Elder Care and Gifting to Children

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mtnrider
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Elder Care and Gifting to Children

Post by mtnrider »

My mother who is unmarried has been diagnosed with early stage dementia. The memory care facilities where we live are easily 100k/year. From what I understand, Medicaid kicks in to cover it only when a person has gone through all their financial resources including their primary residence. She has a NW of roughly 800k.

Would it be best for her to gift the money to her kids, get Medicaid coverage early and then have us give her the money over the years for any additional care, etc.? (She has implied doing this but I don't know all the tax ramifications, risks, etc.

Any help would be appreciated.

Thanks!
123
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Re: Elder Care and Gifting to Children

Post by 123 »

Use the funds she has to get her the level of safety and care that she deserves after saving all her life. Many facilities will agree to keep a resident under Medicaid funding after the resident have exhausted their funds as private payer (plan and ask in advance).

Who deserves the use of the funds for their care more, her or her children?
Last edited by 123 on Thu Jun 08, 2023 10:43 am, edited 2 times in total.
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TomatoTomahto
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Re: Elder Care and Gifting to Children

Post by TomatoTomahto »

Someone will arrive shortly who knows more about Medicaid clawbacks or lookbacks or whatever they call them.

I would be very careful discussing gifting with someone who has been diagnosed with dementia if you would be a beneficiary.
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Carefreeap
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Re: Elder Care and Gifting to Children

Post by Carefreeap »

mtnrider wrote: Thu Jun 08, 2023 10:34 am My mother who is unmarried has been diagnosed with early stage dementia. The memory care facilities where we live are easily 100k/year. From what I understand, Medicaid kicks in to cover it only when a person has gone through all their financial resources including their primary residence. She has a NW of roughly 800k.

Would it be best for her to gift the money to her kids, get Medicaid coverage early and then have us give her the money over the years for any additional care, etc.? (She has implied doing this but I don't know all the tax ramifications, risks, etc.

Any help would be appreciated.

Thanks!
You need to do your research as Medicaid elegibility and resources are very state-specific. Look back periods can be anywhere from 3-5 years whereby Medicaid can claw-back assets which have been given away. Medicaid facilities may have very long wait times and/or not be a great place to leave mom. Generally speaking after going through this process with my dad I would say use her resources to help her, not protect an inheritance. Also once money is distributed to others there's no guarantee those "heirs" will keep the money in trust for your mother's care. Given the level of assets your monther has I would consult with an elder law attorney specific to where your mother lives or the area if she plans on moving closer to family.

Good luck with your journey. This can be one of the toughest things you can go through.
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Jack FFR1846
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Re: Elder Care and Gifting to Children

Post by Jack FFR1846 »

Not memory care, but assisted living was where DW's aunt went. We assisted in getting her house sold. She was never married. Her assets went to her care and she declined over the years, ending up in a nursing home ($12,000 a month). We never had any inclination to gift or take money from her. She needed the care and keeping her assets available for this care kept her in these facilities until she passed.

My understanding is that Medicaid will look back 5 years and if there are any gifts, they will be clawed back.

Instead, leave the assets in her name, help sell her house and get power of attorney so you can pay her bills including the facility where she goes. When the funds drop to an appropriate level, Medicaid can help. Be sure up front that the facility you choose will accept Medicaid when her funds run out. Not all do.

If she has social security and/or pension payments coming in, you might have a better choice of facilities. DW's aunt went into a municipal facility at a "subsidized" rate which was maybe 15% lower than a full pay rate. But they were pretty particular about both assets and income and the combination of a state pension and an annuity put her right at the upper limit. Her estate at her passing was in the couple hundred grand area.
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mkc
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Re: Elder Care and Gifting to Children

Post by mkc »

Have been through the Medicaid application process in NY in 2015.

Lookback period in NY is 5 years. Any withdrawal from any account in an amount greater than $2000 for which there wasn't a receipt showing something purchased, a bill paid, or a transfer/deposit to another applicant-owned (not joint) account was considered available assets that delayed Medicaid pick up (delay is sometimes called the penalty period). We had to provide 5 years of tax returns, brokerage statements, IRA statements, bank statements, copies of any checks written $2000 or greater, etc., including closed accounts. We had to jump through hoops to get the documentation for the closed ones.

If funds are gifted but applicant needs Medicaid within 5 years in NY, those gifted funds are considered to still be owned and available to the applicant to pay for care, delaying Medicaid pick up.

I expect it's much the same (although the lookback period may be different) in most states.

Clawback happens after the recipient passes away and Medicaid attempts to recoup their money from the probated estate.
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Jimbo Moneybags
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Re: Elder Care and Gifting to Children

Post by Jimbo Moneybags »

mtnrider wrote: Thu Jun 08, 2023 10:34 am My mother who is unmarried has been diagnosed with early stage dementia. The memory care facilities where we live are easily 100k/year. From what I understand, Medicaid kicks in to cover it only when a person has gone through all their financial resources including their primary residence. She has a NW of roughly 800k.

Would it be best for her to gift the money to her kids, get Medicaid coverage early and then have us give her the money over the years for any additional care, etc.? (She has implied doing this but I don't know all the tax ramifications, risks, etc.

Any help would be appreciated.

Thanks!
Sorry to hear about the diagnosis, I lost both parents and several other family members to that disease (all of whom paid for their own care needs from their savings and investments) and it is a difficult situation.

As far as your question: the answer is no. Her funds should be used to pay for her care. If/when she exhausts those, then medicaid would kick in. Just be sure the memory care facility will accept medicaid if/when that time comes.

From a practical standpoint, attempting to engage a senior with dementia in a "strategy" to gift all of her wealth to yourself and siblings in order to immediately qualify her for medicaid (so that you can convert her wealth into your own and shift the burden of paying for her care onto others) would fail due to the medicaid look-back period of 60 months. I'll leave the ethics of such a strategy for you and your family to consider without further comment.

Suggesting to her that she meet with an attorney who specializes in elder care may be helpful to ensure (if it isn't too late) that her estate planning, health care directives, and the like are in good order. However, depending upon her actual progression, she may already lack the mental capacity to handle her own affairs. In that event, if there is not a valid power of attorney in place, a guardianship may be necessary.

Best wishes.
HomeStretch
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Re: Elder Care and Gifting to Children

Post by HomeStretch »

Sorry to hear about your mom’s diagnosis. There are different types of dementia so knowing hers may be helpful to you in making financial decisions.

Medicaid is state specific so if you add her state to your original post you may receive more pertinent info.

Your mom will need her assets to private pay for in-home or in-facility care. So aside from maybe sheltering $10k to cover things the Medicaid LTC Personal Needs Allowance doesn’t cover, there isn’t a need to transfer her assets to family.

Consult soon with an elder law attorney experienced with Medicaid in your mom’s state to discuss her options.
- Her Estate documents may need to be updated (for example, Medicaid in our state required specific powers to be added to the state statutory POA form).
- Discuss what her assets can be spent down on during the look back period without affecting Medicaid eligibility. For example, she may be able to prepay final arrangements and have that prepayment not included in her countable assets for Medicaid eligibility.
- You can discuss whether sheltering some of your mom’s assets makes sense and the Medicaid look back period during which it will need to be repaid to her in order to receive benefits.

Tour facilities to get an idea of the living conditions, costs and whether they accept Medicaid assignment. If they do accept Medicaid assignment, find out if they accept it as of Day 1 or only after a period of private pay or not at all. Ask also about:
- the admission wait list length of time for private pay patients versus day 1 Medicaid patients
- if your mom will need to change rooms when she moves onto Medicaid
- if they will file the Medicaid application or if you will need to hire an attorney to do so
- whether they will wait to be paid during the Medicaid review period or if the family is expected to pay/be reimbursed

In my parent’s state (CT), my parent with dementia could not have more than $2k in countable assets at month-end to be granted and remain eligible for LTC benefits for a skilled nursing facility (SNF). Medicaid pays some level of benefit for in-home care and perhaps dementia care in non-SNF but the benefit amount is low. All income except for $75/month was paid to the SNF as Applied Income and Medicaid paid the balance. There was a 5 year look-back period on account activity and expenditures. Any gifts or non-spousal transfers during that period would need to be repaid or, if not, would delay the benefit start date.

The only facilities that accept Medicaid assignment in our area are SNF. To get into a better one and jump the 2-3 year admissions waiting list, my parent had to private pay for at least 1 year ($240k). Assisted Living and MemoryCare facilities do not accept it (mostly VC and PE owned). If you can’t private pay, you can’t stay.

I hired an elder law attorney to update my parent’s Estate documents and to manage the Medicaid LTC application process. All in it was $11k. It took a lot of work on my part to gather all account statements, credit card statements and receipts for large expenses for the 5-year look-back period. It took 9 months for Medicaid to review and approve benefits retroactively.
hudson
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Re: Elder Care and Gifting to Children

Post by hudson »

mtnrider wrote: Thu Jun 08, 2023 10:34 am My mother who is unmarried has been diagnosed with early stage dementia. The memory care facilities where we live are easily 100k/year. From what I understand, Medicaid kicks in to cover it only when a person has gone through all their financial resources including their primary residence. She has a NW of roughly 800k.

Would it be best for her to gift the money to her kids, get Medicaid coverage early and then have us give her the money over the years for any additional care, etc.? (She has implied doing this but I don't know all the tax ramifications, risks, etc.

Any help would be appreciated.

Thanks!
Who's in charge of your mother's affairs? Is it you?
Are her final papers in order?
These are good questions for an elder attorney.
What does your mother want?

If I was in that situation, I would hope that everything that I did passed the "smell test."
In like situations where the person was no longer capable, I've seen family meetings work well...especially if consensus is used.
Sandwich
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Re: Elder Care and Gifting to Children

Post by Sandwich »

Jack FFR1846 wrote: Thu Jun 08, 2023 10:50 am ..........

My understanding is that Medicaid will look back 5 years and if there are any gifts, they will be clawed back.

Instead, leave the assets in her name, help sell her house and get power of attorney so you can pay her bills including the facility where she goes. When the funds drop to an appropriate level, Medicaid can help....
+1, I was POA for an unmarried uncle for the 7 years that he lived in an licensed assisted living home. Most important goal was remaining private pay so that he could get the best possible care and not be moved into a Medicaid-bed. After a number of inquiries, due to his unique health conditions, I found a home thru which he had his own bedroom and regular access to a registered nurse. For a couple of years, I rented out his condo to generate income to pay for his care and eventually sold it as his cash resources ran low.

Cash from the condo sale paid for the care for the 4.5 years of his life. Was almost to the point of filing for Medicaid on his behalf when he passed away.

OTOH, I knew of another resident in uncle's care home, "Anna" who, although bedbound, still owned her own condo (HCOL area) "with the intent to return home". I was told by uncle's caregiver that Anna's relative / POA didn't want to sell Anna's condo, which was vacant. The law at that time, stipulated that one could retain their "own home with an intent to return even if vacant" and if they had less than $ 2,000 in other assets could go on Medicaid.

My impression is that the state medicaid office would do some sort of clawback of the amount Medicaid had paid for Anna's care after Anna died. My impression is that the amount of monthly funds from Medicaid was much lower that the amount of my own uncle's private pay checks.

Looking back on all this, my uncle and "Anna" received virtually the same care since they were in the same home with the same caregiver. IMO, one should pay for their own care, if they have the means, and leave Medicaid for the truly indigent.
BarbBrooklyn
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Re: Elder Care and Gifting to Children

Post by BarbBrooklyn »

Does Medicaid pay for Memory Care in your mom's state? In most states, Medicaid will only pay for Skilled Nursing care and ONLY if the person is both medically and financially eligible.

In some states, simply having dementia and not being able to perform Activities of Daily Living (ADLs) is not sufficient; there has to be a medical reason for SNF--chronic heart failure, kidney disease--something that requires MEDICAL oversight and not simply custodial care.

Find a certified Elder Law Attorney who understands Medicaid regs in Mom's state.
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Topic Author
mtnrider
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Re: Elder Care and Gifting to Children

Post by mtnrider »

Thank you all for answering. I'm a bit relieved not to have to consider this gifting strategy. I want her to be comfortable but can't afford to get a house with another bedroom where my job is.

It sounds like the best thing is talking to an elder care attorney. She does have her ducks in a row financially. I hate to see her draw down her finances to poverty level but it sounds like that is how the system works before Medicaid kicks in.

It's a tough blow on multiple fronts. Thanks for all the kind advice.
bsteiner
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Re: Elder Care and Gifting to Children

Post by bsteiner »

mtnrider wrote: Sat Jun 10, 2023 6:48 pm ..,
It sounds like the best thing is talking to an elder care attorney. …
Elder LAW attorneys can help with Medicaid law. But if you want elder CARE you’ll need nurses and other health care providers.
RationalWalk
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Re: Elder Care and Gifting to Children

Post by RationalWalk »

I can relate my understanding based on caring for my mother for several years as she transitioned from independent living to assisted living and finally to a nursing home primarily because of her dementia. In my area, Medicaid is only available at Skilled Nursing Facilities (SNFs). It is not available at Memory Care facilities, which are usually associated with Assisted Living Facilities (ALFs). If the person is not significantly impaired, an ALF offering Memory Care will likely be a more comfortable place to reside in terms of facilities, food, staff, etc. A person can begin in the Assisted Living section if they aren't significantly impaired and don't represent a "wandering" or "elopement" risk walking out of the facility (entrance doors are not locked in Assisted Living). They can then transition to the Memory Care section if their condition worsens. However, since these are private pay the person will need to move to a Medicaid-eligible SNF if funds are becoming depleted. The cost of Memory Care is significantly higher than Assisted Living and approaches the cost of SNFs.

If funds are at risk of becoming depleted, the person will need to move to a Medicaid-eligible SNF. There are a couple of issues to consider. First, the better SNFs often have a long waiting list for outside admissions, are more expensive, and have a financial eligibility requirement of 18 months to 2 years of private pay. Some have a very limited number of Medicaid beds, and make it difficult to secure admission. In my area, the annual cost at the highest rated SNFs was $130,000 and higher a few years ago. In order to meet the eligibility requirement, the person would need perhaps $200K+ in financial assets to be admitted. Second, there is a medical eligibility screen as part of the admission process. Sadly, a person with more advanced dementia/alzheimer's might not pass that screen and be admitted.

The bottom line, is that careful judgment needs to be exercised in regard to managing admission to a better SNF. The person may need to secure admission well ahead of the time their private pay funds might be depleted, and/or their dementia is severe enough that they might not be admitted even if financially qualified. Unfortunately, this might be well sooner than desired, based on the person's level of physical and cognitive functioning.
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