Articles
Key Issues in Long Term Care Planning
There have been many recent changes in the rules governing the MaineCare program that covers nursing home and assisted living care. Despite the changes, there are still legal ways to save assets. The recent changes have made it more important to understand the requirements and do long term care planning before you are facing an immediate crisis. To take advantage of these options, however, it is crucial to understand the estate planning documents you should have, and to understand the basics of long term care planning.
A durable power of attorney specifies the individual(s) who have authority to manage your financial assets should you become sick, and specifies what the agent has the authority to do. Sometimes, people have powers of attorney that do not comply with Maine law, that do not specify whether the agent has gifting authority or that limit gifting authority, or that do not name successor agents. In these situations, the client may not be able to engage in meaningful long term care planning to conserve a person's assets against complete expenditure on long term care costs. Having a complete, legal power of attorney that meets your goals regarding asset protection is vital. There are also protections you can implement in your Will to protect assets after your death if you are survived by a spouse or other family member who is disabled or may need long term care.
For most people who need nursing home care, they will either pay privately or become eligible for MaineCare. At a cost of over $90,000/year for nursing home care and over $70,000 for assisted living care, most people eventually will need to access MaineCare. The basic MaineCare eligibility criteria include a medical assessment and income requirements, but often the most difficult criterion to meet is the asset criterion. The "countable" assets of the institutionalized spouse must be $10,000 or less, and, for nursing home care, those of the community spouse must be $109,560 or less. There is no limit on the assets of the community spouse if the institutionalized spouse is in assisted living. Many assets (including the home, an automobile, prepaid burial contracts, certain types of annuities, and income-producing property) are not counted. Assets that do not count for purposes of eligibility are still at risk of having to be sold after the MaineCare recipient dies to repay the State for MaineCare expenses incurred during the recipient's life. It is important to obtain advice prior to applying for MaineCare in order to protect these assets.
Major changes have occurred recently with regard to how MaineCare treats gifting. Non-exempt gifts result in a period of ineligibility for MaineCare. Such gifting, if it occurs within 5 years of the MaineCare application, will pose significant hurdles to obtaining MaineCare eligibility for nursing home care. In contrast, however, MaineCare recently decided that it will no longer penalize gifts when it reviews applications for MaineCare for assisted living. With regard to gifting penalties, MaineCare has also determined that the death of a spouse can result in penalties on the eligibility of the surviving spouse for MaineCare if that spouse is on MaineCare or needs MaineCare within 5 years of the deceased spouse's death.
Another recent change in the law that has posed problems for many is the issue of paying family members for the time spent caring for an elderly or disabled relative. If you or a loved one plan to pay family caregivers, you should get assistance to ensure that your plan will meet the MaineCare rule requirements.
The MaineCare rules are complex and are becoming more restrictive. For healthy persons, long term care insurance may be an option. For others, lawful options to conserve assets will depend upon the client's situation and goals, and the application of the complex eligibility rules. Having a current and thorough understanding the gifting penalties and exemptions is critical to helping clients access MaineCare.