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MEDICAID PLANNING FOR
COUPLES: HOW TO MANAGE THE
$7-9,000/MONTH COST OF
STAYING IN A NURSING HOME

P. Haans Mulder, JD, MST, CFP®
Cunningham Dalman, P.C.
321 Settlers Road
Holland, MI 49423
(616) 392-1821
phmulder@holland-law.com
Upcoming Seminars
• Medicaid Planning for Singles-April 18
• Veterans Benefits, Estate Recovery, and
  Changes in the Medicaid Rules-June 13
• All seminars are at 4:30



                            Serving the Holland area since 1900
Background
• Attorney and Partner at Cunningham
  Dalman, P.C.
• Have a Masters in Tax (MST), CFP®
  and specialize in estates/elder law and
  business planning.


                              Serving the Holland area since 1900
Background
• Cunningham Dalman, P.C. has been
  serving the greater Holland area since 1900.
• We have 15 attorneys specializing in all
  areas of the law.




                             Serving the Holland area since 1900
Overview
 • Discuss the Medicaid rules and the
   program.
 • Give you some ideas to help the healthy
   spouse protect more of your assets if
   nursing home care is necessary.


                             Serving the Holland area since 1900
Did you know?
 • 40% of people 65 years and older will
   stay in a nursing home.
 • Average cost to stay in a local nursing
   home is $7-9,000/month ($84-
   $108,000/year).


                             Serving the Holland area since 1900
What is Medicaid?
 • It is a state and federal program that
   pays for medical treatment (including
   long term care).
 • Oftentimes confused with Medicare.



                             Serving the Holland area since 1900
When does Medicaid apply?
 • Historically, it only paid for nursing
   home care.
 • In certain counties (that have the MI
   Choice Waiver program), it will pay for
   care in someone’s home or an
   assisted living facility.

                             Serving the Holland area since 1900
Who does Medicaid apply to?
 • Applies to people who are 65 years or
   older, blind, or disabled.
 • Must satisfy the medical requirements
   (level of care assessment).
 • Need to meet the income and asset
   tests.

                            Serving the Holland area since 1900
Who does Medicaid apply to?
 • Your monthly income cannot exceed
   the monthly cost of your stay in a
   nursing home ($7-9,000 in this area).
 • For the Waiver program, your income
   (not your spouse) must be less than
   $2,094/month.

                            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 (up to a maximum of
   $115,920).


                               Serving the Holland area since 1900
Planning Example #1
 • Clients are a husband and wife who
   are in their 70’s.
 • They have a house and $250,000 in
   investments.



                           Serving the Holland area since 1900
Planning Example #1
 • They previously planned to avoid
   probate by having an estate plan
   (which included a living trust,
   pourover will, and powers of attorney)
   and titling their assets in their trust.



                              Serving the Holland area since 1900
Planning Example #1
 • They are now worried about the cost
   of long term care.
 • They are also concerned about one of
   them passing and what “safety net”
   will be available for the surviving
   spouse.

                           Serving the Holland area since 1900
Planning Example #1
 • To plan for these risks, they convert
   their joint living trust into a single
   living trust.
 • If one spouse passes away, the single
   living trust becomes a “spousal
   supplemental needs trust.”

                            Serving the Holland area since 1900
Planning Example #1
• If the surviving spouse needs nursing
  home care in the future, she will likely
  qualify immediately for Medicaid.
• The trust creates a “safety net” to pay
  for the house and expenses not
  covered by Medicaid (so the children
  do not have to).
                              Serving the Holland area since 1900
Planning Example #1
• If one spouse was already on
  Medicaid, that spouse will remain in
  the program.
• It also creates a “safety net” to pay for
  expenses not covered by Medicaid
  (so the children do not have to).

                               Serving the Holland area since 1900
Planning Example #2
 • The client is a husband and wife in
   their mid-70s and have three children.
 • Their son is trustworthy and lives
   close by.
 • Have a house, vehicle, and $350,000
   in investments.

                             Serving the Holland area since 1900
Planning Example #2
 • They receive monthly income of
   $2,200 in Social Security and $600
   from a pension.
 • They have monthly expenses of
   $3,200 so there is a shortfall of income
   of $400 per month.

                             Serving the Holland area since 1900
Planning Example #2
 • The wife is very healthy.
 • The husband has been diagnosed with
   an early onset of Alzheimer's and they
   are concerned about him going to a
   nursing home and the wife not having
   sufficient resources.

                            Serving the Holland area since 1900
Planning Example #2
 • They create an irrevocable trust in which
   they receive the income (interest and
   dividends).
 • Their son is the trustee and their three
   children are the beneficiaries of the trust
   principal.

                              Serving the Holland area since 1900
Planning Example #2
 • They make a gift of $200,000 to the trust.
 • They will receive approximately of
   $667/month in income from the trust.
 • They will not likely need any other
   resources.


                             Serving the Holland area since 1900
Planning Example #2
 • If they need other resources, their son
   can take a distribution from the trust
   (because he is the trustee and
   beneficiary).
 • He can then gift it back to them.


                             Serving the Holland area since 1900
Planning Example #2
 • There is a five year “look back” period for
   Medicaid.
 • The husband will need to remain healthy
   for five years from the time of the gift for
   this planning technique to be effective.


                              Serving the Holland area since 1900
Planning Example #3
 • The clients are a husband and wife in
   their late 70s.
 • They have a house, vehicle, and
   $250,000 of investments.
 • The wife had to go to a nursing home.


                            Serving the Holland area since 1900
Planning Example #3
 • They could keep the house (because it
   was properly owned) and their vehicle
 • Without any Medicaid planning, they
   would have had to spend down their
   investments to the less of one-half or
   $115,920.

                            Serving the Holland area since 1900
Planning Example #3
 • Drafted a “sole benefit trust” that allowed
   the husband to protect all of their
   investments (as opposed to just half).
 • The wife was able for qualify immediately
   for Medicaid and no spend-down was
   necessary.

                              Serving the Holland area since 1900
Questions……




              Serving the Holland area since 1900
Upcoming Seminars
• Medicaid Planning for Singles-April 18
• Veterans Benefits, Estate Recovery, and
  Changes in the Medicaid Rules-June 13
• All seminars are at 4:30



                            Serving the Holland area since 1900
Thank You
 P. Haans Mulder, JD, MST, CFP®
 Cunningham Dalman, P.C.
 321 Settlers Road
 Holland, MI 49423
 (616) 392-1821
 phmulder@holland-law.com
 www.holland-law.com


                             Serving the Holland area since 1900

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Medicaid Planning for Married Couples

  • 1. MEDICAID PLANNING FOR COUPLES: HOW TO MANAGE THE $7-9,000/MONTH COST OF STAYING IN A NURSING HOME P. Haans Mulder, JD, MST, CFP® Cunningham Dalman, P.C. 321 Settlers Road Holland, MI 49423 (616) 392-1821 phmulder@holland-law.com
  • 2. Upcoming Seminars • Medicaid Planning for Singles-April 18 • Veterans Benefits, Estate Recovery, and Changes in the Medicaid Rules-June 13 • All seminars are at 4:30 Serving the Holland area since 1900
  • 3. Background • Attorney and Partner at Cunningham Dalman, P.C. • Have a Masters in Tax (MST), CFP® and specialize in estates/elder law and business planning. Serving the Holland area since 1900
  • 4. Background • Cunningham Dalman, P.C. has been serving the greater Holland area since 1900. • We have 15 attorneys specializing in all areas of the law. Serving the Holland area since 1900
  • 5. Overview • Discuss the Medicaid rules and the program. • Give you some ideas to help the healthy spouse protect more of your assets if nursing home care is necessary. Serving the Holland area since 1900
  • 6. Did you know? • 40% of people 65 years and older will stay in a nursing home. • Average cost to stay in a local nursing home is $7-9,000/month ($84- $108,000/year). Serving the Holland area since 1900
  • 7. What is Medicaid? • It is a state and federal program that pays for medical treatment (including long term care). • Oftentimes confused with Medicare. Serving the Holland area since 1900
  • 8. When does Medicaid apply? • Historically, it only paid for nursing home care. • In certain counties (that have the MI Choice Waiver program), it will pay for care in someone’s home or an assisted living facility. Serving the Holland area since 1900
  • 9. Who does Medicaid apply to? • Applies to people who are 65 years or older, blind, or disabled. • Must satisfy the medical requirements (level of care assessment). • Need to meet the income and asset tests. Serving the Holland area since 1900
  • 10. Who does Medicaid apply to? • Your monthly income cannot exceed the monthly cost of your stay in a nursing home ($7-9,000 in this area). • For the Waiver program, your income (not your spouse) must be less than $2,094/month. Serving the Holland area since 1900
  • 11. 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 (up to a maximum of $115,920). Serving the Holland area since 1900
  • 12. Planning Example #1 • Clients are a husband and wife who are in their 70’s. • They have a house and $250,000 in investments. Serving the Holland area since 1900
  • 13. Planning Example #1 • They previously planned to avoid probate by having an estate plan (which included a living trust, pourover will, and powers of attorney) and titling their assets in their trust. Serving the Holland area since 1900
  • 14. Planning Example #1 • They are now worried about the cost of long term care. • They are also concerned about one of them passing and what “safety net” will be available for the surviving spouse. Serving the Holland area since 1900
  • 15. Planning Example #1 • To plan for these risks, they convert their joint living trust into a single living trust. • If one spouse passes away, the single living trust becomes a “spousal supplemental needs trust.” Serving the Holland area since 1900
  • 16. Planning Example #1 • If the surviving spouse needs nursing home care in the future, she will likely qualify immediately for Medicaid. • The trust creates a “safety net” to pay for the house and expenses not covered by Medicaid (so the children do not have to). Serving the Holland area since 1900
  • 17. Planning Example #1 • If one spouse was already on Medicaid, that spouse will remain in the program. • It also creates a “safety net” to pay for expenses not covered by Medicaid (so the children do not have to). Serving the Holland area since 1900
  • 18. Planning Example #2 • The client is a husband and wife in their mid-70s and have three children. • Their son is trustworthy and lives close by. • Have a house, vehicle, and $350,000 in investments. Serving the Holland area since 1900
  • 19. Planning Example #2 • They receive monthly income of $2,200 in Social Security and $600 from a pension. • They have monthly expenses of $3,200 so there is a shortfall of income of $400 per month. Serving the Holland area since 1900
  • 20. Planning Example #2 • The wife is very healthy. • The husband has been diagnosed with an early onset of Alzheimer's and they are concerned about him going to a nursing home and the wife not having sufficient resources. Serving the Holland area since 1900
  • 21. Planning Example #2 • They create an irrevocable trust in which they receive the income (interest and dividends). • Their son is the trustee and their three children are the beneficiaries of the trust principal. Serving the Holland area since 1900
  • 22. Planning Example #2 • They make a gift of $200,000 to the trust. • They will receive approximately of $667/month in income from the trust. • They will not likely need any other resources. Serving the Holland area since 1900
  • 23. Planning Example #2 • If they need other resources, their son can take a distribution from the trust (because he is the trustee and beneficiary). • He can then gift it back to them. Serving the Holland area since 1900
  • 24. Planning Example #2 • There is a five year “look back” period for Medicaid. • The husband will need to remain healthy for five years from the time of the gift for this planning technique to be effective. Serving the Holland area since 1900
  • 25. Planning Example #3 • The clients are a husband and wife in their late 70s. • They have a house, vehicle, and $250,000 of investments. • The wife had to go to a nursing home. Serving the Holland area since 1900
  • 26. Planning Example #3 • They could keep the house (because it was properly owned) and their vehicle • Without any Medicaid planning, they would have had to spend down their investments to the less of one-half or $115,920. Serving the Holland area since 1900
  • 27. Planning Example #3 • Drafted a “sole benefit trust” that allowed the husband to protect all of their investments (as opposed to just half). • The wife was able for qualify immediately for Medicaid and no spend-down was necessary. Serving the Holland area since 1900
  • 28. Questions…… Serving the Holland area since 1900
  • 29. Upcoming Seminars • Medicaid Planning for Singles-April 18 • Veterans Benefits, Estate Recovery, and Changes in the Medicaid Rules-June 13 • All seminars are at 4:30 Serving the Holland area since 1900
  • 30. Thank You P. Haans Mulder, JD, MST, CFP® Cunningham Dalman, P.C. 321 Settlers Road Holland, MI 49423 (616) 392-1821 phmulder@holland-law.com www.holland-law.com Serving the Holland area since 1900