THE ONLY THING CONSTANT IS CHANGE ITSELF: VETERANS BENEFITS, ESTATE RECOVERY AND UPDATES TO THE MEDICAID RULES P. Haans Mulder, JD, MST, CFP ® Cunningham Dalman, P.C. 321 Settlers Road Holland, MI 49423 (616) 392-1821 [email protected]
May 08, 2015
THE ONLY THING CONSTANT IS CHANGE ITSELF: VETERANS BENEFITS, ESTATE RECOVERY AND UPDATES TO THE MEDICAID RULES
P. Haans Mulder, JD, MST, CFP®
Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) [email protected]
Background• Haans is a partner and has a Masters in
Tax, CFP®, and specializes in estates/elder law and business planning
• Cunningham Dalman, P.C. has been serving the greater Holland/Zeeland area since 1900
Serving the Holland area since 1900
Overview• Cover the VA’s Aid & Attendance benefit
and its eligibility rules• Discuss the Estate Recovery program• Finish with new developments under the
Medicaid rules
Serving the Holland area since 1900
Veteran’s A&A Benefit• Single veterans are eligible for up to
$1,732 per month • Veteran with a spouse is eligible for up to
$2,054 per month• Surviving spouse is eligible for up to
$1,113 per month
Serving the Holland area since 1900
Veteran’s A&A Benefit• The benefit will cover in-home as well as
care in an assisted living facility• Obtaining the benefit in someone’s home
can be difficult unless there are significant medical expenses
Serving the Holland area since 1900
Veteran’s A&A Benefit• The veteran must have served 90
consecutive days of active duty and at least one day during a war-time period
• The veteran must have also received discharge other than dishonorable
Serving the Holland area since 1900
Veteran’s A&A Benefit• Program has an income and asset test• Can either have low monthly income or
medical expenses that exceed income• Must have not more than $80,000 of
countable assets (single or married)• Is often much less
Serving the Holland area since 1900
• The veteran can establish an irrevocable trust and gift “excess” assets to it
• There is no “look-back” period• The veteran’s child is often the trustee
and all of the children are the beneficiaries of the trust
Serving the Holland area since 1900
Veteran’s A&A Benefit
• If the veteran needs the gifted funds, the trustee can take a distribution from the trust (because he or she is the trustee and a beneficiary)
• The trustee can then gift it back to the veteran
Serving the Holland area since 1900
Veteran’s A&A Benefit
Medicaid and Estate Recovery• 40% of people 65 years and older will
stay in a nursing home• Average cost to stay in a local nursing
home is $7,500-$10,000/month
Serving the Holland area since 1900
What is Medicaid?• State and federal program that pays
for medical treatment (including nursing home care)
• Oftentimes confused with Medicare
Serving the Holland area since 1900
When does Medicaid apply?• Applies principally to care in a nursing
home• Applies to people who are blind or
disabled• Must pass the income and asset tests
Serving the Holland area since 1900
Who does Medicaid apply to?
• Under income test, you cannot have enough income to pay the monthly cost of staying in a nursing home ($7,500-$10,000 in this area)
Serving the Holland area since 1900
Who does Medicaid apply to?
• Under assets test, a single person can only have $2,000 in countable assets
• Can keep your home (if it’s not in your trust) and a vehicle
• All other assets are countable
Serving the Holland area since 1900
Who does Medicaid apply to?
• Asset test allows a married couple to keep their home (again, if it’s not in a trust), a vehicle, and one-half of their other assets
Serving the Holland area since 1900
Estate Recovery• It applies to assets that have to be
probated (has the potential to include all assets)
• The only assets that are typically left are: bank account, personal property (including vehicle), and the house
Serving the Holland area since 1900
How do you protect against estate recovery?
• The most effective way to protect the house is with a “ladybird deed”
• A trust or individual’s are named beneficiaries on the deed
Serving the Holland area since 1900
How do you protect against estate recovery?
• The house remains an exempt asset during the Medicaid recipient’s life
• The costs and hassle of probate are avoided
• The State can’t recover against it
Serving the Holland area since 1900
Some other things to be aware of
• When a single person is on Medicaid, he or she can keep the house
• However, he or she will not be able to use Social Security and other income to pay the house expenses
Serving the Holland area since 1900
Some other things to be aware of
• This typically means that a child or beneficiary must pay these expenses
• Children should protect their right to be reimbursed by executing and recording a mortgage against the house
Serving the Holland area since 1900
Some other things to be aware of
• This gives a child’s reimbursement claim higher priority than the State of Michigan’s estate recovery right
• A child will get paid when the house sells
Serving the Holland area since 1900
Some other things to be aware of
• You should make sure the Medicaid recipient has signed a financial power of attorney
• That way, the agent can execute the mortgage
Serving the Holland area since 1900
New Developments-House• If the house is in your trust, it becomes
a countable asset• If it’s in your individual name, it will go
through probate• Don’t just leave it in an individual’s
name if you are single
Serving the Holland area since 1900
New Developments-House• Don’t have enough cash to pay the
costs of maintaining the house• House can be rented to pay these
costs• Best option is rent to a family member
and then “sublease” it
Serving the Holland area since 1900
New Developments-Short Deadlines to Respond
• Have spoken in prior years about long delays
• Now the issue is that the State of Michigan is pressuring case workers to respond quickly
Serving the Holland area since 1900
New Developments-Short Deadlines to Respond
• It’s a significant problem because you may not have enough time to respond
• If the application is denied, you likely don’t have a basis to appeal
Serving the Holland area since 1900
Questions……
Serving the Holland area since 1900
Thank YouP. Haans Mulder, JD, MST, CFP®
Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) [email protected]
Serving the Holland area since 1900