Protecting Wealth in Retirement Tipping the Scales in Your Favor Medicaid and  What You Need to Know to Be Prepared Presen...
Steven Stanganelli, CRPC®, CFP® CERTIFIED FINANCIAL PLANNER ™ Professional CHARTERED RETIREMENT PLANNING COUNSELOR (SM) St...
What You Need to Know for Medicaid Benefits Asset Preservation   <ul><li>Going 5 years back  </li></ul><ul><li>Penalties f...
Beginning Requirements to Play by the Rules  <ul><li>1. Medicaid Income & Resource Levels </li></ul><ul><li>At the beginni...
Beginning Requirements to Play by the Rules <ul><li>B. CS Resource Allowance (CSRA) </li></ul><ul><ul><ul><li>$ 20,880 - $...
Beginning Requirements to Play by the Rules <ul><li>If no income limit or cap then spend down  </li></ul><ul><li>  ●  Cont...
The Impact of New Rules - DRA <ul><li>2. Different penalty period begins  </li></ul><ul><li>3. Limit in amount of home equ...
How the Rules Apply Going Back   <ul><ul><ul><li>Sliding scale after 2009 </li></ul></ul></ul><ul><ul><ul><li>Not 5 years ...
Harsh Reality of Look-back and Penalty <ul><ul><li>No change in Calculation formula </li></ul></ul><ul><ul><li>Beginning d...
When the Penalty Begins <ul><ul><ul><ul><li>At time of application, and/or </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Du...
Transfers that Work <ul><ul><li>Exceptions: spouse, minor or disabled child residing in the home </li></ul></ul>Educating ...
Transfers that Work <ul><ul><ul><li>Actuarially sound repayment term  </li></ul></ul></ul><ul><ul><ul><li>Equal payments d...
Transfers that Work <ul><li>Life Estates </li></ul><ul><ul><li>If purchased in another person’s home: </li></ul></ul><ul><...
Transfers that Work <ul><li>Income first rule </li></ul><ul><ul><li>Applies to spousal planning </li></ul></ul><ul><ul><li...
Transfers that Work <ul><li>Continuing Care Retirement  Communities (CCRC) targeted  </li></ul><ul><ul><li>Entrance fee ma...
Transfers that Work <ul><li>Long term care insurance partnership program </li></ul><ul><ul><li>First determine if state ha...
Transfers that Work <ul><li>Irrevocable, non-assignable </li></ul><ul><li>Actuarially sound </li></ul><ul><li>Provides for...
Transfers that Work <ul><li>Spouse, minor or disabled child may be first beneficiary, state second  </li></ul><ul><li>Rule...
Transfers that Work <ul><ul><li>Spouse of the applicant </li></ul></ul><ul><ul><li>Minor child of the applicant </li></ul>...
Transfers that Work <ul><li>Spousal transfers </li></ul><ul><li>Transfers to a blind or disabled child </li></ul><ul><li>T...
Transfers that Work A Funeral/Final Expense Trust A specific purpose insurance product that is  irrevocable,  un-assignabl...
Funeral Trust Benefits - Summary <ul><li>Death benefits are paid to any funeral home so client is not tied to a specific p...
How the Funeral Trust Works Funeral Trust Funeral and Service Providers Excess Funds paid to Estate or Residual Beneficiar...
Comparing Methods of Pre-Funding * Consult with an elder law attorney to see if this product will work with your specific ...
What You Need to Know for Medicaid Benefits Asset Preservation   Educating Professionals and the Public on Estate Planning...
Upcoming SlideShare
Loading in …5
×

Medicaid And Protecting Wealth In Retirement

2,064 views

Published on

This presentation provides an overview of the road map needed to avoid the land mines and traps related to Medicaid. Proper planning is needed to preserve a legacy, cover final expenses and still be eligible for all available Medicaid benefits.

Published in: Economy & Finance, Business
  • Be the first to comment

  • Be the first to like this

Medicaid And Protecting Wealth In Retirement

  1. 1. Protecting Wealth in Retirement Tipping 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
  2. 2. Steven Stanganelli, CRPC®, CFP® CERTIFIED FINANCIAL PLANNER ™ Professional CHARTERED 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: 978-388-0020 Or 978-621-8268 Or Steve@focus-capital.com For More Information: www.paladinregistry.com Steve Stanganelli, MSF, CRPC, CFP (Call 978-388-0020 for more information)
  3. 3. What You Need to Know for Medicaid Benefits Asset Preservation <ul><li>Going 5 years back </li></ul><ul><li>Penalties for doing it wrong </li></ul><ul><li>Transfers that work </li></ul><ul><li>Investments and insurance that can work </li></ul>Educating Professionals and the Public on Estate Planning <ul><li>Beginning requirements to play by the rules </li></ul>
  4. 4. Beginning Requirements to Play by the Rules <ul><li>1. Medicaid Income & Resource Levels </li></ul><ul><li>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: </li></ul><ul><li>A. Monthly Income </li></ul><ul><li>Individual (at home) $ 725 </li></ul><ul><li>Individual (in a nursing home) up to $ 50 </li></ul><ul><li>Couple (at home) $ 1067 </li></ul><ul><li>B. Resources </li></ul><ul><li>Individual $2,000 - $4,350 </li></ul><ul><li>Couple $3,000 - $6,400 </li></ul>Educating Professionals and the Public on Estate Planning
  5. 5. Beginning Requirements to Play by the Rules <ul><li>B. CS Resource Allowance (CSRA) </li></ul><ul><ul><ul><li>$ 20,880 - $104,400 </li></ul></ul></ul><ul><li>C. May be higher by court order or fair hearing </li></ul><ul><li>D. Institutional Spouse (“IS”) Resource Allowance (ISRA) $2,000 - $4,350 </li></ul>Educating Professionals and the Public on Estate Planning 2. Limits on income and on assets for spouses A. Community Spouse (“CS”) income allowance $1,712 - $2,610
  6. 6. Beginning Requirements to Play by the Rules <ul><li>If no income limit or cap then spend down </li></ul><ul><li> ● Contributions toward the cost of care after </li></ul><ul><li> deductions of expenses and allowances </li></ul>Educating Professionals and the Public on Estate Planning <ul><li>Income limits of many states </li></ul><ul><li>Income limit or cap - $1,911 </li></ul><ul><li>● If over this limit, a special income diversion </li></ul><ul><li> trust must be created to be eligible </li></ul><ul><li>● Income diverted to trust, then distributions to </li></ul><ul><li> pay cost of care </li></ul>
  7. 7. The Impact of New Rules - DRA <ul><li>2. Different penalty period begins </li></ul><ul><li>3. Limit in amount of home equity </li></ul><ul><li>4. Certain annuities that work </li></ul><ul><li>5. Certain promissory notes that work </li></ul><ul><li>6. Life estate limitations </li></ul><ul><li>7. Income must be calculated first </li></ul><ul><li>8. Continuing Care Retirement Communities (CCRC) restrictions </li></ul><ul><li>9. Partnership programs between states and long term care insurance </li></ul>Educating Professionals and the Public on Estate Planning 1. Going back up to 5 years
  8. 8. How the Rules Apply Going Back <ul><ul><ul><li>Sliding scale after 2009 </li></ul></ul></ul><ul><ul><ul><li>Not 5 years until 2011 </li></ul></ul></ul><ul><ul><ul><li>Start dates vary by states </li></ul></ul></ul><ul><li>Direct transfers = 60 months (5 years) </li></ul><ul><ul><li>Trust transfers = 60 months (5 years) </li></ul></ul>Educating Professionals and the Public on Estate Planning <ul><li>Extension for looking period : </li></ul><ul><ul><li>Phase in of 5 year look-back </li></ul></ul>
  9. 9. Harsh Reality of Look-back and Penalty <ul><ul><li>No change in Calculation formula </li></ul></ul><ul><ul><li>Beginning date of penalty period will prove harsh </li></ul></ul><ul><ul><li>Every day of ineligibility counted </li></ul></ul>Educating Professionals and the Public on Estate Planning <ul><li>New penalty period for many states: </li></ul><ul><ul><li>Applies to institutional level care </li></ul></ul>
  10. 10. When the Penalty Begins <ul><ul><ul><ul><li>At time of application, and/or </li></ul></ul></ul></ul><ul><ul><ul><ul><li>During penalty period, and/or </li></ul></ul></ul></ul><ul><ul><ul><ul><li>At time benefits commence </li></ul></ul></ul></ul><ul><ul><ul><li>Would otherwise be receiving skilled care if no penalty applied </li></ul></ul></ul>Educating Professionals and the Public on Estate Planning <ul><ul><li>Penalty begins when: </li></ul></ul><ul><ul><ul><li>Individual eligible for Medicaid </li></ul></ul></ul>
  11. 11. Transfers that Work <ul><ul><li>Exceptions: spouse, minor or disabled child residing in the home </li></ul></ul>Educating Professionals and the Public on Estate Planning <ul><li>Home equity </li></ul><ul><ul><li>Limited to $500,000 (or $750,000) </li></ul></ul>
  12. 12. Transfers that Work <ul><ul><ul><li>Actuarially sound repayment term </li></ul></ul></ul><ul><ul><ul><li>Equal payments during loan term </li></ul></ul></ul><ul><ul><ul><li>No deferral or balloon payments </li></ul></ul></ul><ul><ul><ul><li>Prohibit cancellation on death </li></ul></ul></ul>Educating Professionals and the Public on Estate Planning <ul><li>Promissory notes </li></ul><ul><ul><li>Transfer less than fair value unless: </li></ul></ul>
  13. 13. Transfers that Work <ul><li>Life Estates </li></ul><ul><ul><li>If purchased in another person’s home: </li></ul></ul><ul><ul><ul><li>Must reside there for one year following the purchase </li></ul></ul></ul>Educating Professionals and the Public on Estate Planning
  14. 14. Transfers that Work <ul><li>Income first rule </li></ul><ul><ul><li>Applies to spousal planning </li></ul></ul><ul><ul><li>Income of the Medicare Advantage (MA) will be diverted to well spouse to reach Minimum Monthly MainteNance Allowance (MMMNA ) </li></ul></ul>Educating Professionals and the Public on Estate Planning
  15. 15. Transfers that Work <ul><li>Continuing Care Retirement Communities (CCRC) targeted </li></ul><ul><ul><li>Entrance fee may be considered a countable asset </li></ul></ul><ul><ul><li>CCRC entrance application </li></ul></ul>Educating Professionals and the Public on Estate Planning
  16. 16. Transfers that Work <ul><li>Long term care insurance partnership program </li></ul><ul><ul><li>First determine if state has initiated the partnership program </li></ul></ul><ul><ul><li>Qualifying LTCI protects assets up to the amount of benefits paid out under the policy when Medicaid needed by owner of policy </li></ul></ul>Educating Professionals and the Public on Estate Planning
  17. 17. Transfers that Work <ul><li>Irrevocable, non-assignable </li></ul><ul><li>Actuarially sound </li></ul><ul><li>Provides for equal monthly payments during the term of the annuity – no balloon payments, no deferred payments </li></ul><ul><li>State named first beneficiary for single applicant (up to amount paid out) </li></ul>Educating Professionals and the Public on Estate Planning Annuities may be exempt if the following requirements are met:
  18. 18. Transfers that Work <ul><li>Spouse, minor or disabled child may be first beneficiary, state second </li></ul><ul><li>Rules do not apply to retirement annuities or annuities purchased with retirement funds or annuities purchased prior to rule changes </li></ul>Educating Professionals and the Public on Estate Planning Annuities may be exempt if the following requirements are met:
  19. 19. Transfers that Work <ul><ul><li>Spouse of the applicant </li></ul></ul><ul><ul><li>Minor child of the applicant </li></ul></ul><ul><ul><li>Blind or permanently disabled child of the applicant </li></ul></ul><ul><ul><li>Sibling with equity interest (resided 1 yr) </li></ul></ul><ul><ul><li>Caregiver child (resided with parent 2 yrs) </li></ul></ul>Educating Professionals and the Public on Estate Planning Certain exempt transfers still apply to applicant’s home:
  20. 20. Transfers that Work <ul><li>Spousal transfers </li></ul><ul><li>Transfers to a blind or disabled child </li></ul><ul><li>Transfers to a sole benefit special needs trust </li></ul>Educating Professionals and the Public on Estate Planning Certain other transfers of any assets without penalty still apply:
  21. 21. Transfers that Work A 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. Steve Stanganelli, MSF, CRPC, CFP (Call 978-388-0020 for more information)
  22. 22. Funeral Trust Benefits - Summary <ul><li>Death benefits are paid to any funeral home so client is not tied to a specific provider </li></ul><ul><li>Excess of actual costs will be returned to the client’s named beneficiary in the estate </li></ul><ul><li>Funds are protected from all creditors, probate, nursing homes, estate taxes and even Medicaid </li></ul><ul><li>Immediately excluded asset in order to qualify for Medicaid </li></ul><ul><li>A Trust transfer that is not penalized by Medicaid </li></ul><ul><li>Maximum policy limits up to $12,500 in most states ($25,000 in MA) </li></ul>Steve Stanganelli, MSF, CRPC, CFP (Call 978-388-0020 for more information)
  23. 23. How the Funeral Trust Works Funeral Trust Funeral and Service Providers Excess Funds paid to Estate or Residual Beneficiary Pre-Planning Funds Up to $12,500 * Guaranteed Issue Life 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 Benefit GROWS – Tax Free! Submit claims and invoices Funds avoid probate and delays; Funeral expenses covered immediately Claims Paid Next Day Steve Stanganelli, MSF, CRPC, CFP (Call 978-388-0020 for more information)
  24. 24. Comparing Methods of Pre-Funding * Consult with an elder law attorney to see if this product will work with your specific needs and circumstances. Steve Stanganelli, MSF, CRPC, CFP (Call 978-388-0020 for more information) Benefits 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
  25. 25. What You Need to Know for Medicaid Benefits Asset Preservation Educating Professionals and the Public on Estate Planning Medicade eligibility rules Vary Significantly From State to State, You Must Seek Expert Counsel In your Jurisdiction

×