Seniors Must Plan Earlier to Protect Assets

On Feb. 8, President Bush signed into law the Deficit Reduction Act of 2005, which among other provisions places severe new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care. The new federal law applies to all transfers made on or after the date of enactment. On Feb. 2, the U.S. House of Representatives passed the Deficit Reduction Act of 2005 (S. 1932) by a vote of 216 to 214. The Senate had already passed the bill by a vote of 51 to 50.

Medicaid is the state and federal program that pays toward the cost of long-term care. Nursing home care currently costs between $8,000 to $12,000 per month and, without financial assistance, can quickly leave people impoverished. This law will dramatically change the way individuals can become eligible for Medicaid assistance.

The primary purpose and intent of this law is to ensure that senior citizens who have assets to pay for their own nursing home care will do just that. The effect of these regulations will be that individuals who had hoped to save their money for their children and not pay for nursing home care themselves will have to plan in advance. No longer will government programs such as Medicaid be available to them since additional legal obstacles have been included in this piece of legislation. The following are some of the changes.

1. Increase the look-back period to 60 months for all transfers. Under the old law, there was a two tiered look-back period. For transfers to or from certain trusts the look-back period was 60 months. For all other transfers, the look-back period was 36 months. The new legislation creates a single look-back period of 60 months for all transfers.

2. Change the date the penalty period begins to run. Under old law, the date of commencement of the penalty period was the month in which an asset transfer was made. Under the new rule, the penalty period would commence when the individual transferring the assets enters a nursing home and would otherwise be eligible for Medicaid coverage. In other words, the penalty period does not begin until the nursing home resident is out of funds, meaning he or she cannot afford to pay the nursing home. Innocent gifts to grandchildren, donations to a church or synagogue, birthday or anniversary gifts could, years later, result in extended periods without any long-term care coverage of any kind. What does this mean for you? If you have considered protecting some assets for your loved ones in case you later require long-term care, you should contact a qualified elder law attorney now.

3. Homesteads with equity above $500,000 would render an applicant ineligible. The law also makes any individual with home equity above $500,000 ineligible for Medicaid nursing home care, although states may raise this threshold as high as $750,000. This is particularly difficult in some parts of the state where home values have soared and the price paid for the property many years ago could be a fraction of what it’s worth today. This provision would not apply if a spouse or child under 21 or
child who is blind or disabled, reside in the home. Homeowners could reduce their equity through a reverse mortgage or home equity loan.

4. Annuities. Another change applies to the treatment of annuities. Annuities would have to name the State as a remainder beneficiary and balloon payment annuities would be a countable asset. The government will require the person to change the beneficiary from their children (or others) to the government before they can be eligible for Medicaid or they will be denied coverage.

5. The “Income First” Rule. The rule would be mandatory so that community spouses will appeal for an increased resource allowance based on their need for more funds to meet their minimum income requirements. Income from both spouses will be used to determine eligibility for Medicaid. The new law imposes the “Income First Rule” on the wives and husbands of Medicaid applicants. This rule allows the government to count the income of both spouses to justify the spouse having to spend more of the couple’s money before either will be eligible for Medicaid.

If you have considered protecting some assets for your loved ones in case you later require long-term care, you should consult with a qualified elder law attorney to discuss the provisions of this new law and how it may affect you and your family. The bottom line is if you have been hesitating about seeing an attorney about long-term care planning, hesitate no longer.

Elder law is intended to broadly assist “extended living.” An elder law practitioner provides the legal information necessary for persons whose lives will extend or have already extended beyond the time when all children are usually out of the house and when regular employment ceases. After the elder law attorney and client complete
their work, legal documents have been drafted, tax considerations have been analyzed, and a plan to protect the elder’s estate has been implemented.

Benjamin D. Eckman’s practice focuses on estate planning and elder law. Eckman received his bachelor’s degree in business/accounting from Touro College and his law degree from Seton Hall University School of Law. He is a member of the New York State Bar Association, the New Jersey State Bar Association, the National Academy of Elder Law Attorneys, the Elder Law Section and Real Property, Probate and Trust Section of the New Jersey State Bar Association, the Union County Bar Association, Passaic County Bar Association and the Bergen County Bar Association. He can be reached at 973-709-0909; 908-206-1000; or 201-263-9161.

Senior Spirit Opens in Roselle Park

Senior Spirit Medical Day Center recently opened its newest facility in Roselle Park. Senior Spirit offers seniors the care they need while allowing them to continue living at home. With individually tailored programs that meet each senior’s medical, social and nutritional needs, Senior Spirit is able to provide the elderly with expert care while nurturing their independence.

“We’re pleased to provide caregivers, who are, in most cases, unpaid family members or friends, with respite and peace of mind,” according to Don Szymanski, who is a partner in Senior Spirit, along with Rick Giordano and Frank Cretella.

The Roselle Park facility can accommodate 90 seniors per session, and there are two five-hour sessions on weekdays.

According to experts, adult day care programs offer significant savings in long-term care costs, which are often a financial burden on government agencies and individuals.

Members are provided with door-to-door transportation free of charge. Hot, nutritious meals are prepared daily. A qualified dietician works closely with the food service staff and a registered nurse to create menus that meet doctors’ dietary orders.

Engaging social activities are planned around the goal of increasing the physical, mental, social and verbal abilities of the members. Daily trips to parks, museums, restaurants, bowling alleys, specialty stores and grocery stores offer members the opportunity to pursue special interests and remain engaged with their community.

Eligibility for participation in Senior Spirit’s Medical Day Care Center must be endorsed by a physician. Senior Spirit is open to men and women who are experiencing:
• Difficulty with the demands of day-to-day living
• Difficulty with personal care
• Confusion
• Social interaction
• Physical impairments
• Memory and cognitive problems
• Challenges in their ability to live independently
• Challenges in their ability to self-monitor medical conditions such as diabetes and high blood pressure

Senior Spirit Medical Day Center, 430 E. Westfield Ave., Roselle Park; 908-620-1889 or 866-615-5500; www.senorspiritdaycenter.com

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