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Medicaid Planning
A recent court case, Hutcherson v. Arizona Health Care Cost Containment System Administration ("AHCCCS"), brought a ruling down regarding the State's recovery rights as a beneficiary of a Medicaid Compliant Annuity. Within the decision:
"We hold that the 2006 amendment to 42 U.S.C. § 1396p(c)(1)(F)(i) creates a right in the State to recover as a remainder beneficiary against a community spouse's annuity for an institutionalized spouse's medical costs. We further hold that the St ...
As previously mentioned in a prior blog post I made, the first cost-of-living adjustment since 2008 has recently been made. This adjustment brought a 3.7% increase to many of the planning figures used in an elder law practice every day.
Spousal Impoverishment Standards
Minimum Community Spouse Resource Allowance: $22,728
Maximum Community Spouse Resource Allowance: $113,640
Maximum Monthly Maintenance Needs Allowance: $2,841
Income Cap Limit: $2,094
Minimum Ho ...
Many elder law practitioners that utilize Medicaid Compliant Annuities in their planning are familiar with J.G. Wentworth proclaiming their ability to purchase any annuity - regardless of the provisions.
We all know that a Medicaid Compliant Annuity cannot be sold under any circumstances. The insurance company will refuse to honor any requests regarding change in ownership, annuitant, payee, or beneficiary. This is because a Medicaid Compliant Annuity is irrevocable and non-assign ...
"If a single person buys a Medicaid Compliant Annuity to provide income during a disqualification period, and the state Medicaid agency is designated as the primary beneficiary, what if the individual predeceases the annuity?"
This is an excellent question that I receive quite often in the Ask Dale forum. Krause Financial Services has a vast amount of experience with individuals predeceasing their Medicaid Compliant Annuities, and has worked with many states' Medicaid agencies in m ...
Primarily in Florida, Personal Services Contracts ("PSK"), which are also referred to as Caregiver Agreements, are widely used as a spend-down tool for Medicaid and Veterans benefits planning.
A PSK generally services four purposes:
It reduces an applicant's countable resources to an acceptable level, which entitles the applicant to receive benefits;
It outlines the duties and obligations of the parties;
It establishes the compensation that will be paid to the caregiver; and
...
An Intentionally Defective Grantor Trust ("IDGT") is an irrevocable trust created so that the assets of the trust are attributable to the grantor for federal income tax purposes, but not for gift, estate, or generation skipping transfer tax. The "defect" is that the grantor reports all of the income, deductions, and credits associated to the trust property on his or her personal income tax return. The IDGT does not file an income tax return - IRS Form 1041.
Likewise, when the IDGT ...
Today, an irrevocable trust is an excellent planning tool for those clients wanting to qualify for Medicaid benefits in the future. Medicaid is the government program that pays for the bulk of long-term care provided in a nursing home setting.
The goal of the plan is to establish and fund the trust with assets that are countable (unprotected) for Medicaid purposes. Once the trust is established, funded, and five years has passed after the date of the last transfer, all the assets ...
Medicaid planning with IRAs typically involves a considerable amount of caution due to the heavy tax consequences and penalties that can result from careless errors. The same holds true for both preplanning and crisis Medicaid planning. In preplanning, the tax-qualified funds cannot simply be transferred into a trust, and in crisis Medicaid planning the funds cannot simply be co-mingled with other post-tax countable resources in spend-down strategies. So where does that leave ...
If your client has a tax-deferred annuity that is causing problems with Medicaid or VA eligibility, it can be easily cashed out. To do so, the client will need to contact the insurance company that issued the annuity and request a complete liquidation. The insurance company will return the annuity's present value, less any applicable surrender charge. The surrender charge is a penalty that applies when an annuity is terminated before its maturity date. The surrender cha ...
An irrevocable trust is an excellent tool when preplanning for Medicaid benefits. Anything that is put into the irrevocable trust is protected from a Medicaid spend-down if five years pass from the date of the transfer.
For example, Alice Smith, a 77-year-old widow, wants to protect her family cottage from potential long-term care nursing home bills and preserve it for the benefit of her four children and their immediate families. To do so she would need to establish an irrev ...
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