1. James A. Singler
Calfee, Halter & Griswold LLP
513.693.4875
jsingler@calfee.com
Calfee, Halter & Griswold LLP, 2800 First Financial Center, 255 East Fifth Street, Cincinnati, Ohio 45202
Cincinnati | Cleveland | Columbus | Calfee.com
Long Term
Care Planning

2. Introduction
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• Establish legal documents
• Healthcare Power of Attorney
• Living Will
• DNR
• Organ Donation, Burial Wishes
• Durable General Power of Attorney
• Last Will
• Revocable Living Trust

3. Cost of Long Term Care
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• Baby boomers started turning 65 in 2011
• Elderly population will jump from 35,000,000 in 2000 to
71,500,000 in 2030
• Probability of becoming disabled in at least two activities of daily
living: 68% of all individuals 65 years and older
• Average length of claim: 3.9 years
• Average cost of long term care: $6,327 per month
• Four years of care at $6,327 per month: $303,696 liability per
person
• Sources of payment are: (1) Medicare, (2) Private Pay,
(3) Long Term Care Insurance and (4) Medicaid
Note: Data derived from the American Association of Long Term Care Insurance and Pro Seniors
2

4. Understanding Medicaid
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• What is Medicaid?
• Not all facilities accept Medicaid
• Not all facilities that accept Medicaid have
Medicaid beds available

5. Understanding Medicaid
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• Income eligibility
• Resource eligibility:
• $1,500 single individual
• Community Spouse Resource Allowance (CSRA) minimum
$23,844; CSRA maximum $119,220
• Exempt assets:
• Car
• Prepaid burial contract
• Home equity up to $552,000
• Life insurance with less than $1,500 cash value
• Household goods
• Five-year look back for improper transfers

6. Medicaid Planning Examples
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Single Individual
Profile:
• 75 years of age with early diagnosis of dementia
• Not married
• Two children, both healthy, no creditor or divorce issues
• No long term care insurance
Assets:
• $300,000 home with $100,000 mortgage
• $250,000 brokerage account
• $10,000 paid off car
• $50,000 cash value life insurance with $200,000 death benefit
• $250,000 retirement account
TOTAL COUNTABLE ASSETS: $760,000
Income:
• $3,000 per month pension income

7. Medicaid Planning Examples
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Home: $200,000
Brokerage: $250,000
Car: $10,000
Life Insurance: $50,000 $510,000
Transferred to one or
more of the children
Children transfer to
irrevocable trust for
benefit of parent
Irrevocable Trust Trustee:
One or more of the children
Beneficiary: Parent at
parent’s death to children

8. Medicaid Planning Examples
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Implications:
• Assets are protected if parent does not enter into a long term care
facility within the next 5 years
• Completed gift when assets transferred to the children
• Need to file a Gift Tax Return (Form 709), but no tax due
• Trust income taxed at highest marginal tax rate, plus 3.8%
surcharge
• Trust income taxed at beneficiary tax rate if distributed to the
beneficiary
• Trust irrevocable
• Trust becomes its own taxpayer
• Trust needs to file income taxes each year
• Basis issues: No increase in basis at parent’s death

9. Medicaid Planning Examples
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What if the parent needs long term care three years
after the transfer?
Let’s assume:
• Cost of care is $7,000 per month
• Parent’s income is $3,000 per month
• Burn rate of $4,000 per month
• Private pay for two years with assets from retirement account
• Liability limited to $96,000
• Assets of trust protected
• Assets may or may not be left in retirement account

10. Medicaid Planning Examples
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Single Individual
Profile:
• 80 years of age and in poor health
• Fell and broke a hip
• Two children who do not live in the area
• Will need care from a long term care facility
• No life insurance policy
Assets:
• Car
• $100,000 brokerage account
• No real estate
TOTAL COUNTABLE ASSETS: $100,000
Income:
• $3,000 per month pension income

11. Medicaid Planning Examples
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$50,000
Transferred to one or
more of the children
Irrevocable Trust Trustee:
One or more of the children
Beneficiary: Parent at
Parent’s death to the children
Children transfer to
irrevocable trust for
benefit of the parent
$50,000 remaining

12. Medicaid Planning Examples
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Implications:
• Completed gift
• Must file a Gift Tax Return, but no tax due
• Trust irrevocable
• Taxes at highest marginal tax rate, plus 3.8% surcharge, unless
distributed
• Transfer is improper transfer
• Creates disqualification period of eight months

13. Medicaid Planning Examples
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How to cover cost of care for eight months?
$50,000 Medicaid Compliant Annuity:
• Single premium
• No cash value
• Not assignable
• Immediate annuity
• Income paid to long term care facility
to cover cost of care for eight months
• Following those eight months, parent
qualifies for Medicaid

14. Medicaid Planning Examples
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Married Couple
Profile:
• Husband: 85 years of age with dementia; entering long term care facility
• Wife: 80 years of age and in good health
• Two children
• No long term care insurance policy
Assets:
• $250,000 home with $50,000 mortgage
• Two cars
• Husband’s IRA: $250,000
• Wife’s IRA: $250,000
• $100,000 in savings
TOTAL COUNTABLE ASSETS: $600,000 (Home Equity Exempt)
Income:
• Husband's Social Security: $2,000
• Wife’s Social Security: $1,500
Note: Cost of care is $7,000 per month

15. Medicaid Planning Examples
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Spend down your money:
• Allocate $1,500 to the patient account
• Pay off $50,000 mortgage on the house
• Purchase a new car for $30,000
• Reinvest in property with home improvements of $50,000
• Pre-pay utilities and real estate taxes totaling $10,000
• Transfer house into the wife’s name
• Establish Community Spouse Resource Allowance (CSRA) with
$119,220
TOTAL COUNTABLE ASSETS: $339,280 remaining

16. Medicaid Planning Examples
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What do we do with the remaining $339,280 in countable assets?
We are going to convert countable assets into an income stream for
wife because wife’s income is exempt.
$339,280
• Single premium
• No cash value
• Not assignable
• Takes effect immediately
• Paid out over a term of less than
wife’s lifetime
• State of Ohio beneficiary to the
extent of funds paid for care
Medicaid Compliant Annuity:

17. This presentation is provided by Calfee, Halter & Griswold LLP for education and
information purposes only. This presentation is not intended to provide legal advice on
specific subjects. The resolution of legal issues depends upon the specific facts of a particular
situation and the laws involved. This presentation may be considered advertising under
applicable laws. Nothing contained herein or in any attachment hereto is intended to be used,
or can be used, to avoid penalties imposed under the Internal Revenue Code.
2800 First Financial Center
255 East Fifth Street
Cincinnati, Ohio 45202
513.693.4880
Calfee, Halter & Griswold LLP
www.Calfee.com
Thank You