Protect Your Life Savings from the Expensive Cost of Nursing Home Care

Congress passed the Deficit Reduction Act of 2005, which tightened Medicaid eligibility by changing the penalty period rules and extending the look back from three years to five years. Many people erroneously believe they must spend down their life savings before Medicaid will cover their Long Term Care costs.

Often well meaning professionals – from financial advisors, to bankers, to hospital social workers, to discharge specialists, to nursing home admissions personnel – will repeat and reiterate this incorrect information, perpetuating the myth that spouses, families and individuals must spend down their assets prior to applying for Medicaid coverage for Long Term Care costs. As a result of well-meaning but incorrect advice, many families and individuals are spending thousands and in some cases hundreds of thousands of dollars on nursing home care, when lawful strategies still exist to save these assets for spouses or families without affecting in any way the nursing home resident’s quality of care. As a general rule, the attorneys in the Elder Law Practice Group at Lacy Katzen LLP can save substantially all of a married couple’s assets when one spouse needs nursing home care. Further, we can lawfully save between 40% and 70% of a single person’s assets after they are admitted to a nursing home.

Without careful planning these assets are typically “spent down”. However, spending down creates a trap for unsuspecting families. If there were prior gifts or unexplained cash withdrawals (for homecare or groceries) that cannot be documented, a period of ineligibility called a penalty period may be imposed. The result will be an unpaid nursing home bill. Unfortunately, if the resident’s assets are gone, nursing homes are increasingly suing family members or Powers of Attorneys in an attempt to get paid. Many nursing homes are also requiring a ‘responsible individual” to sign the Admission Agreement along with the resident and; thereby, attempting to extend liability for the resident’s unpaid bill to an unsuspecting family member.

Finally, there has also been a disturbing trend of organizations employing lay people who provide assistance to individuals by preparing and filing Medicaid Applications after the resident’s assets have been “spent down”. Often the nursing homes recommend these organizations to residents and their families. Many go so far as to have authorizations for these organizations included in the home’s admissions agreement. We have heard of instances where some homes may pressure families telling them they must agree to use these organizations if they want a bed at their facility. In some instances, nursing home personnel will discourage residents and their families from contacting an elder law attorney. There is a financial incentive for nursing homes to encourage all residents to spend down all of their assets. The fee these lay people charge for preparing a Medicaid Application is substantially less than an elder law Attorney’s fee. But, beware; these non-lawyers do not possess the legal knowledge or skill to engage in lawful asset protection planning to maximize the savings for nursing home residents or their families. Even worse, these groups are not versed in methods to cure penalty periods for prior transfers or for cash withdrawals and are not concerned if the resident or a family member is left with an unpaid nursing home bill after the Medicaid Application has been filed. Their job is only to file the Medicaid Application.

If you, a family member, or friend is in the unfortunate circumstance to have a loved one in need of home care, in the hospital or at a nursing home, we strongly recommend that you contact Terrance W. Emmens at (585) 324-5413, David E. Anderson at (585) 324-5715 or Lisa C. Arrington at (585) 324-5722 for a free consultation to review asset protection strategies.