Jennifer B. Cona, Esq.
With the healthcare bill stalled or (dare I say it) dead, now is the time for older adults to take action to protect themselves, their families and their assets. Whatever any ultimate healthcare reform bill may contain, we know for sure that seniors, the frail elderly and disabled will be hurt. This at a time when our demographic dramatically ages: People are living longer but not necessarily healthier. More and more people need home healthcare services, rehabilitation and placement in long-term care facilities, including nursing homes. Many people simply cannot afford such long-term care, or if they can initially, their funds are quickly exhausted as average costs can be upward of $10,000 per month.
It is imperative that individuals and families plan ahead to protect their hard-earned assets. And yet people are not heeding the call to action. The American people are clearly fatigued. We are fatigued by the news cycle, with each story more outrageous than the last. We wake up every day to some new international insult, threat to our democracy, financial exploitation of the poor by the rich and other fundamental violations of American democracy. But we are only hurting ourselves by putting our head in the sand.
Older adults can expect an increase in healthcare costs and a decrease in government benefits, including Medicaid. Due process protections have historically allowed those who have planned ahead to be "grandfathered" under the current laws, meaning that the law in effect when they took action will continue to apply to them despite the passage of new laws. As such, it is critical that older adults act now to protect assets.
At the state level, we can expect Medicaid home care benefits to be on the chopping block. Currently, there is no penalty period for Medicaid home care benefits, allowing an individual to transfer assets and become eligible immediately for home care benefits. As most seniors wish to "age in place," this is a welcome opportunity to remain at home and qualify for necessary care. A healthcare reform bill will likely kick these decisions to the state, allowing New York State to impose a look-back and penalty period not just for Medicaid institutional benefits but for home care benefits as well.
Seniors can expect spousal refusal to be on the chopping block as well. Currently, all asset transfers between spouses are exempt from a Medicaid penalty period. As such, when one spouse becomes ill, he or she can transfer all assets to the well spouse and be eligible for Medicaid benefits, both institutional or home care, immediately. If the well spouse then has assets over the maximum allowable amount (currently $120,900) the well spouse must sign a spousal refusal. Federal law has always allowed this because, as a matter of public policy, we do not wish to bankrupt and impoverish a senior whose only crime is having a spouse who has suffered a long-term illness with its attendant astronomical costs.
An action plan implemented now will survive an increased look-back period (currently five years for Medicaid nursing home benefits), the imposition of a penalty and look-back period for Medicaid home care benefits, and the elimination of spousal refusal.
Asset protection planning is critical, now more than ever. Placing assets in an irrevocable trust is often the best place to start. In addition, all adults should have advance directives in place, including a power of attorney, healthcare proxy and living will.
Families need to plan ahead, well in advance of a healthcare crisis, to preserve assets and ensure the ability to access healthcare when needed. Pick yourself up, dust yourself off and take action.
Cona is managing partner of Cona Elder Law, an elder law and estate planning firm based in Melville.