Free Advice Is Expensive With Long Term Care
When I first began working in elder law about 18 years ago, information on Medicaid for seniors facing nursing home and long term care costs was difficult to obtain. The question I heard most often was “Will the nursing home take the house?” People knew there was a lookback on gifting and had some vague ideas but wanted to know more. Now there is a five year lookback with a very different method of calculation. Despite the fact that most lawyers will avoid making decisions in this field because it is not their specialty, many average people seem willing to take the risk to decide on their own. This could be because of the internet or that today many people have experienced someone who has received Medicaid. It might have been in a different State, with different assets, single vs. married, or long ago and the circumstances could have been totally different. The end result is that nothing is more expensive than “free” advice.
More people believe they are “experts” today. “Experts” can be neighbors, friends, relatives, medical providers, or others who provide a continuing stream of “free” advice. The results I sometimes see are chilling. Here are some real examples.
A family member of a person who was receiving Medicaid in a nursing home in a neighboring County approached me. An agency had assisted with
a “free” Medicaid application and the parent was now dying and had no funds. I asked whether the agency explained they were permitted to set up an irrevocable burial reserve with their parent’s funds before going on Medicaid. They said no. The parent would have been entitled to set up the burial reserve and keep either $2,400 or $8,000 in her name and still receive Medicaid. Since there was no way to go back now to recover funds, “free” advice in this case would cost the family the price of the funeral which could easily run $8,000 to $12,000 or more. This in addition to the sadness of dealing with their tragic personal loss. It was unnecessary.
If $8,000 seems costly for free advice, this is minimal compared to advice given on housing. Years ago, in October, 2003, an article in Main Line Today by Holly Love, “On Time and Money,” described the case of our clients. Through almost Herculean effort and by moving in with her parents, wife and husband were able to keep wife’s parents, one with Alzheimers and the other with Parkinson’s disease, at home well beyond the time when they would otherwise have gone to nursing homes. Since the elderly parents had minimal funds, the family wondered what my office could do. I advised them that, because they fit the description of a little known federal category, they could save the family home and we did.
Unfortunately, many people think that, simply by transferring the family home into the name of children, they can protect it without more. Because of the five year lookback, they think they should do it five years in advance. Actually, if this is done improperly without fitting one of the legal exceptions, the government would expect adult children to pay back the full value of the interest transferred before their parent would be covered under Medicaid. This could be hundreds of thousands of dollars. Free advice can be expensive.
It can get more complicated. A neighbor of mine, after having received free advice that he could protect the house after caring for his mother for several years was later informed the house was going to be sold because of a government claim under Medicaid estate recovery and he would need to move. He never actually transferred the house.
Some people have told me their parent went to long term care and “of course, they lost everything.” This was even in cases where a disabled child was involved and the house could have fit another Medicaid exception.
Sadly, many people who receive free or lower cost advice have no idea even what the results could have been and what they may have lost.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.