A Trust transfer that is not penalized by Medicaid

• Maximum policy limits up to $12,500 in most states ($25,000 in MA)


How the Funeral Trust Works

Funeral Trust

Funeral and Service

Providers

Excess Funds paid to Estate

or Residual Beneficiary

Pre-Planning FundsUp to $12,500 *

Guaranteed IssueLife Insurance Policy

* Pre-Planning Funds can come from savings, 1035 Exchanges or investments and can create a trust or trusts with a cumulative value of $12,500 (or $25,000 in MA)

Policy Assigned to

Death BenefitGROWS – Tax Free!

Submit claims and invoices

Funds avoid probate and delays;Funeral expenses covered immediately

Claims PaidNext Day


Comparing Methods of Pre-FundingBenefits paid directly to any Funeral Home

Protected from Probate

Protected from Lawsuits & Creditors

Protected from Income Taxes

Protected from Medicaid Spend Down

Savings NO NO NO NO NO

Annuity NO YES Depends on State

NO NO

Traditional Life Insurance

NO YES Depends on State

YES NO

Funeral Trust thru Specific Life Insurers

YES YES YES YES * YES

* Consult with an elder law attorney to see if this product will work with your specific needs and circumstances.



What You Need to Know for Medicaid Benefits Asset Preservation

Date post:	08-May-2015
Category:	Economy & Finance
Upload:	steve-stanganelli
View:	1,853 times
Download:	2 times

Medicaid And Protecting Wealth In Retirement

Economy & Finance