Medicaid                     52%

Private Pay                  35%

Medicare                       9%

V.A. & other Public    2%

Private Health Insurance 2%

However, these figures do not include long-term care provided in private residences and personal care homes.  When all is considered, the bulk of long-term care is provided by families and friends.  When planning for retirement, it would be wise to plan for long-term care as well.

Many individuals postpone planning of this nature until it is too late.  By the time they try to qualify for Medicaid they realize just what a tremendous task that can be.  To be eligible for Medicaid you cannot have a monthly income exceeding an amount tied to the current poverty guidelines.  Additionally the total value of savings, cash, investments, and other non-excludable resources are capped.  Burial plans, automobiles and life insurance also have similar maximum values.  This is complicated by the fact that the person applying must have been at this level for up to 60 months before the need for nursing home or home health care arose.

Gifting your property in order to reach this level is tricky for several reasons.  There is a limit of $16,000 per gift annually without tax consequences.  Additionally, gifting property now may result in the grantee having to pay substantial capital gains taxes.

Perhaps worse is that since 2005 the government can place a lien against your estate to recover monies you have received while on Medicaid.

Long-term care planning for most individuals should be planning for Medicaid avoidance, not Medicaid eligibility.  In order to qualify for Medicaid an applicant must prove a “medical necessity for nursing home care” and establish financial eligibility.  Impoverishing a person so as to make them financially eligible for Medicaid may serve only to strip them of their assets when they need them most.

94% of Texas nursing home facilities are Medicaid certified.  The 6% that are not certified include some of the very best in the State.  If you can afford to live in one of the better facilities you may prefer to do so rather than try to preserve assets for other family members.

“Medicaid beds” pay less than “private pay beds.”  Therefore, many facilities have only limited numbers of “Medicaid beds.”  You may have to go on a waiting list before a bed is available.  One result of this is that to have a good choice of nursing homes, it may be necessary to go in as a “private pay” resident and have enough funds to pay privately until a “Medicaid bed” becomes available.  However, recent case law may change this.

Another problem is that Medicaid does not pay for holding a bed if you go to a hospital temporarily.  If when you are discharged from a temporary hospital stay, the nursing home does not have available “Medicaid beds,” then you may have to move to another facility.

Many people see Medicaid as a form of “welfare” and are resistant to applying for it, even if they would be eligible.  Some nursing homes encourage these sentiments by having separate wings for their “Medicaid beds,” sometimes with lower quality floor coverings and other amenities.  If you share these sentiments, then Medicaid may not be right for you.

An alternative to using your personal savings or Medicaid is planning with long-term care insurance. How do you know if long-term care insurance will work for you?  A good approach is to plan for a worst case scenario and determine from that if you will be able to afford the cost of your care.  However, what your worst case is will vary depending on whether you are married or single and the size of your financial portfolio.  For a married couple the worst case scenario usually is for one spouse to need nursing home care, while the other spouse is able to continue living at home.  This is financially the worst case, because the expenses of maintaining a residence and the lifestyle of a more or less active person continue, with the long-term care costs stacked on top.  The amount of care you or your spouse may require will affect your scenario as well.

Factors to consider include the cost of nursing home care and your life expectancy.  The Texas Department of Human Services has determined that the average cost for nursing home care is over $5,000 per month; but as with life expectancy, that is only an average.  When planning, it is best to include scenarios that are worse than average.

Why should you consider buying long-term care insurance?  The most common reason is to insure against impoverishment.  However, you may just want to ensure that you do not have to use any of your life savings or assets to pay for your living expenses.   Finally, you may want to leave an inheritance to your children or grandchildren.  Another common belief is you can’t take it with you so you might as well spend it all before you go.  Your choice to purchase long-term care insurance can only be determined by your personal values and goals.

In parting, I will add that if you are interested in long-term care insurance, then the younger you are when you purchase this type of insurance, the better, because the cost of the policy increases dramatically with age.

I hope the information provided here is helpful.  If you have any questions regarding this, please consult with an attorney.

Sam A. Moak is and attorney with the Huntsville law firm of Moak & Moak, P.C.  He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.  www.moakandmoak.com

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The most well-known form of caregiver is a family member or close friend who takes on the care of a loved one when they are no longer able to complete important tasks on their own. However, caregivers could also be someone whom the older adult may not know.  They may be employed through an agency and come into the home, or work in the facility where the elder person may live. These are professionals who provide services that can range from companionship to full medical care.

As someone ages, it is crucial to have people around who can support them. More than ever before, seniors are wanting to stay in their homes and are able to, if they utilize caregivers.  Because of this development, and because many seniors are living in a long-term care facility that employs caregivers rather than move to a nursing facility, there has been a rise in the demand for caregivers.

Currently, there is a nationwide shortage of caregivers in all types of settings, and it is impacting communities at all levels. Shortages of familial caregivers, volunteer caregivers, and professional caregivers have caused many older adults to do without these services for long periods of time.  The waiting period for caregiving services has risen, even if someone has been approved to start receiving care.  Once services are started, there may also be times when the extent of services an elder may need exceeds the number of caregivers or hours of care they are granted.

Facilities and agencies are also experiencing shortages. Not only are people not able to find caregivers to come directly to the home, but people are also not able to find caregivers within facility settings.

For this reason, it is wise to start sooner rather than later to form a relationship with an agency and/or caregiver(s).  It is wonderful when an agency or caregiver is first hired, and it goes smoothly for all parties. However, it may take trying several caregivers or agencies before you find one that is a good fit for the care receiver. Word of mouth can be an effective way to contact someone interested in being a caregiver.  Let the people in your social circles know you have a need and see if anyone answers the call.

When the caregiver is found, then you must be familiar with what the law requires.  Each state has regulations on health care.  The Texas Professional Association of Caregivers recommends an 8-hour certification course.  This ensures that the person who is taking care of your loved one is properly trained and thus equipped to provide care.  It is also recommended that a background check be performed, an agreement in writing be entered and insurance provided.

Caregivers are one of the most important and impactful resources for an elder to maintain quality of life.  If you or someone you know needs services, or may need them in the near future, start the process now.  As part of that process, you should consult with an attorney familiar with Elder Law to assist you with questions in this area.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C.  He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.  www.moakandmoak.com

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One of the greatest concerns for my clients is that they may end up in a nursing home. This not only means a great loss of personal autonomy, but also a tremendous financial price. Many seniors are watching their retirement funds or “nest eggs” shrink as the financial crisis affecting our country deepens. As a result, many are seeking counsel on how to shelter their assets from nursing home care costs.

A relatively new industry has arisen as a result of these fears. These “asset protection” firms encourage their clients to shelter their assets so that they can bequeath their home to the heirs and leave taxpayers to foot the nursing home bill. In my opinion, this is further evidence of the decaying moral fiber in our country that has led to the sad situation in many areas. It is a society’s moral obligation to take care of their elders. Not the taxpayer, but the families. A better plan would be to seek the advice of a financial planner to help the couple save money for their elder care, perhaps by utilizing long term care insurance to provide their care rather than other taxpayers footing the bill.

Medicaid is a joint federal-state program that provides health insurance coverage to low income children, seniors and people with disabilities. In addition, it covers care in a nursing home for those who qualify. However, Medicaid will probably not provide a level or quality of care you would hope for. For example, Medicaid will not pay for a private room.

In order to be eligible for Medicaid benefits a nursing home resident may have no more than $2,382.00/month income and $2,000.00 in “countable” assets for a single individual 2021. There are protections if one spouse has to enter a nursing home. The spouse of a nursing home resident, called the “community spouse,” is limited to one half of the couple’s joint assets up to $130,380.00 (in Texas for 2021) in “countable” assets. This figure changes each year to reflect inflation. In addition, the community spouse may keep the first $26,076.00 (again in 2021 for Texas), even if that is more than half of the couple’s assets. The maximum allowance in Texas is up to $130,380.00.

All assets are counted against these limits unless the assets fall within a short list of “noncountable” assets. Noncountable assets are limited to the following:

– Personal possessions, such as clothing, furniture and jewelry;

– One motor vehicle, valued up to $4,500.00 for unmarried recipients and of any value for the healthy community spouse;

– The applicant’s principal residence up to $603,000.00 (in 2021 for Texas);

– Prepaid funeral plans and a small amount of life insurance (face value less than $1,500.00);

– Assets that are considered “inaccessible” for one reason or another.

The second major rule of Medicaid eligibility is the penalty for transferring assets. Medicaid does not want you to move into a nursing home on Monday, transfer your assets on Tuesday and apply for Medicaid on Wednesday. Congress has imposed penalties on the transfer of assets without receiving fair value in return. The Deficit Reduction Act of 2005 (DRA) has made these restrictions very severe.

A common hurdle in qualifying for Medicaid is gifting of one’s assets in order to qualify. The rules regarding gifting are quite complex. Gifts made during the 60 calendar months prior to the Medicaid application month may result in a loss of eligibility for a calculated period of time.

The penalty period is calculated by dividing the total amount gifted within the prior 60 calendar months by $21.371 (considered the average daily cost of nursing home care in Texas in 2020). For example, if an applicant had given away $10,000.00, the period of disqualification would be calculated as follows: $10,000.00 divided by $213.71 = 46 days or about 1 /1/2 months of disqualification.

The period of disqualification begins running on the first day of the month that your loved one entered a medical facility and met the medical need, income and resource criteria for eligibility. Be very cautious making gifts. When gifting, the gift giver can’t expect to get the money back from the gift recipient. It is a gift with no strings attached. Also, the recipient may intend to keep the gift for the giver but the recipient’s creditors or spouse or the recipient’s death may cause the funds to be diverted elsewhere. There is no way I could alert you to every possible disadvantage. One must always take into consideration “unforseen circumstances.”

There are transfers which are exceptions to the transfer penalty. They are limited to the following transfers:

– To the applicant’s spouse;

– To a child who is under 21 years of age or who is blind or disabled;

– Into a trust for the sole benefit of a disabled individual under 65 years of age;

– To a sibling who has lived in the home during the year preceding the applicant’s institutionalization and who already holds an equity interest in the home; and,

– To a “caretaker child,” who is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s institutionalization and who during that period provided care that allowed the applicant to avoid a nursing home stay.

For a brief period it was against the law to help someone transfer assets improperly. This is no longer the case, although it may be again in the future. If you decide to embark on a plan to make your loved one eligible for Medicaid, it is important to avoid a claim of exploitation. Texas law defines “exploitation of an elderly person” to be the appropriation of their assets without the elderly person’s informed consent. So long as there is no one to complain about proper Medicaid planning (i.e., ALL family members agree on a course of action), then the issue will probably not arise. However, if someone perceives that you or someone else is taking advantage of your loved one, Adult Protective Services may become involved. Civil and criminal penalties can result from finding of exploitation.

Another factor to be aware of with Medicaid is that on March 1, 2005, Texas implemented the Medicaid Estate Recovery Program in compliance with federal Medicaid laws. The program is managed by the Texas Department of Aging and Disability Services.

Under this program, the state may file a claim against the estate of a deceased Medicaid recipient, age 55 and older, who applied for certain long-term care services on or after March 1, 2005. Claims include the cost of services, hospital care, and prescription drugs supported by Medicaid.

Remember, nothing from the government comes for free. There are always strings attached and before you blindly apply for Medicaid, know all the facts so that you can make an informed decision. There are a lot of myths and untruths out there about Medicaid, seek legal advice from somewhere other than the coffee bar.

If you find yourself in the age group of 50 to 70 you should start researching long-term care insurance. The younger you are when you apply the better. Why should you consider buying long-term care insurance? The most common reason is to insure against impoverishment. However, you may just want to ensure that you do not have to use any of your life savings or assets to pay for your living expenses. Finally, you may want to leave an inheritance to your children or grandchildren. Another common belief is you can’t take it with you, so you might as well spend it all before you go. Your choice to purchase long-term care insurance can only be determined by your personal values and goals.

I hope the information provided here is helpful. If you have any questions regarding this, please consult with an attorney skilled in estate planning and elder law.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas. www.moakandmoak.com

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In previous columns, I explained the importance of having a Durable Power of Attorney, Medical Power of Attorney and a Directive to Physicians, Family and Surrogates (commonly referred to as a Living Will). While I often advise clients on the benefits of these instruments, I want to stress the importance of these documents if you have been diagnosed with Alzheimer Dementia. Having personally lived with the effects of dementia with my father, I can tell you this is a very difficult disease. Planning should be done as soon as possible if you have been diagnosed or if you have been told you have early symptoms of Alzheimer Dementia because you must be of sound mind when you execute these documents. This will require a note or letter from your doctor verifying your ability to sign documents of this nature.

Alzheimer is a crippling disease that can progress very quickly. It requires specialized care, and in some instances, around the clock supervision. If you do not take time to have the proper legal documents put into place, then you could cause your spouse or children to bear a great emotional and financial burden. As I have pointed out in my earlier columns, you never know what could happen to you or when it might happen. So it is prudent to plan ahead by executing a Durable Power of Attorney, Power of Attorney for Healthcare and Directive to Physicians, Family and Surrogates. This allows you to choose who you would want to handle your affairs and deal with your doctor and healthcare provider, and even give advice to your chosen representative as to the type of care you desire. Having these documents in place ahead of time can save valuable time in the case of an emergency.

Anyone is susceptible to being diagnosed with Alzheimer Dementia, suffer a stroke, or be the victim of an accident. While age has a great deal to do with Alzheimer Dementia, it has no bearing on the latter. These cases are good examples of why planning ahead and having a Durable Power of Attorney, Medical Power of Attorney and Directive to Physicians, Family and Surrogates is important.

While there are a myriad of sources for these instruments, all powers of attorney are not created equal. I have reviewed everything from a one or two page power of attorney to an eight or nine page document. Remember, what works in one part of the country will not work in all parts. Additionally, merely having a power of attorney does not mean it will be accepted by all entities your agent may be dealing with unless it explicitly states their authority. After you become incapable of handling your affairs without assistance is not the time to find out your documents do not work.

If you would like to plan ahead and have one or all of the instruments discussed in this column prepared, be aware that Texas law places certain requirements as to the form of the documents discussed and as recently as September 2017, updated the recommended requirements. Therefore, you should consult an attorney who is focused on this area of law and has experience with regard to what is required to insure your agent can use these documents when the time comes. If you had any of these documents prepared for you in the past or while you resided in a different state you should have a Texas attorney review the documents to make sure they comply with current Texas law.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.www.moakandmoak.com

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I, like many elder law attorneys, spend a large part of my practice engaged in preventive law. Preventive law is a law practice that seeks to anticipate and prevent legal problems and litigation. It is an approach found in several other areas of law besides elder law and estate planning. Many of us who practice elder law already use counseling techniques and many of the documents we prepare with the goal of avoiding litigation (such as an expensive trip to probate court or other legal or financial harm that might have been avoided with appropriate planning).

The conduct of an attorney would of course vary with the situation and depend on the unique circumstances of the case or conflict. With that said, there are some behaviors that would distinguish the peacemaking mind set, and which would be designed to obtain win-win outcomes. These include a willingness to (1) agree to stipulations as to facts and the admission of evidence along with other requests to hasten the proceeding; (2) accommodate requests from opposing party or counsel for schedule changes due to illness, family, or work responsibilities; and (3) avoid the “gotcha” strategy when a mistake is made by an opposing party or counsel; and (4) abstain from negative personal or otherwise disparaging comments. This list is not meant to be exclusive or exhaustive – the bottom line for all these “indicia” of the avoiding conflict mind set is that the attorney acting as a peacemaker is an erstwhile advocate for family or intergenerational healing and that this restorative approach can be consistent with the interests of the client.

When elder law attorneys act as probate peacemakers or as elder/probate mediators, they bring their substantive knowledge of and familiarity with these preventive steps and techniques. This combination of substantive experience and the preventive approach to a problem or set of problems combine in a way that can help predict how a client and members of a family or another interested group might behave in the future. That can mean that an attorney serving as a peacemaker or as counsel to a disputing party can help ensure that the client has the benefit of strategic advice before future problems or troubles appear on the horizon. To the extent that a dispute is not definitively resolved by some process, or if related issues crop up, a peacemaker can be enlisted to draft an agreement that can guide the parties toward productive management of anticipated future disputes.

If it is your desire that your final wishes be carried out without conflict or litigation, then you should seek the assistance of an attorney experienced in Probate, Estate Planning and Elder Law matters. He or she can guide you with regard to decisions and language that will make the transfer of your assets a peaceful experience instead of a stressful one.

If you have a question regarding Elder Law, Estate Planning, Living Trusts or Probate in the Huntsville area, please contact us at 936-295-6394 or visit our website. Call today and we will connect you with an experienced Elder Law and Probate Attorney. We can schedule you a face to face appointment to discuss your circumstances. If you have questions or are considering any aspect of your estate plan, probate, your health care directives, etc., we can help! Call us now at 936-295-6394 . We look forward to hearing from you and assisting you with any and all elder law and estate planning needs.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas. 

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