Jan Neal Law Firm LLC

Alabama Estate, Elder and Special Needs Law


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Save Your Money with a Medicaid Spend Down Special Needs Trust

You don’t really have to spend down all your resources to qualify for nursing home Medicaid.  There are multiple ways to preserve funds.  One of those ways is through the use of what I call the Medicaid Spend Down Special Needs Trust.        

Usually persons who need nursing home care end up needing Medicaid to pay for that care.  Why? Because it is so expensive.  Nursing home care can cost between $6000 and $8000 depending on the specific market area in Alabama.  At $7000 per month, the average nursing home resident will spend $84,000 in a year. Under these circumstances, most persons will exhaust their resources at a rapid rate rendering them unable to pay for the care they need without the assistance of Medicaid. 

There are some funds a married couple can preserve for the spouse who remains at home, but there is still an amount that has to be spent down if a couple has countable assets over $25,000.  A single person has to spend all of his or her resources down to $2000 before he or she can qualify for Medicaid.  Using up the assets a person saved over a lifetime is known as the dreaded Medicaid “spend down.” 

But what many people do not know is that there is a way to qualify for Medicaid to pay for nursing home care in Alabama without the resident having to go through a complete “spend down.”  That is through the use of a pooled Special Needs Trust. 

There are many types of Special Needs Trusts (SNTs), including trusts for disabled younger persons, disabled children whose parents and grandparents want to provide for their future needs, persons on public benefits who recover money from personal injury lawsuits or who inherit money when a relative dies.  Each type of SNT has highly specific requirements.  But what they all have in common is the goal of protecting funds for a disabled person without those funds resulting in the loss of public benefits. 

With the Medicaid Spend Down SNT, instead of spending down the money required to be spent by Medicaid on nursing home care before eligibility can be established, the money is paid into a SNT and can then be used to pay for special needs not otherwise paid for by Medicaid for the disabled person once he or she becomes eligible.  Medicaid eligibility can be immediately established while these funds remain available to pay for special needs for the nursing home resident. 

The drawback to this type of trust is the requirement that, on the death of the person for whom the trust was established, Medicaid must be reimbursed from funds remaining in the trust up to the amount Medicaid has paid for the nursing home resident’s care.  Still, creating a pool of money to meet the special needs of the nursing home resident after being awarded Medicaid is far better than simply spending down those funds before qualifying for Medicaid and leaving the resident with no resources to pay for special needs. Since Medicaid allows a nursing home resident to keep only $30 of his or her income each month to pay for personal needs, you can see how that is not enough to have needs met without families pitching in to help pay for necessary items.     

An example of what the SNT funds can pay for is a private room in a nursing home since Medicaid will only cover a semi-private room.  Other special needs might be items and services that can improve the quality of life for the nursing home resident such as hair salon charges, manicures, telephone, newspaper subscriptions,  audiobooks, movies, recreation, medical and dental expenses not otherwise covered, special  equipment like wheelchairs or specially-equipped vans; therapy or rehabilitation services; training and education, travel, electronic equipment including computers and mobile devices.

With a little planning the quality of life for a nursing home resident can be improved, and the burden for a family’s out of pocket expenses decreased.

Do not be confused with an internet search.  The rules are different from state to state.  Most states allow a person 65 and older to create a pooled SNT but still penalize transfers into that trust.  That is not the case in Alabama.

Contact us for more information about establishing a Medicaid Spend Down SNT.

      


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Quarterly Newsletter Available

shutterstock_63936919Our quarterly newsletter, Elder Law Bookmarks, was sent today.  Articles included in the newsletter are:

  • People with Disabilities Can Now Create Their Own Special Needs Trusts
  • Is it Better to Remarry or Just Live Together?
  • Repealing Obamacare Will Have Consequences for Medicare
  • For Better or Worse, States Are Turning to Managed Care for Medicaid Long-Term-Care
  • Make Reviewing Your Estate Plan One of Your New Year’s Resolutions

If you want to be added to the mail list, send an email to neal@janneallaw.com.

 


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Elder Law Training at OLLI

olli-materials-first-page

On October 10, 2016, Jan taught the first of a two part presentation on Elder Law at  Osher Lifelong Learning Institute (OLLI) at Auburn University entitled Elder Law:  Enhancing the Lives of Seniors Through Education, Planning For What Comes Next.  The second session will be taught on Monday, October 17, 2016, at 2:30 p.m. at The Clarion in Auburn, Alabama.  

Topics covered in this training include:  Older Americans Act Legal Assistance; Important Documents Needed for Proper Planning; Authority Issues; Long-term Care Levels of Care and Payment Options; Medicaid for Long-term Care; Special Needs Planning; Probate; Administration of Estates; Planning for Last Remains and Funerals.

A 39 page Keynote presentation covering these topics is provided to course participants.

Anyone interested in this and the many other learning opportunities available through OLLI can learn more by visiting the OLLI website.


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Alabama ABLE Act to Provide Planning Opportunity for Disabled Persons

Husband and handicapped wife taking stroll in park alley

On June 9, 2015, Governor Bentley signed ABLE Act legislation into law in Alabama permitting the state to implement a program to permit developmentally disabled persons to have limited tax free savings without losing public benefits.  ABLE stands for Achieving a Better Life Experience, and the act was passed on the federal level in December 2014 permitting each state to set up its own program.  Though the program in Alabama has not yet become operable, it will be getting underway in the coming months.

The ABLE Act will permit up to $14,000 per year to be placed in one approved bank account set up for a developmentally disabled person living in Alabama (one who became disabled prior to age 26) with those funds exempt from counting as resources for public benefit purposes.  This means that the disabled person can have these funds to use for disability-related expenses without losing his or her public benefits such as SSI or Medicaid.  Up to $100,000 can be accumulated in an ABLE account without loss of SSI, and $350,000 can be accumulated in such an account in Alabama without loss of Medicaid (note that this is state specific, and some states may permit an accumulation as high as $425,210 or as low as $235,000 before loss of Medicaid).  At the death of the disabled person any funds left in the ABLE account will be payable to Medicaid to repay that agency in amounts up to what the agency paid for the disabled person’s health care costs.

Contributions to an ABLE account are not tax deductible, and income earned by an ABLE account is not taxable.

Stay tuned for more information about these accounts in the coming months or go to the Alabama State Treasury’s ABLE website and sign up for an update notification when accounts are available.