2009 Colorado Medicaid Numbers Just Released
The new 2009 Medicaid numbers have just been released, and are as follows:
- The new community spouse resource allowance (CSRA) is $109,560. The 2008 CSRA is 104,400.
- The new maximum monthly maintenance needs allowance (MMMNA) is $2735. The 2008 MMMNA is $2611.
- The minimum monthly maintenance needs allowance stays at $1750 until July 1, 2009.
The new numbers are effective January 1, 2009 and reflect an increase in the CPI of 4.9% from September 2007 to September 2008.
Questions about what these numbers mean? Get our FREE Guide to Colorado Medicaid and learn some of the important legal and financial strategies that families are using to qualify for financial assistance with their nursing home costs legally and honestly.
The Colorado Medicaid Crisis…What Does it Mean for You?
Fifty percent of women and twenty-five percent of men will find themselves in a nursing home at some point in time during their lives. The cost of a Colorado nursing home averages around $5,500 per month and is climbing rapidly. Medicare (not Medicaid) will pay for only the first 20 days of nursing home care, so it can’t be relied on in a long-term care situation. It’s little wonder, then, that merely 2/3rds of nursing home families run out of money in the first year of the nursing home stay.
With the help of a skilled Colorado Medicaid attorney, you or a loved one can protect assets without spending down everything to the poverty levels prescribed by Medicaid. However, most people are completely unaware of their planning option.
In desperation, most people make terrible mistakes by doing things without the advice of Medicaid counsel, such as giving assets away to the children in hopes of qualifying for Medicaid. Such gifting will lead to Medicaid penalties, tax problems, delayed Medicaid eligibility and, of course, the complete loss of control over the assets given away.
Medicaid laws are complex, strictly enforced and continually changing. Making them work to your advantage requires the experience of an elder law attorney who focuses on his or her practice on Medicaid planning. If you or a loved one is facing a nursing home crisis, give us a call or request our FREE Guide to Colorado Medicaid. We can put you on the right path to protecting the home and savings before it’s too late!
How To Protect Your Assets from Colorado Nursing Homes BEFORE You Get Sick
The first line of defense for protecting your assets against Colorado nursing home costs is long-term care insurance. Unfortunately, the vast majority of Americans don’t buy it. They perceive it to be either too expensive or something that they will never need. Isn’t that the way all insurance goes? Folks that want to buy long-term care insurance often find they can’t because their health has gone south. That leaves them one viable planning option: gifting assets to the children or a Colorado trust.
While it’s true that you can give assets to your children to protect them from loss in the event you have to go to a nursing home later, it takes five years before your assets escape the scrutiny of Colorado Medicaid. However, the gift of assets to your children will cause multiple issues, including tax problems and the loss of control of your assets. Once you give your assets to your children, you can never get them back. If your children get sued, go through a divorce, run into debt problems or simply fail to honor your wishes, you will regret the decision of giving the assets away directly to your children.
An alternative is to give your assets away to an irrevocable trust rather than to your children. The irrevocable trust, called a Five Year Trust, will allow you to live in your home for the rest of your life, continue to receive the interest or dividends off of your savings and investments for the rest of your life and protect your assets throughout your lifetime from all of the things that can go wrong with your children as previously mentioned. Your Five Year Trust can be designed to transfer unspent assets at death down to your children and protect those assets for both your children and your grandchildren through the additional supplement called a Bulletproof Trust.
The Five Year Trust is an irrevocable living trust. It also avoids probate and adverse tax consequences connected with giving away assets. To be effective, it must be drafted with extreme care so that Colorado Medicaid will not consider it an available resource at some later time when you apply for Medicaid benefits. The counsel of an experienced elder law attorney is absolutely mandatory in this type of matter. If you have an interest in studying this option further, please give us a call at (303) 423-8423 and request our FREE white paper entitled “The Five Year Trust.”
Intimidated No More by Colorado Medicaid
Several months ago I wrote an article telling you about the problems that Colorado lawyers have been having with Medicaid regarding the use of irrevocable income-only trusts. The Colorado Medicaid office is doing everything possible to prevent Colorado seniors from engaging in advance planning by transferring their assets to these trusts (which we call “Five-Year Trusts”).
The law allows seniors to transfer their assets to protect them if the transfer is made five years before an application for Medicaid benefits is filed. Transferring assets directly to children is the simplest way to accomplish this planning objective; however, transferring assets directly to children subjects those assets to the problems the children may have either at the present time or in the future, including divorces, debt problems, law suits and irresponsible behavior. Outright transfers of property to children also causes gift tax and capital gains tax problems for both the parents and the children. When it comes to a residence that’s transferred outright to the children, the family can lose the $250,000 or $500,000 exclusion from capital gains taxes if and when the house is later sold. The Five-Year Trust avoids these sticky tax problems and is the preferred technique for transferring assets five years in advance of needing nursing home care.
Unfortunately, as I reported previously, Medicaid doesn’t like seniors using these trusts. They view the use of these trusts as “gaming” the Medicaid system. Colorado Medicaid, however, allows seniors to use Five-Year Trusts, provided these trusts do not allow the senior to reaquire any of the assets originally transferred to the trust. In other words, once the assets have been given away to the trust, they can never be returned to the senior. The Five-Year Trust is designed to prevent the return of trust assets to the senior.
This requirement does not present a problem to most seniors who are intent on leaving an inheritance to their children. Most seniors are willing to forego the return of their residence as long as they have the lifetime right to live in it. Further, most seniors are okay with the idea of transferring most of their life savings to a Five-Year Trust since this trust would pay the senior all of the interest from their savings for life. Most seniors don’t intend to consume the savings they have accumulated during life; their intent is to pass that money on to the children and simply enjoy the interest off of the money to supplement their retirement income.
Elder law attorneys design Five-Year Trusts so that the trustee can distribute money or assets out of the trust to the children later on if the children need help financially during rough times. This ability to distribute money out of the trust to the children upsets the Colorado Medicaid officials. They see this ability to release money out the “back door” to the kids as a way for money to escape from the trust, then be given back to the senior by the good graces of the children. Even though there is no pre-conceived plan among the family members to do this, the Colorado Medicaid folks presume collusion. Although case law prohibits this presumption, Medicaid thinks that everyone that plans with these trusts plans in advance to defraud Medicaid. This contention is absurd.
Medicaid reviews all trusts of Colorado Medicaid applicants. Medicaid officials routinely deny benefits by finding one reason or another why their Five-Year Trust is ineffective. What they usually come up with is a reason to determine that the assets originally transferred to the trust were never, in fact, given to the trust as a true gift; therefore, Medicaid declares that the assets in the trust are “available resources” which prevent the senior from qualifying for Medicaid benefits on the financial side of the equation.
We and several other Colorado elder law attorneys have challenged Medicaid on these various denials and have prevailed in almost every case. Medicaid, however, continues to invent new ways to declare these trusts ineffective planning techniques.
Although I was intimidated by their constant denials, I have made the decision to continue to use these trusts for my clients and prepare my clients to be ready for a fight later on when Medicaid attempts to declare their trust an available resource. I advise my clients of the risks up front and tell them that they are no worse off, except for the incremental fee for doing this type of planning, than if they had done no planning whatsoever. The Five-Year Trust will still avoid probate and make certain that properties are distributed to the children in a matter that my clients specify. With the other accompanying documents, including financial powers of attorney, healthcare powers of attorney, living wills and HIPAA releases, they still have an outstanding estate plan that will make everything go faster, cheaper and easier in the event of a later disability or death.
So it’s nothing ventured nothing gained. The more we learn about Colorado Medicaid and how the bureaucracy works, we are more comfortable taking them on. Therefore, we are doing more Five-Year Trusts to help our older clients plan for the future by protecting an inheritance for their children and grandchildren.
If you would like to learn more about the Five-Year Trust, call Andrea at my office at (303) 423-8423 to order a free copy of a paper I have written entitled “The Five-Year Trust.” You’ll gain a great insight on how this technique works and whether or not it’s appropriate for you.
Medicare and Colorado Nursing Homes…How Much Will Medicare Pay?
Over the years, I’ve discovered that most people are confused about how much Medicare (not Medicaid) will pay for nursing home expenses. This post from Elder Law Answers should clear this up:
Many people believe that Medicare covers nursing home stays. In fact Medicare’s coverage of nursing home care is quite limited. Read more
The Colorado Medicaid Asset Protection Trust — Further Explained
The trust that Mary sets up could be either revocable or irrevocable. The type of trust that Mary would set up would depend on a number of different circumstances, both personal and financial. An irrevocable trust would afford asset protection with respect to problems the other children may have over the years, including divorces, lawsuits, debt problems and irresponsible behavior. A revocable trust will not offer those protections, but is easier to maintain and administer over the years. Counseling with the family will help determine which way to go here. Read more
The Colorado Medicaid Asset Protection Trust
As I mentioned in my previous blog, giving assets away to a trust that you set up for yourself is probably not the way to go in today’s strict Medicaid world. It’s this type of “self-settled” trust that the Medicaid folks are coming down on hard. Instead, give assets away to your children as a group or to your most trusted child and have that child or your children hold the money for your future needs. Read more
Colorado Medicaid Opposes Irrevocable Trusts
As a follow up to my first post, I want to elaborate a bit on what I believe is Medicaid’s position with regard to the use of irrevocable income-only trusts by those folks seeking to protect their assets from nursing homes and Medicaid Estate Recovery in the event of a nursing home stay.
Medicaid allows for the use of income-only irrevocable trusts as a way to shelter assets and as an alternative to outright gifts of assets to children. Therefore, many Coloradans have transferred assets to these trusts with the expectation that the assets transferred would not be considered as available resources when they later apply for Medicaid assistance when a nursing home becomes necessary. Over the last couple of years, however, Medicaid has been much tougher in their review of these trusts before Medicaid is granted to an applicant. Medicaid is now saying that any irrevocable trust that confers any kind of a benefit to the Trustmaker will fail with the result that the assets in the trust will be considered available resources. This will result in the denial of Medicaid benefits because they will be considered “over resourced.” Read more
The Colorado Medicaid Bureaucrats
My law firm just won an important case in front of Judge C. Jean Stewert in the Denver Probate Court, but the State Medicaid bureaucrats are saying that they don’t care what the court ruled. They’re going to do what they want when it comes to the treatment of irrevocable income-only trusts and an applicant’s attempt to qualify for Medicaid. The case is complicated even to those well-versed in Medicaid law, so I won’t go into the details of the case now but will post the Court documents shortly so you can dig into the details if you choose. The main thrust of this post is to express my frustration with the Medicaid bureaucracy and publicly expose the arrogance they are now exhibiting with regard to their disregard of Court orders. They believe they are above the law and can ignore court orders that attempt to protect our poorer citizens. If you have an interest in seeing how these bureaucrats work the system, stay tuned. More later.