Medicaid Planning for Nursing Homes: Preserving Wealth and Ensuring Care

Posted on September 15, 2023September 15, 2023 by Lin Law LLC

By Attorney Curtis A. Edwards

When it comes to planning for long-term care and nursing home expenses, Medicaid is a critical program for many individuals and families in Wisconsin. With nursing home costs in Wisconsin ranging anywhere from $8,000 to $12,000 a month, it is essential to understand how Medicaid planning can be a valuable tool in preserving your wealth while ensuring you receive the care you need.

Medicaid vs. Medicare: Know the Difference

Medicaid, not Medicare, is the primary program that provides financial assistance for nursing home care and home-based long-term care in Wisconsin. While many people use the terms Medicaid and Medicare interchangeably, it is important to recognize that they are two distinct programs with vastly different coverages and eligibility requirements. Before delving into Medicaid planning, it’s crucial to understand the fundamental differences between Medicaid and Medicare:

Medicaid, is a state and federally funded program that provides health care and long-term care services for low-income individuals, including seniors. To qualify for Medicaid, your income and assets must fall below certain thresholds.

Medicare, on the other hand, is primarily a federal health insurance program for people aged 65 and older. While it covers some medical expenses, it offers limited coverage for nursing home and long-term care costs.

Key Aspects of Medicaid Planning

Protecting Your Home

One of the most common concerns for individuals who may need to go into a nursing home is that they will lose the family home. Many people mistakenly believe that they must sell their home in order to qualify for Medicaid. However, this is not the case in Wisconsin. Your primary residence is typically not considered an asset as long as you reside in it or have the intent to return, even if returning seems impractical due to your current health condition. This means that you can retain ownership of your home while receiving Medicaid benefits for nursing home or long-term care services.

Asset Transfers

Medicaid has strict rules regarding asset transfers. Most notably, the program penalizes asset transfers made within a specified look-back period (typically five (5) years). These penalties are designed to discourage “gifts” or transfers for less than fair-market value that could be perceived as an attempt to qualify for Medicaid by impoverishing oneself artificially. However, not all transfers result in disqualification and there are permissible ways to spend down assets within the guidelines to qualify for Medicaid.

Spousal Impoverishment Protection

Medicaid provides protections for married couples to prevent financial hardship when one spouse enters a nursing home or requires long-term care. These protections are based on specific dollar amounts but typically allow the community spouse (the one not receiving Medicaid benefits) to retain up to 50% of the couple’s assets up to a maximum of $148,620. If the community spouse’s share of the assets is below $50,000, then 100% of the assets up to $50,000 can be retained by the community spouse. These allowances ensure that the community spouse can maintain a reasonable standard of living while ensuring the institutionalized spouse’s care needs are met.

Income Allocation

Medicaid planning can also involve the strategic allocation of income. Specifically, income can be transferred from the institutionalized spouse to the community spouse to help equalize their financial situations. This can be a crucial step in ensuring both spouses have the resources they need.

Gifting Strategies

While outright gifting can raise concerns, strategic gifting within Medicaid’s guidelines can be part of an effective planning strategy. It’s essential to consult with an attorney experienced in Medicaid planning to determine the best approach for your unique circumstances.

Seek Professional Guidance

In conclusion, Medicaid planning can be complex and nuanced, with each individual’s financial and familial circumstances requiring a tailored approach. With careful planning and the expertise of a knowledgeable attorney, you can ensure a financially stable and secure future for yourself and your loved ones. If you have any questions or are interested in learning more about this topic, please contact Lin Law LLC at (920) 393-1190.

Elder Law & Special Needs Journal publishes article by Lin Law

Posted on October 29, 2020April 7, 2021 by Lin Law

The following article by Lin Law was published in the October 2020 issue of the Elder Law & Special Needs Journal of Wisconsin.

In re the Estate of David F. Oaks: ‘Gifts Causa Mortis’ Explained

This recent court of appeals case concerns the doctrine of “gift causa mortis,” a gift made in contemplation of the donor’s imminent death. Gift casua mortis, BLACK’S LAW DICTIONARY (11th ed. 2019). This doctrine operates as an exception to the general rule that testamentary dispositions must comply with the statutory requirements for a valid will. In re the Estate of David F. Oaks, ¶ 13 (citing Meegan v. Netzer, 2012 WI App. 20, 339 Wis. 2d 460, 810 N.W.2d 358). A gift causa mortis becomes effective upon the donor’s death if the following elements are satisfied:

the donor had an intention to make [the] gift effective at death;
the donor made the gift with a view to the donor’s death from present illness or from an external and apprehended peril;
the donor died of that ailment or peril; and
there was a delivery of the gifted property.

Id. (citation and internal quotation omitted).

Shortly prior to his death by suicide, the decedent, David Oaks, wrote a note bequeathing all of his “worldly belongings” to his significant other, Lynne Stouff, with whom he had lived for the last 10 years. The note read as follows: “Lynne Stouff has been my companion and my crutch for a long while. As I leave this existence I want all worldly belongings to be assigned to Lynne.” Oaks died intestate, with one estranged child from a prior relationship. His daughter, Cheri Wardell, filed a petition for formal administration of the estate, and was named personal representative. Stouff filed a claim against the Estate, contending she was entitled to the entirety of Oaks’s assets under the doctrine of gift causa mortis. The Estate denied Stouff’s claim on the basis that a gift causa mortis cannot occur when the donor commits suicide, and that Oaks had failed to deliver the gifted property to Stouff. The circuit court, however, rejected the Estate’s arguments and granted Stouff’s motion for summary judgment. On appeal, the court of appeals affirmed the circuit court.

The court of appeals held that a gift causa mortis made in contemplation of the donor’s suicide is not per se invalid. Id. ¶17. Rather, the beneficiary may show that the donor made the gift in anticipation of his or her death from a “present mental illness.” Id. This issue being a question of first impression, the court of appeals cited case law from other jurisdictions finding that an effective gift causa mortis may occur in the context of suicide as the result of the donor’s present mental illness. Id. ¶¶ 23 – 25 (citing In re Van Warner’s Estate, 238 N.W. 210 (Mich. 1931); Scherer v. Hyland, 380 A.2d 698 (N.J. 1977)). In this case, the decedent had a well-documented history of depression, which was found to have resulted in his death by suicide. Id. ¶ 28. In ruling in Stouff’s favor, the court of appeals noted that proof of a donor’s death by suicide would not be sufficient to satisfy the second and third elements of a gift causa mortis in all cases, and that the issue of whether the donor’s death was caused by his or her present mental illness would generally be a question of fact. Id. ¶ 30.

Second, the court of appeals held that Oaks completed delivery of his possessions to Stouff prior to his death because she was the legal owner of the home that she and Oaks shared, which held all of Oaks’ tangible personal property, and Stouff had access to “indicia of ownership” for the remainder of Oaks’ possessions, including keys to his vehicles, checkbooks, and bank account information. Id. ¶ 38. Although physical delivery may be necessary in some circumstances, Wisconsin case law provides that the required form of delivery will vary depending upon the nature of gifted assets and the situation of the involved parties. Id. ¶ 32 (quoting Sorenson v. Friedmann, 34 Wis. 2d 46, 55, 148 N.W.2d 745 (1967)). Where the parties are members of the same household, as in this case, the donor’s declaration of his or her donative intent, followed by the donor treating the gifted asset as the donee’s property, will generally be sufficient to effectuate delivery. Id. ¶ 37 (citing Potts v. Garionis, 127 Wis. 2d 47, 377 N.W.2d 204 (Ct. App. 1985); Horn v. Horn, 152 Wis. 482, 140 N.W. 58 (1913)). Based on these holdings, the court of appeals affirmed the circuit court’s grant of summary judgment in Stouff’s favor.

One question that Oaks left unanswered is whether a valid gift causa mortis is capable of overriding a preexisting testamentary disposition. With regard to a decedent who has an existing will, the answer is most likely “no,” unless the gift causa mortis involves a writing sufficient to supplement or revoke the decedent’s existing will. See Wis. Stat. § 853.11. The question remains, however, for intestate decedents who have utilized alternative methods of testamentary disposition.

In this case, the doctrine of gift causa mortis resulted in the decedent’s intended beneficiary receiving the entirety of his estate, despite Oaks’ failure to execute a will. The doctrine should not, of course, be seen as a method of bypassing the usual testamentary formalities, particularly in light of its narrow application. It is, however, an issue for practitioners to remain aware of when representing interested parties in an estate administration.

Medicaid Eligibility – What is a “divestment” and why should I care?

Posted on June 11, 2019January 25, 2021 by Lin Law

The Medicaid application process uses various terminology to refer to eligibility requirements. For example, what is a divestment? A “divestment” is defined as any transfer of income, non-exempt assets, or homestead property belonging to the Medicaid applicant and/or his or her spouse for less than fair market value.

Any divestment during the applicable look-back period triggers a period of Medicaid ineligibility, with certain limited exceptions. The look-back period is 60 months and is measured from the date that the applicant is institutionalized and applies for certain Medicaid benefits. The penalty period is equal to the value of the divestment, divided by the average daily nursing home private pay rate ($286.15 as of July 1, 2018).

As an example, Jane gifts her personal residence, with a fair market value of $50,000, to her son John in May 2018. In May 2019, Jane is admitted to a nursing home and applies for Medicaid to cover the cost of her long-term care. Because Jane transferred homestead property for less than fair market value during the 60 months prior to her admission to the nursing home, she will incur a penalty period of 174 days ($50,000 divided by $286.15 = 174.73 days, rounded down) during which she will be ineligible for Medicaid.

Certain transfers, such as the purchase of an annuity or a promissory note, are not considered a divestment if they meet certain requirements.

If you have any questions on this subject, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Medicaid Eligibility – How do I know which assets to count?

Posted on May 24, 2019January 25, 2021 by Lin Law

As referenced our previous post, Medicaid 101 – What is it and who is eligible?, Medicaid applicants can have no more than $2,000 in available, non-exempt assets, which raises two questions: when are assets available, and which assets are exempt?

An asset is “available” if: (1) the asset can be sold, transferred, or disposed of by or on behalf of the applicant; (2) the applicant is entitled to receive the proceeds from the sale of the asset; (3) the applicant can legally use the proceeds to provide for his or her support and maintenance; and (4) the asset can be made available in less than 30 days.

Exempt assets, which are not subject to the $2,000.00 asset limit, include:

the applicant’s personal residence (up to $750,000 in equity), if he or she has a subjective intent to return to the residence, or his or her minor or disabled child or dependent relative resides in the home;
one (1) automobile of unlimited value, if the applicant uses it to travel to his or her medical appointments;
whole life insurance with face value of up to $1,500;
irrevocable burial trust worth up to $4,500; and
personal property and furnishings of “reasonable value.”

If you have any questions on this subject, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Medicaid 101 – What is it and who is eligible?

Posted on April 8, 2019January 22, 2021 by Lin Law

Medicaid, also known as Medical Assistance (“MA”) or Title XIX, is a health insurance
program, jointly administered by the federal and state governments, for the benefit of certain elderly, blind, and disabled Wisconsin residents.

Because Medicaid is essentially a welfare program, eligibility is subject to strict income and asset limitations. Income limitations depend on whether the applicant is single or married, whether the applicant is “categorically needy” (is already eligible for Social Security Income), and whether the applicant is “medically needy” (resides in a nursing home where the cost of care exceeds his or her income).

The asset limitation, however, is the same for most Medicaid applicants: the applicant can have no more than $2,000 in available, non-exempt assets. Note, however, that if the applicant is married, his or her spouse is able to retain additional non-exempt assets. The topics of exempt vs. non-exempt assets, eligibility for married individuals, and other related issues will be covered in future blog posts.

If you have any questions on this subject, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Disabled individuals are now ABLE to save – Achieving a Better Life Experience (ABLE) accounts

Posted on March 4, 2019January 25, 2021 by Lin Law

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Up the river without a paddle – is one power of attorney as good as the next?

Posted on November 15, 2018January 22, 2021 by Lin Law

Not all powers of attorney are created equal. When planning for future incapacity, particularly if you anticipate requiring governmental benefits such as Medicaid, it is important that your financial power of attorney provide your agent(s) with all the powers he or she might need to provide for your elder law or special needs objectives. These powers may include, but are not limited to, the ability to:

– Create and fund revocable, irrevocable, or supplemental needs trusts;

– Make gifts above the annual exclusion amount or to him or herself, if necessary;

– Execute estate planning documents and other agreements, such as a caregiver agreement; and

– Change beneficiary designations on life insurance policies and retirement assets.

If you are planning for your future incapacity, make sure that your power of attorney grants your agent the powers he or she will need to accomplish your elder law and special needs objectives, so that your agent does not find themselves up the river without a paddle.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Disclaimer: The information in this blog post is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author. Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation.

We get by with a little help from our friends – Supported Decision-Making Agreements for functionally impaired adults.

Posted on November 5, 2018January 22, 2021 by Lin Law

In April 2018, the Wisconsin State Legislature passed legislation to create Chapter 52 of the Wisconsin Statutes, authorizing the use of Supported Decision-Making Agreements in the State of Wisconsin. Wis. Stat. § 52.01(6) defines “supported decision-making” as “a process of supporting and accommodating an adult with a functional impairment to enable the adult to make life decisions… without impeding the self-determination of the adult.”

Accordingly, a Supported Decision-Making Agreement can authorize the principal’s supporter (or supporters, if the principal desires more than one) to assist the principal in a number of ways, including:

a. Providing supported decision-making to the principal, including assistance in understanding the options, responsibilities, and consequences of the principal’s life decisions, without making those decisions on behalf of the principal;

b. Assisting the principal in accessing, collecting, and obtaining information that is relevant to a given life decision, and in understanding said information; and

c. Assisting the principal in communicating his or her decisions to the appropriate persons.

A Supported Decision-Making Agreement cannot be used as evidence of incapacity or incompetency of the principal, and is revocable by the principal at any time. Because of their flexibility, Supported Decision-Making Agreements may (and in many cases, should) be used in conjunction with powers of attorney for finances and healthcare. Importantly, Supported Decision-Making Agreements must now be considered as a potentially less restrictive alternative to guardianship, and may also be used in conjunction with a full or limited guardianship.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Medicare vs. Medicaid: Do you know the difference?

Posted on October 1, 2018January 22, 2021 by Lin Law

When speaking about public benefits, people often confuse Medicare and Medicaid. After all, they do basically the same thing, right? Not exactly…

Medicare is available to all individuals age 65 and older, in addition to chronically disabled individuals of any age, irrespective of resources (i.e., assets). It is federally administered and beneficiaries are often responsible for co-pays and premium payments. Medicare has four parts, each providing distinct benefits:

1. Part A (Hospital Insurance) – provides coverage for hospital costs and related

services (e.g., skilled nursing facility care, home health care, and hospice care).

2. Part B (Supplementary Medical Insurance) – provides coverage for physician services

and certain outpatient services that are not covered by Part A.

3. Part C (now known as Medicare Advantage) – provides expanded coverage beyond

Parts A and B.

4. Part D (Voluntary Prescription Drug Benefit) – provides prescription drug coverage

through private insurance companies.

Medicaid, commonly referred to as Medical Assistance (MA), receives federal funding but is administered by the individual states. Unlike Medicare, Medicaid is a needs-based program, and beneficiaries are subject to strict financial eligibility requirements. Medicaid covers a broad range of health services, but is primarily known for providing long-term care (i.e., nursing home) coverage. Individuals may be eligible for both Medicare and Medicaid, and receive benefits from both programs at the same time.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

What is guardianship and how do you avoid it?

Posted on August 23, 2018January 22, 2021 by Lin Law

Guardianship is a court procedure in which an individual is appointed to make certain decisions for another person (the “ward”). The purpose of a guardianship is to protect or assist an individual who, due to mental incapacity, is unable to make decisions, defend him or herself against exploitation, or otherwise provide for his or her needs.

The proposed ward may require a guardian of the estate and/or a guardian of the person. A guardian of the estate handles the ward’s financial matters, similar to a power of attorney for finances, whereas the guardian of the person handles day-to-day matters such as the ward’s living arrangements, medical care, etc. In addition, the person petitioning the court to appoint a guardian for the proposed ward may request a temporary or permanent guardianship. A temporary guardianship can generally be established within a few weeks and lasts for sixty days, with up to one sixty-day extension. A permanent guardianship, on the other hand, remains in effect until removed by the court. In order to establish a guardianship, the proposed ward must be found legally incompetent by two physicians or one physician and one psychologist.

The ultimate goal of a guardianship is to impose as few restrictions on the ward as possible (i.e., remove as few of the ward’s rights as possible), while also ensuring that his or her needs are being met. However, even the most minimally restrictive guardianships results in the loss of some of the ward’s rights. One way to prevent a guardianship from becoming necessary is to plan ahead and execute a Financial Durable Power of Attorney and Power of Attorney for Healthcare. These documents will usually provide the principal’s power of attorney or health care agent with sufficient authority to protect or provide for the principal’s needs without petitioning the court to establish a guardianship, thereby avoiding the time and expense of a court proceeding.

If you have any questions on this topic, please contact Attorney Emily E. Ames at eames@llattorneys.com or (920) 393-1190.

Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only, and is not intended as legal advice from Lin Law LLC or the individual author. Please consult an attorney licensed to practice law in your jurisdiction for information regarding your individual situation.