Medicaid Asset Protection Trust can help with Long Term Care Costs

August 7, 2024

The numbers are clear: 70% of Americans expect to need long-term care at some point in their retirement. Many people aren’t aware of the importance of long-term care until they are uninsurable because of health conditions or can’t afford the premiums. How can you plan? A Medicaid Asset Protection Trust can help with long term care costs.

Depending upon where you live and the type of care needed, long-term care costs anywhere from $50,000 to $100,000 per year. With an average stay of two to five years, it’s a hefty financial burden without long-term care insurance, a MAPT, and good planning.

Creating a Medicaid Asset Protection Trust requires the help of an experienced estate planning attorney to be sure you obtain all of the benefits of such a trust. Long-term care costs are one of the biggest financial worries for retirees, as noted in a recent article, “This Trust Can Protect Your Assets From Long-Term Care Costs,” from Kiplinger.

The Medicaid Asset Protection Trust (MAPT) moves money out of your estate into a trust, so it becomes uncountable for Medicaid means-testing purposes. It has to be created and funded at least five years before the applicant can be deemed eligible for Medicaid funding, known as the “Medicaid look-back.”

The trust needs to be set up by an experienced estate planning attorney because there are many fine points to consider. The MAPT won’t serve its intended purpose if it’s not set up correctly.

The MAPT must be an irrevocable trust, meaning the grantor (who set up the trust) no longer has access to those assets. This can be a little unnerving. You’ll also want to speak with your estate planning attorney about your plans for the near and distant future. How will you access funds if you’re putting funds into the trust? Who will be able to access them?

This trust will also benefit families with assets closer to the old estate tax levels. In 2024, the gift and estate tax exemptions are still very high—$13.61 million. However, if the law sunsets without Congress acting, the estate tax could revert to around $5 million or lower if the federal government decides more wealth needs to be taxed. Assets in a trust are not part of the taxable estate, so having a trust also protects assets from federal and state estate taxes.

Trusts are also powerful means of controlling asset distribution. Your MAPT could distribute a set amount of money to a beneficiary throughout their lifetime, or a minor grandchild could be given a certain amount after they’ve completed four years of college or achieved a particular goal.

Consult an estate planning attorney to learn how a Medicaid Asset Protection Trust can help with long term care costs, if they’re right for you, and how to get started. If you would like to learn more about managing assets for long term care, please visit our previous posts.

Reference: Kiplinger (July 11, 2024) “This Trust Can Protect Your Assets From Long-Term Care Costs”

Photo by T Leish

Common Errors with Medicare Enrollment

November 30, 2021

Money Talks News recent article entitled “5 Things Most Seniors Get Wrong About Medicare” reports that recently, the insurance website MedicareAdvantage.com surveyed more than 1,000 Medicare beneficiaries and found that they share common errors with Medicare enrollment. The researchers said that this ignorance can mean seniors wasting money and forfeiting benefits. Here are the errors most seniors make with Medicare enrollment, and how such things really work.

Premiums, deductibles, and coinsurance. Many survey respondents were unable to correctly define these terms:

Deductible: 59.7%
Coinsurance: 55.5%
Premium: 56.1%

A deductible is the amount you pay out-of-pocket for care before your insurance kicks in. Coinsurance is what you often pay for services after you’ve met the deductible — for example, a common coinsurance requirement is 20% of service costs. Your premium is the amount you pay each month for coverage.

Out-of-pocket spending limits. One thing about most health insurance plans is that they restrict the amount you’re expected to pay out of pocket. However, when talking about original Medicare, nearly three-quarters (73.7%) of survey respondents don’t realize they could be hit with an unlimited amount of coinsurance bills for Part A and Part B coverage. It’s a big reason why Medicare supplement plans are so important, if you’re choosing original Medicare. Many Medicare Advantage plans — also known as Medicare Part C — come with out-of-pocket limits. After you reach this limit, you pay nothing for the Part A and Part B care that is included in your plan.
Part D’s late enrollment penalty. Only a fifth (20%) of Medicare beneficiaries knew that there’s a penalty if you sign up late for Part D prescription coverage. After your initial Medicare enrollment period ends, you may owe a penalty if there’s a period of 63 or more consecutive days when you don’t have Medicare drug coverage or other equivalent prescription drug coverage. If you have a penalty, you’ll have to pay it for as long as you have Medicare drug coverage.
The fall open enrollment period. Every year, the federal government schedules an open enrollment period when you can make changes to your existing coverage. This period always starts on October 15 and goes until December 7. However, 59.7% of Medicare beneficiaries didn’t know the start date, and half of that percentage falsely thought open enrollment starts after October 15.
Virtual services covered because of the pandemic. Since the COVID-19 pandemic, virtual health care has become more widely available. As a result, the federal government now permits Medicare to cover some of these services. However, a large percentage of beneficiaries are unaware of that fact. Here are the percentages of survey respondents who didn’t know that the following services now are covered:

Virtual e-visits with a physical therapist: 81.9%
Virtual telehealth visits for preventative health screenings: 56.6%
Virtual telehealth visits for mental health counseling: 54.1%

Working with an experienced Elder Law attorney who can help you avoid these common errors with Medicare enrollment, and allow you the full benefits you have earned and deserve. If you would like to read more about Medicare benefits and how to enroll, please visit our previous posts.

Reference: Money Talks News (Nov. 3, 2021) “5 Things Most Seniors Get Wrong About Medicare”

Beneficiary Controlled Trust can protect your legacy

Taking Medicare or Employer’s Health Plan

September 9, 2021

As we get older, a common dilemma approaches: Do I consider taking Medicare or keep my employer’s health plan? Let’s say that you work full time and have a very good medical insurance plan, but it’s costly, especially if you also have been covering the rest of your family. Say that the spouse is 60 and permanently disabled and has been told he’s eligible for Medicare. A common question is whether the working spouse should remove the disabled spouse from the employer’s coverage and go with Medicare. What’s the best option?

NJ Money Help’s recent article entitled “Should we take Medicare or keep an employer health plan?” explains that there are different components of Medicare to cover specific services: Medicare Part A, Part B, and Part D.

Medicare Part A helps pay for hospital and facility costs. Medicare Part B helps pay for medical costs, like doctors and medical supplies. Medicare Part D is for prescription drug coverage. Most people don’t pay a monthly premium for Part A, but there are premiums associated with Part B and Part D coverage.

If an individual is 65 and has received disability benefits from Social Security for 24 months or has received certain disability benefits from the Railroad Retirement Board for 24 months, he or she will automatically get Medicare Part A and Part B.

You should also know that you can decide to delay Medicare Part B by contacting Social Security after you become eligible, and you receive the card. Discuss this option with your employer’s health care benefit department to understand how Medicare may or may not work with your current coverage. This is because there are some plans and health benefit plans (especially those with fewer than 20 employees) that become secondary to Medicare, when an enrollee becomes eligible for Medicare.

If you decide to participate in Medicare Part B, understand that there’s a cost. The premium is based on your income, and the standard Part B premium in 2021 is $148.50 per month, if your income was $176,000 or less in 2019 for a married filing joint return. The Medicare Part B premium increases as your income increases.

Medicare Part B pays for many of your medical bills. However, not all the costs for covered health care services and supplies are included. As a result, many seniors buy a supplemental insurance plan, called Medigap. This plan will pay for some of the remaining health care costs, like co-payments, coinsurance and deductibles that are not covered by Medicare.

Remember that it’s important to enroll in Medigap coverage within six months following Medicare Part B enrollment. Medigap is an additional cost along with your Medicare Part B premium and is sold through a private insurance company. To determine what will be more cost effective, you’ll need to compare the Medicare costs with your employer plan. There are many things to consider when taking Medicare or your employer’s health plan. Consulting with an experienced Elder Law attorney who has worked with Medicare coverage and knows the ins and outs.

If you would like to learn more about Medicare coverage, please visit our previous posts.

Reference: NJ Money Help (Aug. 13, 2021) “Should we take Medicare or keep an employer health plan?”

Category: Medigap

Medicaid Asset Protection Trust can help with Long Term Care Costs

Common Errors with Medicare Enrollment

Taking Medicare or Employer’s Health Plan

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