Episode Transcript
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Speaker 1 (00:00):
Good morning everyone, Welcome to Life Happens Radio. I'm Lou Piro,
your host for this morning here on a rather gloomy
Saturday morning in the Capital region. Supposed to get better
as we go along. I saw the sun popping up
somewhere along my weather map on the Weather Channel. But
for today, hopefully you'll buckle in with us over the
next hour, and we're going to talk about a topic
(00:21):
that we talk about fairly frequently here on Life Happens,
and that is healthcare, and more specifically long term care.
As we look at our planning, as we look at
the things we do to get ready for our clients'
lives and their retirements, we prepare plans that look at
all of the different needs that they have. And the
(00:41):
name of the show is Life Happens. Are you prepared?
So what is life happening? It happens all around us
and in our office we sit with families every day
and we talk to them about the situations that they
find themselves in. Some say, well, I should have done
something sooner, and others say I never expected that. And
(01:04):
whichever camp you fall into, you want to be prepared.
You want to be sitting with an experienced team of experts,
an experienced team which includes an elder law attorney, and
I happen to be sitting with one right now, and
his name is Frank. Hemen, good morning, Frank, Hei Lou
(01:25):
And Frank is a partner at pier O'Connor and Strauss
as am I and that's the law firm that brings
you this show. And Medicaid is a part of our
practice that we have been doing for thirty plus years,
almost thirty five years, and it's a part of our
practice that the depth of knowledge just increases because law
(01:47):
changes almost every year, sometimes two or three times a year.
The rules change and you have to keep up with it.
So today we're going to unravel Medicare, which has basic
health insurance for people sixty five and over. Medicaid the
program that covers long term care, but has a means
(02:07):
testing to it, which is a financial qualification insurance to
cover these areas health insurance. And if you think your
health insurance is covering long term care, that is a
fallacy and a myth. And we're going to try to
bust the myths here today on Life Happens, and there
is a long term care insurance which is very hard
to find these days, which is a product that does
(02:29):
cover long term care. So whether you're thirty, fifty, seventy ninety,
or one hundred and three like my aunt Initty, you
need to be thinking about these things, and you need
to be thinking about what if life happens to me
and I find myself in that situation, do I have
a plan? And if you're thirty, this planning can be
(02:50):
very easy because you can buy insurance policies that are
life insurance based. They're very affordable. You start paying and
it's a guaranteed premium every year, it's the same premium
they don't jack premium is on life insurance. It's the
same premium and you get double coverage. So if you're
thirty and you have kids, you can buy an insurance
policy that'll both cover their college education and if you
(03:13):
ever need long term care, you can use that policy
later in life to pay for your long term care.
So this planning starts should start can start very early.
And we used to share this show with New York
Long Term Care Brokers which is now Advisors Insurance Brokers.
And when we started that fourteen plus years ago, Brian
Johnson was one of the people on the show, and
(03:34):
Brian wasn't even thirty and he had a very comprehensive
long term care insurance policy that he's been paying on
that has just kept pace because it has an inflation
protection on it. And when you buy at that age,
by the time you're sixty five, seventy five, eighty five,
ninety five, the amount of coverage that you have is
keeping pace with the needs and the cost. And Frank,
(03:58):
let's unravel these costs little bit because a lot of
people think, oh, you know, nursing homes are so expensive,
but if I get home care, it's going to be
a lot less.
Speaker 2 (04:07):
I mean it can be. It kind of depends on
how much care you need. If you need two, three
four hours a day, sure it's much cheaper to pay
a home health aid, either privately from an agency or
a woman down the street, or if somebody you know
in your life or even rely on family at that point.
But a lot of people need a lot more care,
at least when they come to see us. They usually
need a lot more care than that. Lou I think
(04:29):
you like to put it of. You know, you want
to take care of the plan when the house isn't
on fire, right, You don't want to be doing all
this like while everything is crumbling, the house is on
fire and the fire department showing up outside. And that's
unfortunately usually where we see families. More often than that.
Speaker 1 (04:43):
We love to use quips and quotes, and one of
my favorite ones, there's a tribute I think to John F. Kennedy,
which is the time to fix a leaky roof is
when the sun is shining. You don't want to have
to do this in a downpour. Yeah, you don't want
to do this when your house is on fire. No, no,
so getting out in front of it, and I see
you just grabbed your calculator and when I start talking
about costs for it, grab his calculator every time and
(05:05):
crunch his numbers every time. And this is math, folks,
This is not myth. This is math. And with math,
you say, Okay, if I need to be at my home,
in my home, and I need somebody there twenty four
to seven with me, I need companion care. But I
need more than that, I need people to help me
do all of my activities of daily living. And these
(05:25):
sounds somewhat grim, but bathing, dressing, toileting, continence, feeding yourself,
transferring from chair to bed. Those are activities of daily living.
There are i ad ls as well, But as you
age and when you need help, you are gauged by
these things. And if you need help with these things,
(05:48):
then twenty four hours a day and if you go
to a home health agency right now, you're going to
be paying somewhere in the thirty to thirty five dollars
an hour range.
Speaker 2 (05:56):
Yeah, so I was running thirty five an hour.
Speaker 1 (05:58):
Okay, some are forty now, but let's call it thirty
five times twenty four and how many days in a year?
Speaker 2 (06:03):
Right, So you got thirty five dollars an hour, twenty
four hours in the day. That's eight hundred and forty
dollars per day, per day, per day. Times it by
three hundred and sixty five days in the year, it's
three hundred six thousand, six hundred dollars. So if you
round down, it's three hundred thousand dollars.
Speaker 1 (06:20):
Yeah. And we have a friend of the firm, an advisor,
very very good financial advisor, whose grandmother is in this
situation right now. Yes, and they do have some resources
and they're paying. And he said, you know, eighteen to
twenty thousand dollars is what they're paying right now for care,
(06:40):
and the family is supplementing.
Speaker 2 (06:41):
Right, And that's I mean, he's downstate, so that's probably
on point with a nursing home average cost. But that's
slightly higher than I would say the average nursing costs
in this area that's usually between sixteen to seventeen generally,
So if they're at eighteen to twenty, it's a little
bit more than a nursing home here, but not crazily so, right,
So it's not it's not vastly cheaper, like you said, Lou,
(07:03):
and think that's the point.
Speaker 1 (07:04):
So figure two hundred thousand dollars just a round number
for the nursing home, Yeah, maybe a little more, yeah,
and maybe two fifty for home care if you need
intensive homecare twenty four to seven. Yeah, And where do
you find that money?
Speaker 2 (07:17):
Yeah? Most people don't have that just sitting in the bank.
And if they do, how many times can they do
that without it severely impacting their finances and what they
have and what they'll leave to their children, their grandchildren,
whoever it is that they want to provide for. And
it's not long.
Speaker 1 (07:32):
I'm going to open up the phone lines. You've got
Frank Hemig Lupiro here ready to answer your questions. The
phones are open and you can give us a call
at eight hundred talk WGY. That's eight hundred eighty two
five five nine four nine, eight hundred eighty two five
fifty nine forty nine. And we're going to unravel these
But I have a client I sat with yesterday and
(07:52):
I said, call me tomorrow on the show, because your
story is such a good one. And they're sitting there
and we're you know, they came into their own planning
and they had started their own planning with another attorney,
and they said, they're not getting their phone calls answered,
they're not getting documents, nothing has been done on their plan.
And then she says, and we use the same attorney
(08:13):
for my mom, oh, who just spent all of her
money down and has been waiting to get on Medicaid.
And they've been waiting to get this Medicaid application through
at DSS for over a year.
Speaker 2 (08:24):
I know what that's like.
Speaker 1 (08:25):
And in the meantime they have drained the resources and
so it's it was a situation. And I said, well,
here are the things that went wrong and the plan
that you that you had, and the and the attempts
that you had, and it was a holy cow. We
should have done this with someone who has the experience,
(08:47):
and you need to shop, folks. So we're going to
talk about how to shop for an elderly attorney. And
we're not the only ones in town that are good,
that have knowledge. We have a lot of experience in
this area. There are others, but we're happy to work
with every client that walks in our door. And people
ask us, well, what's an ideal client for you? And
for me, it's somebody who has the need for our
legal services. Whether you're rich or poor, if you need us,
(09:11):
you're a good client for us.
Speaker 2 (09:13):
Yeah. I sat with a very nice family yesterday and
they said, you know, they thought they were doing okay.
I would say they're doing better than okay, but they
said they were doing okay. And they said they've heard
from other people and I don't know who those other
people are, but they've heard from other people that you
need to have a certain amount of wealth or things
to warrant needing a trust. And I said, well, if
(09:34):
you walk in and say like you have your house,
even if it's really all that you have. If you
have if you have a desire to protect your house,
and you have enough to pay a legal fee, then
I think it's worthwhile to have a conversation about whether
you want to do some planning to try to protect
your house. Doesn't mean that you'll go for our recommendation, right.
We're there to spread the knowledge and give you counsel
(09:55):
and advice, and it's ultimately it's going to be up
to you. But I think it makes sense to at
least have the conversation.
Speaker 1 (10:00):
So again eight hundred eight two five, five, nine, four nine.
And I want to bust one of the myths that
comes out in an AARP survey. They do surveys every
couple of years, and a survey seniors, and I don't
know what the statistic is now, but about two years
ago they polled seniors and they asked seniors, well, if
you need long term care, how would you pay for it?
(10:24):
And what did sixty three percent of them say? Frank,
Medicare Medicare are not Aid. Medicare Medicaid don't confuse them
any people do. But Medicare and Medicaid came into the
law in nineteen sixty five. We've tracked that history on
this show. There was the fiftieth anniversary of Medicare and
we had the director of the Statewide Senior Action Coalition
(10:46):
on who was a historian, and went through the whole
Medicare Act and what it was supposed to do back
in nineteen sixty five, and what Medicare said according to
Lyndon Johnson, who was the president. If you're historical buff,
he was a press in nineteen sixty five, and he
called something called the Great Society Program, which said in
its preamble, never again will seniors in America have to
(11:09):
worry about healthcare? And what was the average life expectancy
in nineteen sixty five, sixty seven, sixty seven?
Speaker 2 (11:18):
Yeah, I was gonna say it was either sixty six
or sixty seven. So they designed a program to cover
people for two years. Yeah, which but very nice. But
it's significantly a little different now.
Speaker 1 (11:27):
And now you have people at ninety seven, yeah, thirty
years later having consumed healthcare. So the system for those
thirty years, the programs, folks, have not kept pace. They've
not been modernized. They've not looked at the dynamics and
the demographics and the aging statistics today, and we have
more and more baby boomers aging out ten thousand a day,
(11:52):
turning sixty five, and now the front edge of the
baby boom generation. You know, if you look at what
they consider baby boom generation, people born in nineteen forty eight,
that's the front edge of the wave. And they're now
aging into their set through their seventies and soon they'll
be in their eighties.
Speaker 2 (12:12):
And that's potentially going to be a problem.
Speaker 1 (12:14):
And when do people need long term care? The average
age of entry into long term care, into needing some
kind of help is about eighty three. So as boomers
start turning eighty three and they start becoming consumers, boomers
are still caregivers for their aging parents right now.
Speaker 2 (12:31):
Yeah, I don't see it a lot, but I do
see it. Oh, I see it quite often, where, oh,
this is my retirement. That's not what I signed up for.
Speaker 1 (12:40):
Taking care of my ninety five year old mother, my kids,
my grandkids, my dog, my kid's dog, and I'm taking
care of all of these people. It isn't something that,
if you're unprepared, is going to be a pleasant experience.
So let's talk about medicare, Frank, what does Medicare.
Speaker 2 (12:57):
Come generally, and this is not going to be an
exhaustive list, but generally, it's going to cover your hospital,
right if you need a hospitalization, that's your Medicare. It
can cover rehab after your hospitalization, so we talk a
lot about that, and then it can have a drug
or prescription component to it as well. And then there
are supplemental plans that you can buy, like with your
(13:19):
insurance company, to kind of bundle your services under Plan C.
I believe, but I'm not an expert when it comes
to that. But that's generally what it is. But as
I think the as what I hope is becoming more
obvious is I didn't mention home care, I didn't mention
assisted living, and I didn't mention nursing home and that's
on purpose, right, And.
Speaker 1 (13:37):
People get confused by the skilled care benefit. If you
have Medicare, Medicare will cover something if you go into
a hospital and you're admitted to the hospital for three
days and you go into rehabilitation. There is a small
benefit that's very misunderstood, the rehabilitation skilled nursing benefit, which
(13:58):
applies if you qualify and how many days.
Speaker 2 (14:02):
So you get the first twenty days paid in full,
so you don't rack up any bills for those first
twenty days. If you make it to day twenty one,
then you're entitled to from day twenty one up to
day one hundred, so in additional eighty days, where then
you are required to pay a copay, which I think
is about two hundred and nine dollars a day these days,
going up every Yeah, it's just above two hundred dollars
(14:24):
if I'm remembering correctly, But it's only if you qualify
for those one hundred days. You're not entitled to the
hundred days. If you don't continue progress, then they keep
authorizing your rehab.
Speaker 1 (14:33):
And the government keeps changing the way they assess people
through that rehabilitation process. And there was a federal lawsuit
at class action Lawsuits several years ago that challenged this
one when all the way to the US Supreme Court
that told hospitals that they had to change nursing homes,
that they had to change the way they assessed people
because they had They said you had to keep improving
(14:56):
in order to qualify. The standard was an improvement standard,
which was never in the law, but that's how it
was being interpreted. And they were told not to do that,
but guess what they're still doing.
Speaker 2 (15:06):
Yeah, I still hear that. Yeah.
Speaker 1 (15:07):
So a week into your stay, you're gonna have a
team meeting with the care provider and they're gonna say, well,
you know, she's getting better and we think another week
of rehabilitation is what we're gonna look at. So what
are your plans? And this is when it kind of
hits you. So they have a forty eight hour notice requirement,
so they have to give you at least forty eight
hours before they terminate you from Medicare. But okay, we're
(15:29):
now paying this two hundred and fifty dollars. Well, I'm
low this daily benefit of four hundred dollars a day
to pay the nursing home. You're going to private pay that.
Now you're going to have to write a check for
eighteen thousand dollars for a deposit and then another eighteen
thousand for the first month. So get ready to write
a thirty six thousand dollars check in forty eight hours.
(15:51):
And they say, oh my god, I need a lawyer.
Speaker 2 (15:53):
Yeah, I can't afford that.
Speaker 1 (15:54):
And with that you may need a lawyer. We're gonna
take a short break and come back and talk about Medicare, Medicaid,
the transition. What does medicaid cover and it's a lot.
Why do I care? Because it's the only program that's
going to pull you out of that fire when your
house is burning. So stay with us. You're listening to
Life Happens Radio here on Talk Radio WGY. We'll be
(16:15):
right back. Welcome back, Life Happens. I'm Lupiro in studio
with Frank Hemming. We're talking about healthcare, planning for healthcare,
and it takes planning, folks. This is not a gimme,
This is not an automatic. If you pay attention to
what's going on in Washington, DC, you'll know that the
government shut down because of healthcare premiums, and the Democrats
(16:37):
held out trying to get the subsidies for Obamacare coverage.
This is health coverage now, not long term care coverage,
basic health coverage, and that's an open issue. Those are
going to expire, and when they expire, the cost of
health care for Americans is going to go up dramatically.
The estimate that I heard from the Kaiser Foundation is
that seventeen million people will not be able to afford
(16:57):
their healthcare coverage, and that leads to a domino effect.
Where do those seventeen million people go If they don't
have any healthcare coverage, they go to Medicaid, They go
to an emergency room because they don't have any primary
care in the in the er and if you've been
to an ear and I have in the last few months,
I actually went through an er personally, not with a
(17:18):
family member, I've done that too, but personally, it's nowhere
you want to be. You're I'm in a gurney in
the hallway and you know, nobody's talking to you because
there's nobody. They're short of status.
Speaker 2 (17:28):
The one that there's no one there too, nobody's.
Speaker 1 (17:30):
So if it's on a Saturday or Sunday, forget it. Yeah,
you're you're just kind of out in the hallway wondering
where am I going to go next? Right? Where am
I going to be? And so er becomes the primary
care for a lot of people, and as this trickle
down happens, that's going to be the case. So Medicaid
is a program that a lot of people are going
to need, and Medicaid, frank is a rich program in
New York State.
Speaker 2 (17:50):
Still, Yeah, it's I still think I'm still surprised a
bit to see the surprise on clients' faces when we
talk to them about our long term or our home
care program, our nursing home program, and our limited assisted
living program and just say those doors can all be
open to you if you plan correctly, or if you
just don't have an asset issue, but many people do
(18:13):
or an income issue, right or an income issue, and
that's why people want to plan.
Speaker 1 (18:16):
So when you look at Medicaid, it also applies to
people not just for long term care, but for basic
health benefits. Yeah, and it covers doctors, yep. It covers hospitals,
it covers optical, it covers dental. All of these things
are covered under the Medicaid program. And philosophically, there is
(18:38):
a group of people and there has been throughout the
last thirty forty years since I've been dealing with long
term care, that think Medicaid for All is a program
that they should just combine Medicare Medicaid cover all the
benefits in one program. We had an assemblyman here in
New York State, Richard Godfried, who for twenty six years
was an advocate of that and tried to steer in
(19:00):
New York State towards Medicaid for all. It did not
work for a variety of reasons. We won't go political.
But right now we don't have medicaid for all. We
have Medicaid for those who qualify. Right so we're going
to take on the myth busting. And again, if you
have a question on Medicare Medicaid planning, we're going to
get into trust planning. Two different types of trusts, Asset protection,
(19:22):
income protection. Give us a call eight hundred eighty two
five five nine four nine. That's eight hundred talk WG.
Why And I'm going to ask you a question, Frank,
and have you fill in the blanks. Okay, I was
told that I don't qualify for Medicaid because because I
have too much money? Okay, yeah, So what does it
(19:45):
mean to have too much money? And how do you
fix that? And when we talk about money, it is
income and assets. Sure, so you have to look at both.
And when we do, we do a very thorough comprehensive
evaluation of our clients income sources. They are current assets.
And we put a picture together and I draw a picture,
and many of us draw a picture, or we do
(20:07):
a float chart, and we put all the assets for
that particular client on that float chart. We put their
income on that float chart, and we show how the
money flows. So let's start with assets, okay, And what
do you get to keep if you want to qualify
for medicaid.
Speaker 2 (20:25):
If you're a single person, because that's just easier. I
know that number better. If you're a single person and
you want to qualify for medicaid, your asset limit is
thirty two, three hundred and ninety six dollars, So not
a lot of money, but I feel like I always
say it, Listen, it's a lot more than most places.
Most places it's two thousand dollars. California zero because they
(20:46):
got away with their asset tests, but they're the only
state that has, to my knowledge, So you can have
thirty two thousand. I usually just say thirty because it's
easier for people to remember. So essentially, you can have
thirty grand or lesson accountable things and not everything. And
that's partially why I think there are myths associated with
whether I have too much money or not, because a
lot of things that people think count may not count.
Speaker 1 (21:07):
And the answers you get depends on who you ask
the question to yes, are you going to the county
Department of Social Services and asking them how you can
qualify for Medicaid? And what's going to be their answer? Frank,
I'm not a lawyer. Go talk to somebody who is,
or worse yet, or just you. You know you have
too much your We would deny you spend down all
(21:29):
of your assets, yes, because you have too much. Spend
it all down to thirty two three and sixty dollars.
Speaker 2 (21:35):
Yeah, come back and then we'll process your paper and
we'll get you on Medicaid.
Speaker 1 (21:39):
Okay. So if you're on medicaid home care and you
spend down all your money to thirty two thousand dollars
and you need to fix the roof or you need
to you know, you know, you're still going to doctors
and still able to use a car. You need to
get a car, or you need basic living expenses. You
got to pay for heat and other things. How do
you deal with that? How do you put together a
plan that lets you live with a total asset base,
(22:01):
a total nest egg of thirty two thousand dollars. It's
not easy.
Speaker 2 (22:05):
You're easy, yeah, that's for sure.
Speaker 1 (22:06):
And we've had clients that have called us on this show,
and remember you can call us today at eight hundred
and eight, two five, five, nine, four nine. We've had
clients call us up and say, well, I went to
the DSS office and they said, okay, you have to
liquidate your iras. You're rough iras. You have to spend
all that money down to thirty two thousand dollars and
then you can qualify. Was that good advice, Frank?
Speaker 2 (22:27):
No, so we're let's let's bust the other myth. Right,
A myth is that you can only have thirty two
thousand of everything, So let's bust that myth. You can
have thirty two thousand irrespective of a balance in an
IRA or at a retirement account, as long as it's
in payment status meaning you're taking or required distributions. So
that happens automatically at seventy three, and if you need
(22:48):
help before seventy three, we start them early, so your
IRA is exempt, you don't have to spend it down.
Speaker 1 (22:53):
You could have a million dollars in an IRA. We've
had a case like that and qualify for midikaid yep. Now,
as Frank said, in order to get the IRA in
a non countable status. You have to draw on it,
and you have to draw, depending upon the county, a
certain amount of money each month or each year. Yes,
and that gets counted in your budget. And then you
(23:14):
have to account for the income. So what you take
out is becomes income. But that million dollar asset doesn't count,
doesn't count, and you are Medicaid eligible immediately. And I've
had clients come in and say, well, I was told
this that No, you're eligible today. You can apply right now. Yeah,
it's great for Medicaid. And when we come back after
(23:36):
the break, we're gonna have a short break for the news,
we're going to talk about that income. I was told
that I can't qualify for Medicaid home care because I
have too much income. And why is that true? And
how can you plan around that? And the client that
I met with yesterday, that was the situation. They had
(23:57):
too much income. But there's a solution for that.
Speaker 2 (24:00):
It's an easy solution for that.
Speaker 1 (24:01):
And you're gonna have to wait about three minutes to
get that solution. We're gonna come back after the news
and tackle this one more time. Healthcare, long term care, Medicare, Medicaid,
What are the myths stay with us, and we're back.
So I'm going to take a breath here and talk
about an upcoming seminar that we have, and this has
(24:23):
been a very good seminar for our clients. It is
our Trust Administration Workshop. We do a lot of education, Frank,
and you're you're part of that.
Speaker 2 (24:32):
Yeah.
Speaker 1 (24:32):
So before I talk about the Trust Administration Workshop, talk
about something that's become kind of a staple in New
York State in terms of Medicaid and Medicaid education. We
call it Medicaid Monday. Yeah, and we do Medicaid Mondays
the second Monday of every.
Speaker 2 (24:51):
Month, barring holiday, but yes, barring a holiday.
Speaker 1 (24:53):
Sometimes it rolls over a week, yes, But when we
do it, we cover topics that are timely, topic relevant.
It's a crisp thirty minute presentation. Frank does a good
portion of these. I do some, my partner Aaron does some,
and we have guests from all of the different areas
that are affected by Medicaid or that impact Medicaid. And
(25:16):
you've been doing this and how long now, Frank?
Speaker 2 (25:19):
The Medicaid Mondays we've been doing for I think this
was our third full year if I'm remembering correctly, and
we used to do it. We used to do it
as like a month long thing in March. We had
Medicaid Mondays in March, and we do them for four
straight weeks in March, and then we got such good
feedback and kind of so much momentum behind them, we
(25:39):
decided to spin them out into a rather the four
times a year, once a month kind of thing, to
a once a month, all year long kind of thing.
So now we've been doing one every month, I think
for the last three years. And we talk about all
the things that we're kind of talking about today. We
do some basic stuff where it's just this is intro
level stuff. This is what Medicaid is. This is how
(26:00):
you qualify up to very advanced things like promisory note plans,
how to get adequately assessed when you're getting through the
assessment process after you've been approved for Medicaid home care.
And sometimes it's us, sometimes it's guests, sometimes it's both.
Speaker 1 (26:16):
Well, the Medicaid Asset Protection Trust is one of them. Yeah,
you know, laying out how the trust works because there's
so many misconceptions about how it trust works, and in particular,
a trust that you're going to use to protect your assets,
and when we lay it out in a fashion with
the flow chart, all of those myths just fade away.
Speaker 2 (26:35):
As long as we're doing our job properly.
Speaker 1 (26:36):
I agree, And people said, well, if I knew all
of this, i'd done this ten years ago. Because this
is so flexible and I have so much more control
than people told me. We'll get more into the trust
in a minute.
Speaker 2 (26:47):
Yeah.
Speaker 1 (26:47):
But the other one is we have a whole session
on pooled income trusts.
Speaker 2 (26:51):
We do, and we've had We've had our good friends
Sarah from NICSARC come and join us the same time,
so so sometimes it's not even having you take our
word for it. Sometimes we have a representative from one
of the biggest pool trusts in the state that stare
with us to talk about how they do things.
Speaker 1 (27:07):
And we've had Valerie Bogart on when the rules change
for Medicaid home care. We had Becky Prevy from the
New York State Area Association on Aging, the director of that,
talking about all of the aging programs that are available
through the state and the counties. So it is a
rich program. And there is a library on our website
of all of our past shows. So if you have
(27:28):
questions on Medicaid that are deeper than what we can
cover here on the radio. You want to see exactly
how a Medicaid trust works. You want to see how
a pool trust works. You want to see how Medicaid
homecare in the new assessment rules work. We cover those
in depth. To get Medicaid home care, you have to
go through an assessment process. How do you qualify medically
and we'll talk about that in a minute as well,
(27:48):
but financially, we cover it pretty well throughout this series.
Then you can get that at pyro law dot com.
Go to the videos and you can see all the
prior Medicaid Monday sessions. The other workshop that I want
to just mention is our Trust Administration Workshop, and we
have designed this to capture all of the questions that
come up from clients that have done trusts with us
(28:10):
and want to know how to file a tax return,
how to do the administration, Do I need to do
an accounting, how do I make distributions? How do I
terminate a trust? So we cover all of that in
the Trust Administration Workshop. It's ninety minutes. We have CPA
with us, and the CPA is going to be Gretchen
Gunther from teil Beecker and sheermante a local firm, very
good local firm, CPA firm. And this is January twentieth.
(28:32):
So if you want to learn about trust and what
I designed this because I got tired of answering all
the finds questions we would get in undated. No I
signed my trust, What do we do here? What do
I do there? I said, Okay, let's just do a
workshop every quarter for those people who have trusts and
we'll cover all of the details on trust administration in
one setting. And then people started to come just to
(28:55):
learn about trusts who didn't have one, because I want
to know what's on inside the trees trust sure before
I take it on. So if you want to learn
what a trust is, how it works, what it does,
why it works, come January twentieth. It's at twelve noon,
twelve to one thirty. It's at the Capital Region Chamber
of Commerce and we would love to have you join us.
(29:17):
You can sign up on our website at piolaw dot com.
Events and again the twentieth of January. It's a little
ways away, but mark it down on your calendar twelve
to one thirty we cover trusts, we cover the administrative issues,
we cover tax issues. And I'm just gonna throw this
out there again. January twentieth, twelve to one thirty sign
(29:38):
up on peierlaw dot com. We're walking out of or
walking into the studio this morning, and of course our
good friend Dave Kopik is on right before us, and
Dave pulls me aside in the hallway and says, you
gotta answer this question. I'm getting peppered by clients. There
must have been something published somewhere.
Speaker 2 (29:54):
That are they just somebody found, you know, the regulation
that I think they're referring to from.
Speaker 1 (29:59):
It and a big brewha two and a half years
ago when the revenue ruling came out and it said
if you have a grandeur trust, that does not automatically
qualify the assets in the trust for a step up
in basis. Now, to make that meaningful, we have to
(30:19):
explain what basis is. So, when you buy your home
or stock or any other capital asset that has appreciation,
if you sell it during your lifetime, you pay capital
gains on the difference between what you bought it for
and what you sell it for. With your primary residence,
you have exemptions from capital gains tax of two hundred
(30:40):
and fifty thousand dollars and if you're married couple, five
hundred thousand dollars, so you can exempt capital gains up
to that amount. And when you put it in this
particular trust that we design, the trust benefits from that
as well. But when you die owning those assets through
a trust and the trust then passes them on to
your heirs, your heirs get a new cost basis in
(31:01):
the assets. It steps up. So if you bought your
house for two hundred thousand dollars fifty years ago and
it's now worth five hundred thousand dollars, when the kids
inherit it, their new cost basis is five hundred thousand
dollars and they can sell it and pay zero capital
gains tax. And there are people out there saying that
you don't get a step up in basis if you
(31:22):
have it in an irrevocable trust, which is false. The
tax code sections, and if you want to know what
they are, it's internal Revenue Code sections twenty thirty six
and twenty thirty eight. The tax code sections say that
if an asset is included in your estate for tax purposes,
and those two sections hook these trusts into your estate.
(31:45):
Under section ten fourteen E you get a step up
in basis automatically, and nothing changed. None of that changed.
All they said is if you don't have any of
the provisions covered by twenty thirty six or twenty thirty eight,
and all you have is a grant or trust, that
you don't qualify for the step up in basis. So
it's scared people, and we got a ton of questions
(32:05):
and we answer them at the Trusted Men Workshop. But
for those of you who have trust and you're hearing
this rumor out there that you don't get a step
up in basis from a trust drafted properly with income
interests for you, with the power of appointment for you,
the things that we put in our trust that you keep.
You're hearing myths, you're hearing falsehoods. So be assured, rest
(32:28):
assured that you will get a step up in basis
from that trust. You can put your house, in your stocks,
in any appreciated assets in your business, and your heirs,
your beneficiaries will benefit from that step up in basis.
And if you want to learn more in depth, come
to the Trusted Men Workshop.
Speaker 2 (32:44):
On January twentieth, and U, Lou, I'm going to give you.
I'm going to give you some credit. That's that's meed.
So we actually have a statement in our trusts that
says that things in the trust are set up specifically
to pass through your estate and to receive a step
up in basis. And that's there because Lou personally added
(33:04):
it to our trust document. So what so what we're
going to say, So when that rate came out, all
we have to do is like literally point to the
sentence and the trust that says that, and that kind
of clears it up pretty pretty clearly for for people
that have done our trusts.
Speaker 1 (33:18):
Yeah, so let's get back to the income question because
that's where we left off in the first half of
the show. And again, give us a call. We're waiting,
give us a call. Pick up that phone. Eight hundred
eight two five five nine four nine. It's eight hundred
talk WGY. And when you have income and you go
to somebody and say, listen, I want to apply for medicaid. Oh,
you have five thousand a month of income. You're only
(33:39):
allowed how much.
Speaker 2 (33:40):
Rank eighteen or eighteen hundred twenty dollars hundred and twenty dollars.
Speaker 1 (33:45):
You have more than that, you don't qualify for Medicaid.
Speaker 2 (33:47):
See, but I don't. I really struggle with that, I
really really do. I'm not just fighting this for them.
I'm not. I'm saying I don't. I'm not just saying
this for the radio. Like I honestly really struggle with that,
because there is a spend down program, right if you
have more than eighteen hundred and twenty dollars, they could
just say you have a spend down and you must
pay it to us. They should not, at least in
(34:09):
my opinion, be issuing a denial because you have too
much income. They should just be budgeting you with a
spend down. And I don't know if maybe that's county
specific of how they do that or not, because luckily
we never really run into this issue because of the
planning that we're going to talk about of how you
deal with excess income. But in my mind, the only
way that you should get denied for Medicaid if you
(34:31):
have income above an allowance is if you have enough
income to pay for all of your care. Right, So
let's flip it on its head for just a second.
If you're in a nursing home and the nursing home
cost is sixteen thousand dollars. Well, if your income is
seventeen thousand dollars, then you shouldn't need to qualify for Medicaid.
(34:51):
You're ineligible because you don't need Medicaid to pay for
your nursing home because you can pay for it. You
shouldn't be asking the government for entitlements when you can
pay for it. Barring that scenario where your income can
pay for your care, I don't see how you can
have too much income to pay for Medicaid or to
be eligible for Medicaid.
Speaker 1 (35:10):
Right, But there is a more elegant and beneficial solution. Yes,
that is a pooled income trust. Yes, so regardless, as
Frank I said, regardless of your income, you should qualify
for Medicaid either at home or in a nursing home,
because they should tell you that. Well, you need to
(35:30):
pay for the first part of your care, and then
you can keep eighteen hundred and twenty dollars and Medicaid
will pick up the balance.
Speaker 2 (35:39):
If you're home.
Speaker 1 (35:39):
If you're at home, yes, but typically we don't make
people pay the providers. You know how to check.
Speaker 2 (35:48):
No, the only time we ever recommend that you pay
anybody is if it's so small, it's so small of
an amount it's not worth saving. Or if you have
a five dollars spend down, then we're going to tell
you write a five dollars check to the care. That's
not going to hurt too bad. But that's so rare
that we see such a small gap between the allowance
and the person's income, it hardly ever happens. So instead
(36:09):
we used a trust. We just use a different type
of trust.
Speaker 1 (36:12):
And this is a carve out in New York State,
and a lot of things were carved out twenty to
thirty years ago by litigators in I was one that
litigated these cases to get the state and back them
off and to get the ability to use a pooled
income trust for people who are not truly disabled, but
they have to meet a certain definition. They have a
(36:33):
chronic illness, yes, and even if they're over sixty five, Yes,
you're able to do this because there is no rule
that prevents you from transferring income.
Speaker 2 (36:42):
Right.
Speaker 1 (36:43):
So just briefly, we have a caller on the line,
we're going to take that. But briefly, just go through
the mechanics of a pooled Income Trust.
Speaker 2 (36:48):
So essentially, it's so, let's say you have twenty eight
hundred dollars of income. Right, Let's say your allowance is
eighteen hundreds. You have one thousand dollars too much. Well,
when you get the medicaid approval, they should say you
have a spend down for a thousand none because you
make too much money. You make too much income by
one thousand dollars. Every month, we set up this pool
trust account with a charity that runs a pool trust.
(37:09):
Every month, you send them the thousand dollars overage. They
put in an account that's associated with your loved one
or with yourself, and then you can then send bills
invoices things you want the pool trust you pay using
your money on your behalf. And if you kind of
put all those pieces together, we've preserved your income because
it's sitting in your pool trust account where you still
(37:29):
have full access to it. You still have full ability
to direct how it's used, and you don't have to
pay it to medicate it.
Speaker 1 (37:34):
And you can get creative on how you spend the
money in the pool trust. You can hire children under
a caregiver agreement if you have a written agreement, which
we do for clients exactly right a lot of ways,
and we've had a lot of money flow through Pool
Trust on a monthly basis, and we've been able to
put new roofs on homes and new kitchens and homes
and spend money provided you have the right to do so,
and we design it specifically for that. Exactly so we
(37:56):
have Peter and Nisky, you know, with a call, Good morning, Peter, Welcome,
life happens.
Speaker 3 (38:01):
Good morning, gentlemen, thanks for taking my call. I've got
a question regarding irrevocable trust These are the the trustee
if you could speak to what? What? What are the
duties and responsibilities of a trustee? Do they have to
fill out these disclosure forms? Is there such a thing
(38:24):
as an institutional trustee? Can I as owner, I guess
it's grant or be the trustee, et cetera. Let's just speak, okay.
Speaker 1 (38:32):
So it's great questions and we hope you can joined
us on January twentieth our trust administration. These are all
the issues that I may dig into in depth, and
I'll cover them quickly. Here. We do not advise our
clients to be their own trustee of a Medicaid Asset
Protection Trust, which is an irrevocable trust. We believe that
that gives you too much control over the trust, and
(38:53):
that Medicaid will look at the trust as still available
to you because you're still in control of it.
Speaker 3 (38:59):
So excuse me. This has got nothing to do with Medicare, though.
This is a trust that's being set up into which
I'm going to put a life insurance policy.
Speaker 1 (39:07):
Okay, all right, so again for tax purposes? And what's
the purpose of the trust? Let me ask that. Is
it for tax reasons or just administrative reasons.
Speaker 3 (39:20):
It's a term life insurance policy that is being created
on a family member and we're putting that into trust
to protect it from predator's creditors, et cetera.
Speaker 1 (39:32):
Okay, so you're not the insured, no, So you can
be the trustee. That's that's okay.
Speaker 3 (39:40):
I'm gonna I'm gonna pay.
Speaker 4 (39:41):
I'm gonna pay for it, and I I.
Speaker 3 (39:42):
Okay, I can be the trustee then, okay, and you.
Speaker 1 (39:45):
Would have you have to have ways to get money
into a trust if you're gifting it in, and we can.
There's something we call a demand power or crummey demand
right that we build into a trust that allows you
to do that on a tax free basis, and you
can gift to pay. I think on how many beneficiaries
there are on the trust. You can give nineteen thousand
dollars for every beneficiary into that trust and not have
(40:08):
to file a gift tax return. So we structure it
for for all those purposes, very flexible. You can be
the trustee. Who are the ultimate beneficiaries?
Speaker 3 (40:18):
My grandchildren there's two.
Speaker 1 (40:19):
Of them, okay, so and.
Speaker 3 (40:22):
They're they're miners, and I'm this is going to be
on their mother's life. So should something happen to her
before they reach majority, then there would be a trustee,
as I understand it, who would perfect act in their
behalf perfect.
Speaker 1 (40:37):
So you can be the initial trustee, that's not a problem.
You want to make sure that you have success or
trustees behind you because this you know, your daughter's younger
than you, and your grandchildren are younger than her, so
we want to make sure that we have a succession
of trustees. There is an institutional trustee that you can
have banks, trust companies, and in fact, one of the
(40:57):
speakers at our program on January twenty is a representative
of trust Co and he talks about corporate trustees and
fiduciaries and what Trustco is one of the local institutions
that provides that service. So that's covered a possibility. We
work with professional trustees all the time, different banks and
trust companies that will fill this role. But what you're
(41:19):
doing is great. The trust can be very flexible. You
can have a lot of control over it because the
insurance policy is not on your life, and it can
be there for your grandkids if and when something unfortunate happens. Correct,
So all doable, all very possible, and under those circumstances,
(41:42):
it's what we call a third party trust. You're creating
it for the benefit of the grand kids. Very very
flexible drafting that.
Speaker 2 (41:49):
We can do in that case.
Speaker 3 (41:52):
I'll see in January twentieth.
Speaker 1 (41:53):
Thank you very much, gentlemen, appreciate the call we have
Brian and east Greenbush.
Speaker 4 (41:58):
Good morning, Brian, oh, good morning, thanks for taking my
call our pleasure. A question on that step up and
basis and the air revocable trust. Yes, I what about
an annuity that's in an air vocable trust?
Speaker 1 (42:15):
Okay, so you have to look at asset classes and
this is why we do our very detailed deep dive
into clients' assets. Annuities are insurance products. They are in
an insurance wrapper. And when you I'm assuming this is
a non qualified annuity. Yeah, it's not from retirement funds
(42:37):
pre tax dollars. You had an IRA, you rolled it
into a tax qualified annuity, money that you put into
an investment. It's in the annuity contract. Inside of an annuity,
you get tax deferral, so there is no tax being
paid on income inside that annuity. And because of that,
(42:59):
when the annuity out there are income taxes. It's ordinary income.
It's not capital gain. So step up annuities, whether they're
in trust or out of trust, do not get a
step up in basis. Oh well yeah, so you have to.
Speaker 4 (43:20):
Be aware of those tax codes don't apply.
Speaker 1 (43:23):
They do not apply. It's called income in respect of
a decedent or ird. So if you pull it out
during your lifetime, you have a cost basis in that
annuity what you paid for it. But all of the
gain and the annuity, whether it's gain or income, dividends, interest,
all of that is income within the annuity contract. If
(43:45):
you cash the annuity, you pay income tax on it.
When your beneficiaries receive the annuity, they pay income tax
on it, so they get a ten ninety nine if
they liquidate the annuity for all of that increased value.
Speaker 4 (44:00):
Oh so that's that's not good.
Speaker 1 (44:04):
It's not a good result, but it is. You have
to be aware when you buy the annuity and what's
the purpose of the annuity. It could have been life insurance. Right.
Life insurance pays out without any income tax. So if
his true life insurance policy, it can grow and build
and the death benefit is full of income. Tax free
(44:25):
annuity has tax advantages during lifetime. You get a lot
of energy from tax free growth within the annuity. But
it isn't really tax free. It's tax deferred, and that's
why they call it tax deferred.
Speaker 4 (44:35):
A new even though it's in the trust, irrevocable trust.
Speaker 1 (44:39):
Yeah, the trust doesn't doesn't help you there. It's it's
not going to give you a change in the character
of the income from the annuity. Sorry to bring the
bad news.
Speaker 4 (44:54):
There's nothing, okay, I mean, if I come to that
seminar in the twentieth there's no other options or nothing.
Speaker 1 (45:00):
I'd be happy to sit down with you and answer
your specific questions on that at any time, and we
do offer if you want to come in. We do
offer a free consultation. If you want to come in
and talk about your planning and how you can put
all of this together, we'd be happy to sit down
with you.
Speaker 4 (45:15):
All right, Thank you, and have a nice Thanksgiving.
Speaker 1 (45:17):
All right, you two happy Thanksgiving. We got to take
one more short break and then we're gonna come back
and close it out with the last myths of Medicaid.
Stay with us, We'll be right back. We're back. I'm Lupiro.
Frank Heming live in studio. We have time for one
more caller before we close out. We have Bob in Greenfield. Bob,
thanks for hanging on staying with us. Now you're gone,
(45:38):
all right, Bob, if you want to call back, we
will take your call. Frank, we have some other myths.
We've talked about the asset myth. Yeah, we talked about iras.
What are some of the other exempt assets that people
are told? Well, you know, if you have fifty thousand dollars,
you got to spend eighteen on your care. Are there
other ways to spend down? Sure, let's let's keep the
(46:02):
good vibes going. You can pay for your funerals. Yeah,
I love this.
Speaker 2 (46:05):
I say, you could pay for your funeral, so they
exempt any amount in an irrevocable burial agreement, so you
can do your pre planning for your funeral, which we
do advise clients if they haven't done that, because you're
going to need to pay for that at some point.
And not just you or yeah, it's you, your spouse,
your kids in laws are my favorite one for that class.
Speaker 1 (46:24):
Oh yeah, Christmas is coming, folks. So if you want
to send a message and you need to do a
spend down for Medicaid purposes and you want to shelter
some assets.
Speaker 2 (46:32):
Buy your son in law a funeral. Yeah, and it
just tell it's for planning purposes. Since it's don't read
more into that. It's just we got advice from an
elder law attornty. We're just trying to plan for our care,
that's all.
Speaker 1 (46:44):
You're the only one. We're buying it for nothing.
Speaker 2 (46:47):
Meant there, But what are some of the other apps
you can have a car regardless of its value. You
love this, I do because we've used it a few times.
Like I once had a lady that I think she
was like thirty grand over they allowance, and son said, well, well,
you know, even though she needs a nursing home, she's mobile.
She wants to go to lunch, and the nursing home
she's in, we'll let her go to lunch and do things.
And I always use her car to take her around.
(47:10):
And I said, well, can you buy mom and new car?
And that's what he did. He went and he bought
mom and a new car, and she could look at
it out her window. So I was joking, say, you
can have a Ferrari because it doesn't matter what kind
of car you have, right.
Speaker 1 (47:22):
But you just need a driver. Yes, but in order
to have a driver, she had to have a car.
Speaker 2 (47:26):
Yeah, exactly. So you can have a car regardless of
his value. So sometimes we spend that on that. If
you have a home, if it's a home care situation,
you can always spend on home repairs and things, because
sometimes you need to make home improvements for you to
age in your house. Right, So we use that one
a lot. Sometimes there's an operator this is what This
one's a little more rare, but sometimes there's an operating
(47:46):
business that you have, So sometimes you need to funnel
more money into the business to have that continue to
operate while you're receiving your care. You know, sometimes people,
I think mistakenly think that just because you're on Medicaid
means that you're old in free and don't have the
ability to do things. Sometimes we work with young people
who need Medicaid because they're physically disabled. They're otherwise very
(48:07):
very well rounded. They have very regular lives, they lead
regular jobs, and they do all kinds of things. They
even run businesses. So we have used that one too.
Speaker 1 (48:15):
I want to close out in our last three minutes
with another situation. Well, my mom just went into a
nursing home. She has three hundred thousand dollars of assets.
There's a five year look back. I was told there's
absolutely nothing I can do. I just have to spend
the three hundred thousand dollars down to thirty two thousand.
As we talked about, yep, is that true.
Speaker 2 (48:34):
It's not. We don't have enough time to go into
the nitty gritty of this. But essentially, we have a
tool in our toolbox called a promissory note plan, or
a rule haves or a half a lope. There's lots
of names, but essentially we can save about half generally
of what you have if you've done no previous planning
and you come in and you do what we tell
you to do. So, if we had that situation, roughly
(48:56):
three hundred thousand, we're probably going to save in the
neighborhood of one hundred and fifty one hundred and seventy
thousand dollars, probably out of there, depending on some other factors.
But there is a lot more you can do than nothing.
Speaker 1 (49:07):
Even if people are already in the nursing No. Yeah,
we've had families come in and say, well, you know,
I consulted with an elderly attorney and they told me
I had nothing at five years to wait. There's nothing
else I could do. We've spent one hundred thousand, we
have two hundred thousand left. Can I do anything even now?
Speaker 2 (49:24):
Yeah, you can always start doing the promisory NOE plan.
It's really just a matter of is there enough money
still available to make it worthwhile. You know, if you
had seven hundred thousand, you're down to fifty thousand, then
you come in it's too late, we can't get the
money back. But if you had seven hundred, you still
have five hundred. We have plenty of room to help
you with something like that, all right.
Speaker 1 (49:43):
So stay with us. Check out our website. We have
seminars coming up, the Trust Administration Workshop. I would highly
encourage you to attend. It goes into all of the details,
tax and otherwise about trusts, Medicaid, revocable trusts, irrevocable trusts,
my favorite beneficiary controlled trust. Patty and I talked about
these last week. How to leave an inheritance properly to
(50:05):
your children. All of that is covered in the Trusted
Men Workshop. Join us for Medicaid Mondays every Monday, not
every Monday, the second Monday typically of the month. And
this time looking at the dates, Frank, could you just
verify the date? It says December eighth, and then again
it says December seventh, So which one is it?
Speaker 2 (50:25):
It should be? Hold on the eighth, should be yeah,
I believe that's yeah. It should be the.
Speaker 1 (50:30):
Eighth, December eighth, from noon to twelve thirty pm. It'll
be Frank, Aaron, myself, we'll all be there to unravel
this year's Medicaid mysteries. Stay with us. Hope to see
you back next week
Good morning everyone, Welcome to Life Happens Radio. I'm Lou Piro,
your host for this morning here on a rather gloomy
Saturday morning in the Capital region. Supposed to get better
as we go along. I saw the sun popping up
somewhere along my weather map on the Weather Channel. But
for today, hopefully you'll buckle in with us over the
next hour, and we're going to talk about a topic
(00:21):
that we talk about fairly frequently here on Life Happens,
and that is healthcare, and more specifically long term care.
As we look at our planning, as we look at
the things we do to get ready for our clients'
lives and their retirements, we prepare plans that look at
all of the different needs that they have. And the
(00:41):
name of the show is Life Happens. Are you prepared?
So what is life happening? It happens all around us
and in our office we sit with families every day
and we talk to them about the situations that they
find themselves in. Some say, well, I should have done
something sooner, and others say I never expected that. And
(01:04):
whichever camp you fall into, you want to be prepared.
You want to be sitting with an experienced team of experts,
an experienced team which includes an elder law attorney, and
I happen to be sitting with one right now, and
his name is Frank. Hemen, good morning, Frank, Hei Lou
(01:25):
And Frank is a partner at pier O'Connor and Strauss
as am I and that's the law firm that brings
you this show. And Medicaid is a part of our
practice that we have been doing for thirty plus years,
almost thirty five years, and it's a part of our
practice that the depth of knowledge just increases because law
(01:47):
changes almost every year, sometimes two or three times a year.
The rules change and you have to keep up with it.
So today we're going to unravel Medicare, which has basic
health insurance for people sixty five and over. Medicaid the
program that covers long term care, but has a means
(02:07):
testing to it, which is a financial qualification insurance to
cover these areas health insurance. And if you think your
health insurance is covering long term care, that is a
fallacy and a myth. And we're going to try to
bust the myths here today on Life Happens, and there
is a long term care insurance which is very hard
to find these days, which is a product that does
(02:29):
cover long term care. So whether you're thirty, fifty, seventy ninety,
or one hundred and three like my aunt Initty, you
need to be thinking about these things, and you need
to be thinking about what if life happens to me
and I find myself in that situation, do I have
a plan? And if you're thirty, this planning can be
(02:50):
very easy because you can buy insurance policies that are
life insurance based. They're very affordable. You start paying and
it's a guaranteed premium every year, it's the same premium
they don't jack premium is on life insurance. It's the
same premium and you get double coverage. So if you're
thirty and you have kids, you can buy an insurance
policy that'll both cover their college education and if you
(03:13):
ever need long term care, you can use that policy
later in life to pay for your long term care.
So this planning starts should start can start very early.
And we used to share this show with New York
Long Term Care Brokers which is now Advisors Insurance Brokers.
And when we started that fourteen plus years ago, Brian
Johnson was one of the people on the show, and
(03:34):
Brian wasn't even thirty and he had a very comprehensive
long term care insurance policy that he's been paying on
that has just kept pace because it has an inflation
protection on it. And when you buy at that age,
by the time you're sixty five, seventy five, eighty five,
ninety five, the amount of coverage that you have is
keeping pace with the needs and the cost. And Frank,
(03:58):
let's unravel these costs little bit because a lot of
people think, oh, you know, nursing homes are so expensive,
but if I get home care, it's going to be
a lot less.
Speaker 2 (04:07):
I mean it can be. It kind of depends on
how much care you need. If you need two, three
four hours a day, sure it's much cheaper to pay
a home health aid, either privately from an agency or
a woman down the street, or if somebody you know
in your life or even rely on family at that point.
But a lot of people need a lot more care,
at least when they come to see us. They usually
need a lot more care than that. Lou I think
(04:29):
you like to put it of. You know, you want
to take care of the plan when the house isn't
on fire, right, You don't want to be doing all
this like while everything is crumbling, the house is on
fire and the fire department showing up outside. And that's
unfortunately usually where we see families. More often than that.
Speaker 1 (04:43):
We love to use quips and quotes, and one of
my favorite ones, there's a tribute I think to John F. Kennedy,
which is the time to fix a leaky roof is
when the sun is shining. You don't want to have
to do this in a downpour. Yeah, you don't want
to do this when your house is on fire. No, no,
so getting out in front of it, and I see
you just grabbed your calculator and when I start talking
about costs for it, grab his calculator every time and
(05:05):
crunch his numbers every time. And this is math, folks,
This is not myth. This is math. And with math,
you say, Okay, if I need to be at my home,
in my home, and I need somebody there twenty four
to seven with me, I need companion care. But I
need more than that, I need people to help me
do all of my activities of daily living. And these
(05:25):
sounds somewhat grim, but bathing, dressing, toileting, continence, feeding yourself,
transferring from chair to bed. Those are activities of daily living.
There are i ad ls as well, But as you
age and when you need help, you are gauged by
these things. And if you need help with these things,
(05:48):
then twenty four hours a day and if you go
to a home health agency right now, you're going to
be paying somewhere in the thirty to thirty five dollars
an hour range.
Speaker 2 (05:56):
Yeah, so I was running thirty five an hour.
Speaker 1 (05:58):
Okay, some are forty now, but let's call it thirty
five times twenty four and how many days in a year?
Speaker 2 (06:03):
Right, So you got thirty five dollars an hour, twenty
four hours in the day. That's eight hundred and forty
dollars per day, per day, per day. Times it by
three hundred and sixty five days in the year, it's
three hundred six thousand, six hundred dollars. So if you
round down, it's three hundred thousand dollars.
Speaker 1 (06:20):
Yeah. And we have a friend of the firm, an advisor,
very very good financial advisor, whose grandmother is in this
situation right now. Yes, and they do have some resources
and they're paying. And he said, you know, eighteen to
twenty thousand dollars is what they're paying right now for care,
(06:40):
and the family is supplementing.
Speaker 2 (06:41):
Right, And that's I mean, he's downstate, so that's probably
on point with a nursing home average cost. But that's
slightly higher than I would say the average nursing costs
in this area that's usually between sixteen to seventeen generally,
So if they're at eighteen to twenty, it's a little
bit more than a nursing home here, but not crazily so, right,
So it's not it's not vastly cheaper, like you said, Lou,
(07:03):
and think that's the point.
Speaker 1 (07:04):
So figure two hundred thousand dollars just a round number
for the nursing home, Yeah, maybe a little more, yeah,
and maybe two fifty for home care if you need
intensive homecare twenty four to seven. Yeah, And where do
you find that money?
Speaker 2 (07:17):
Yeah? Most people don't have that just sitting in the bank.
And if they do, how many times can they do
that without it severely impacting their finances and what they
have and what they'll leave to their children, their grandchildren,
whoever it is that they want to provide for. And
it's not long.
Speaker 1 (07:32):
I'm going to open up the phone lines. You've got
Frank Hemig Lupiro here ready to answer your questions. The
phones are open and you can give us a call
at eight hundred talk WGY. That's eight hundred eighty two
five five nine four nine, eight hundred eighty two five
fifty nine forty nine. And we're going to unravel these
But I have a client I sat with yesterday and
(07:52):
I said, call me tomorrow on the show, because your
story is such a good one. And they're sitting there
and we're you know, they came into their own planning
and they had started their own planning with another attorney,
and they said, they're not getting their phone calls answered,
they're not getting documents, nothing has been done on their plan.
And then she says, and we use the same attorney
(08:13):
for my mom, oh, who just spent all of her
money down and has been waiting to get on Medicaid.
And they've been waiting to get this Medicaid application through
at DSS for over a year.
Speaker 2 (08:24):
I know what that's like.
Speaker 1 (08:25):
And in the meantime they have drained the resources and
so it's it was a situation. And I said, well,
here are the things that went wrong and the plan
that you that you had, and the and the attempts
that you had, and it was a holy cow. We
should have done this with someone who has the experience,
(08:47):
and you need to shop, folks. So we're going to
talk about how to shop for an elderly attorney. And
we're not the only ones in town that are good,
that have knowledge. We have a lot of experience in
this area. There are others, but we're happy to work
with every client that walks in our door. And people
ask us, well, what's an ideal client for you? And
for me, it's somebody who has the need for our
legal services. Whether you're rich or poor, if you need us,
(09:11):
you're a good client for us.
Speaker 2 (09:13):
Yeah. I sat with a very nice family yesterday and
they said, you know, they thought they were doing okay.
I would say they're doing better than okay, but they
said they were doing okay. And they said they've heard
from other people and I don't know who those other
people are, but they've heard from other people that you
need to have a certain amount of wealth or things
to warrant needing a trust. And I said, well, if
(09:34):
you walk in and say like you have your house,
even if it's really all that you have. If you
have if you have a desire to protect your house,
and you have enough to pay a legal fee, then
I think it's worthwhile to have a conversation about whether
you want to do some planning to try to protect
your house. Doesn't mean that you'll go for our recommendation, right.
We're there to spread the knowledge and give you counsel
(09:55):
and advice, and it's ultimately it's going to be up
to you. But I think it makes sense to at
least have the conversation.
Speaker 1 (10:00):
So again eight hundred eight two five, five, nine, four nine.
And I want to bust one of the myths that
comes out in an AARP survey. They do surveys every
couple of years, and a survey seniors, and I don't
know what the statistic is now, but about two years
ago they polled seniors and they asked seniors, well, if
you need long term care, how would you pay for it?
(10:24):
And what did sixty three percent of them say? Frank,
Medicare Medicare are not Aid. Medicare Medicaid don't confuse them
any people do. But Medicare and Medicaid came into the
law in nineteen sixty five. We've tracked that history on
this show. There was the fiftieth anniversary of Medicare and
we had the director of the Statewide Senior Action Coalition
(10:46):
on who was a historian, and went through the whole
Medicare Act and what it was supposed to do back
in nineteen sixty five, and what Medicare said according to
Lyndon Johnson, who was the president. If you're historical buff,
he was a press in nineteen sixty five, and he
called something called the Great Society Program, which said in
its preamble, never again will seniors in America have to
(11:09):
worry about healthcare? And what was the average life expectancy
in nineteen sixty five, sixty seven, sixty seven?
Speaker 2 (11:18):
Yeah, I was gonna say it was either sixty six
or sixty seven. So they designed a program to cover
people for two years. Yeah, which but very nice. But
it's significantly a little different now.
Speaker 1 (11:27):
And now you have people at ninety seven, yeah, thirty
years later having consumed healthcare. So the system for those
thirty years, the programs, folks, have not kept pace. They've
not been modernized. They've not looked at the dynamics and
the demographics and the aging statistics today, and we have
more and more baby boomers aging out ten thousand a day,
(11:52):
turning sixty five, and now the front edge of the
baby boom generation. You know, if you look at what
they consider baby boom generation, people born in nineteen forty eight,
that's the front edge of the wave. And they're now
aging into their set through their seventies and soon they'll
be in their eighties.
Speaker 2 (12:12):
And that's potentially going to be a problem.
Speaker 1 (12:14):
And when do people need long term care? The average
age of entry into long term care, into needing some
kind of help is about eighty three. So as boomers
start turning eighty three and they start becoming consumers, boomers
are still caregivers for their aging parents right now.
Speaker 2 (12:31):
Yeah, I don't see it a lot, but I do
see it. Oh, I see it quite often, where, oh,
this is my retirement. That's not what I signed up for.
Speaker 1 (12:40):
Taking care of my ninety five year old mother, my kids,
my grandkids, my dog, my kid's dog, and I'm taking
care of all of these people. It isn't something that,
if you're unprepared, is going to be a pleasant experience.
So let's talk about medicare, Frank, what does Medicare.
Speaker 2 (12:57):
Come generally, and this is not going to be an
exhaustive list, but generally, it's going to cover your hospital,
right if you need a hospitalization, that's your Medicare. It
can cover rehab after your hospitalization, so we talk a
lot about that, and then it can have a drug
or prescription component to it as well. And then there
are supplemental plans that you can buy, like with your
(13:19):
insurance company, to kind of bundle your services under Plan C.
I believe, but I'm not an expert when it comes
to that. But that's generally what it is. But as
I think the as what I hope is becoming more
obvious is I didn't mention home care, I didn't mention
assisted living, and I didn't mention nursing home and that's
on purpose, right, And.
Speaker 1 (13:37):
People get confused by the skilled care benefit. If you
have Medicare, Medicare will cover something if you go into
a hospital and you're admitted to the hospital for three
days and you go into rehabilitation. There is a small
benefit that's very misunderstood, the rehabilitation skilled nursing benefit, which
(13:58):
applies if you qualify and how many days.
Speaker 2 (14:02):
So you get the first twenty days paid in full,
so you don't rack up any bills for those first
twenty days. If you make it to day twenty one,
then you're entitled to from day twenty one up to
day one hundred, so in additional eighty days, where then
you are required to pay a copay, which I think
is about two hundred and nine dollars a day these days,
going up every Yeah, it's just above two hundred dollars
(14:24):
if I'm remembering correctly, But it's only if you qualify
for those one hundred days. You're not entitled to the
hundred days. If you don't continue progress, then they keep
authorizing your rehab.
Speaker 1 (14:33):
And the government keeps changing the way they assess people
through that rehabilitation process. And there was a federal lawsuit
at class action Lawsuits several years ago that challenged this
one when all the way to the US Supreme Court
that told hospitals that they had to change nursing homes,
that they had to change the way they assessed people
because they had They said you had to keep improving
(14:56):
in order to qualify. The standard was an improvement standard,
which was never in the law, but that's how it
was being interpreted. And they were told not to do that,
but guess what they're still doing.
Speaker 2 (15:06):
Yeah, I still hear that. Yeah.
Speaker 1 (15:07):
So a week into your stay, you're gonna have a
team meeting with the care provider and they're gonna say, well,
you know, she's getting better and we think another week
of rehabilitation is what we're gonna look at. So what
are your plans? And this is when it kind of
hits you. So they have a forty eight hour notice requirement,
so they have to give you at least forty eight
hours before they terminate you from Medicare. But okay, we're
(15:29):
now paying this two hundred and fifty dollars. Well, I'm
low this daily benefit of four hundred dollars a day
to pay the nursing home. You're going to private pay that.
Now you're going to have to write a check for
eighteen thousand dollars for a deposit and then another eighteen
thousand for the first month. So get ready to write
a thirty six thousand dollars check in forty eight hours.
(15:51):
And they say, oh my god, I need a lawyer.
Speaker 2 (15:53):
Yeah, I can't afford that.
Speaker 1 (15:54):
And with that you may need a lawyer. We're gonna
take a short break and come back and talk about Medicare, Medicaid,
the transition. What does medicaid cover and it's a lot.
Why do I care? Because it's the only program that's
going to pull you out of that fire when your
house is burning. So stay with us. You're listening to
Life Happens Radio here on Talk Radio WGY. We'll be
(16:15):
right back. Welcome back, Life Happens. I'm Lupiro in studio
with Frank Hemming. We're talking about healthcare, planning for healthcare,
and it takes planning, folks. This is not a gimme,
This is not an automatic. If you pay attention to
what's going on in Washington, DC, you'll know that the
government shut down because of healthcare premiums, and the Democrats
(16:37):
held out trying to get the subsidies for Obamacare coverage.
This is health coverage now, not long term care coverage,
basic health coverage, and that's an open issue. Those are
going to expire, and when they expire, the cost of
health care for Americans is going to go up dramatically.
The estimate that I heard from the Kaiser Foundation is
that seventeen million people will not be able to afford
(16:57):
their healthcare coverage, and that leads to a domino effect.
Where do those seventeen million people go If they don't
have any healthcare coverage, they go to Medicaid, They go
to an emergency room because they don't have any primary
care in the in the er and if you've been
to an ear and I have in the last few months,
I actually went through an er personally, not with a
(17:18):
family member, I've done that too, but personally, it's nowhere
you want to be. You're I'm in a gurney in
the hallway and you know, nobody's talking to you because
there's nobody. They're short of status.
Speaker 2 (17:28):
The one that there's no one there too, nobody's.
Speaker 1 (17:30):
So if it's on a Saturday or Sunday, forget it. Yeah,
you're you're just kind of out in the hallway wondering
where am I going to go next? Right? Where am
I going to be? And so er becomes the primary
care for a lot of people, and as this trickle
down happens, that's going to be the case. So Medicaid
is a program that a lot of people are going
to need, and Medicaid, frank is a rich program in
New York State.
Speaker 2 (17:50):
Still, Yeah, it's I still think I'm still surprised a
bit to see the surprise on clients' faces when we
talk to them about our long term or our home
care program, our nursing home program, and our limited assisted
living program and just say those doors can all be
open to you if you plan correctly, or if you
just don't have an asset issue, but many people do
(18:13):
or an income issue, right or an income issue, and
that's why people want to plan.
Speaker 1 (18:16):
So when you look at Medicaid, it also applies to
people not just for long term care, but for basic
health benefits. Yeah, and it covers doctors, yep. It covers hospitals,
it covers optical, it covers dental. All of these things
are covered under the Medicaid program. And philosophically, there is
(18:38):
a group of people and there has been throughout the
last thirty forty years since I've been dealing with long
term care, that think Medicaid for All is a program
that they should just combine Medicare Medicaid cover all the
benefits in one program. We had an assemblyman here in
New York State, Richard Godfried, who for twenty six years
was an advocate of that and tried to steer in
(19:00):
New York State towards Medicaid for all. It did not
work for a variety of reasons. We won't go political.
But right now we don't have medicaid for all. We
have Medicaid for those who qualify. Right so we're going
to take on the myth busting. And again, if you
have a question on Medicare Medicaid planning, we're going to
get into trust planning. Two different types of trusts, Asset protection,
(19:22):
income protection. Give us a call eight hundred eighty two
five five nine four nine. That's eight hundred talk WG.
Why And I'm going to ask you a question, Frank,
and have you fill in the blanks. Okay, I was
told that I don't qualify for Medicaid because because I
have too much money? Okay, yeah, So what does it
(19:45):
mean to have too much money? And how do you
fix that? And when we talk about money, it is
income and assets. Sure, so you have to look at both.
And when we do, we do a very thorough comprehensive
evaluation of our clients income sources. They are current assets.
And we put a picture together and I draw a picture,
and many of us draw a picture, or we do
(20:07):
a float chart, and we put all the assets for
that particular client on that float chart. We put their
income on that float chart, and we show how the
money flows. So let's start with assets, okay, And what
do you get to keep if you want to qualify
for medicaid.
Speaker 2 (20:25):
If you're a single person, because that's just easier. I
know that number better. If you're a single person and
you want to qualify for medicaid, your asset limit is
thirty two, three hundred and ninety six dollars, So not
a lot of money, but I feel like I always
say it, Listen, it's a lot more than most places.
Most places it's two thousand dollars. California zero because they
(20:46):
got away with their asset tests, but they're the only
state that has, to my knowledge, So you can have
thirty two thousand. I usually just say thirty because it's
easier for people to remember. So essentially, you can have
thirty grand or lesson accountable things and not everything. And
that's partially why I think there are myths associated with
whether I have too much money or not, because a
lot of things that people think count may not count.
Speaker 1 (21:07):
And the answers you get depends on who you ask
the question to yes, are you going to the county
Department of Social Services and asking them how you can
qualify for Medicaid? And what's going to be their answer? Frank,
I'm not a lawyer. Go talk to somebody who is,
or worse yet, or just you. You know you have
too much your We would deny you spend down all
(21:29):
of your assets, yes, because you have too much. Spend
it all down to thirty two three and sixty dollars.
Speaker 2 (21:35):
Yeah, come back and then we'll process your paper and
we'll get you on Medicaid.
Speaker 1 (21:39):
Okay. So if you're on medicaid home care and you
spend down all your money to thirty two thousand dollars
and you need to fix the roof or you need
to you know, you know, you're still going to doctors
and still able to use a car. You need to
get a car, or you need basic living expenses. You
got to pay for heat and other things. How do
you deal with that? How do you put together a
plan that lets you live with a total asset base,
(22:01):
a total nest egg of thirty two thousand dollars. It's
not easy.
Speaker 2 (22:05):
You're easy, yeah, that's for sure.
Speaker 1 (22:06):
And we've had clients that have called us on this show,
and remember you can call us today at eight hundred
and eight, two five, five, nine, four nine. We've had
clients call us up and say, well, I went to
the DSS office and they said, okay, you have to
liquidate your iras. You're rough iras. You have to spend
all that money down to thirty two thousand dollars and
then you can qualify. Was that good advice, Frank?
Speaker 2 (22:27):
No, so we're let's let's bust the other myth. Right,
A myth is that you can only have thirty two
thousand of everything, So let's bust that myth. You can
have thirty two thousand irrespective of a balance in an
IRA or at a retirement account, as long as it's
in payment status meaning you're taking or required distributions. So
that happens automatically at seventy three, and if you need
(22:48):
help before seventy three, we start them early, so your
IRA is exempt, you don't have to spend it down.
Speaker 1 (22:53):
You could have a million dollars in an IRA. We've
had a case like that and qualify for midikaid yep. Now,
as Frank said, in order to get the IRA in
a non countable status. You have to draw on it,
and you have to draw, depending upon the county, a
certain amount of money each month or each year. Yes,
and that gets counted in your budget. And then you
(23:14):
have to account for the income. So what you take
out is becomes income. But that million dollar asset doesn't count,
doesn't count, and you are Medicaid eligible immediately. And I've
had clients come in and say, well, I was told
this that No, you're eligible today. You can apply right now. Yeah,
it's great for Medicaid. And when we come back after
(23:36):
the break, we're gonna have a short break for the news,
we're going to talk about that income. I was told
that I can't qualify for Medicaid home care because I
have too much income. And why is that true? And
how can you plan around that? And the client that
I met with yesterday, that was the situation. They had
(23:57):
too much income. But there's a solution for that.
Speaker 2 (24:00):
It's an easy solution for that.
Speaker 1 (24:01):
And you're gonna have to wait about three minutes to
get that solution. We're gonna come back after the news
and tackle this one more time. Healthcare, long term care, Medicare, Medicaid,
What are the myths stay with us, and we're back.
So I'm going to take a breath here and talk
about an upcoming seminar that we have, and this has
(24:23):
been a very good seminar for our clients. It is
our Trust Administration Workshop. We do a lot of education, Frank,
and you're you're part of that.
Speaker 2 (24:32):
Yeah.
Speaker 1 (24:32):
So before I talk about the Trust Administration Workshop, talk
about something that's become kind of a staple in New
York State in terms of Medicaid and Medicaid education. We
call it Medicaid Monday. Yeah, and we do Medicaid Mondays
the second Monday of every.
Speaker 2 (24:51):
Month, barring holiday, but yes, barring a holiday.
Speaker 1 (24:53):
Sometimes it rolls over a week, yes, But when we
do it, we cover topics that are timely, topic relevant.
It's a crisp thirty minute presentation. Frank does a good
portion of these. I do some, my partner Aaron does some,
and we have guests from all of the different areas
that are affected by Medicaid or that impact Medicaid. And
(25:16):
you've been doing this and how long now, Frank?
Speaker 2 (25:19):
The Medicaid Mondays we've been doing for I think this
was our third full year if I'm remembering correctly, and
we used to do it. We used to do it
as like a month long thing in March. We had
Medicaid Mondays in March, and we do them for four
straight weeks in March, and then we got such good
feedback and kind of so much momentum behind them, we
(25:39):
decided to spin them out into a rather the four
times a year, once a month kind of thing, to
a once a month, all year long kind of thing.
So now we've been doing one every month, I think
for the last three years. And we talk about all
the things that we're kind of talking about today. We
do some basic stuff where it's just this is intro
level stuff. This is what Medicaid is. This is how
(26:00):
you qualify up to very advanced things like promisory note plans,
how to get adequately assessed when you're getting through the
assessment process after you've been approved for Medicaid home care.
And sometimes it's us, sometimes it's guests, sometimes it's both.
Speaker 1 (26:16):
Well, the Medicaid Asset Protection Trust is one of them. Yeah,
you know, laying out how the trust works because there's
so many misconceptions about how it trust works, and in particular,
a trust that you're going to use to protect your assets,
and when we lay it out in a fashion with
the flow chart, all of those myths just fade away.
Speaker 2 (26:35):
As long as we're doing our job properly.
Speaker 1 (26:36):
I agree, And people said, well, if I knew all
of this, i'd done this ten years ago. Because this
is so flexible and I have so much more control
than people told me. We'll get more into the trust
in a minute.
Speaker 2 (26:47):
Yeah.
Speaker 1 (26:47):
But the other one is we have a whole session
on pooled income trusts.
Speaker 2 (26:51):
We do, and we've had We've had our good friends
Sarah from NICSARC come and join us the same time,
so so sometimes it's not even having you take our
word for it. Sometimes we have a representative from one
of the biggest pool trusts in the state that stare
with us to talk about how they do things.
Speaker 1 (27:07):
And we've had Valerie Bogart on when the rules change
for Medicaid home care. We had Becky Prevy from the
New York State Area Association on Aging, the director of that,
talking about all of the aging programs that are available
through the state and the counties. So it is a
rich program. And there is a library on our website
of all of our past shows. So if you have
(27:28):
questions on Medicaid that are deeper than what we can
cover here on the radio. You want to see exactly
how a Medicaid trust works. You want to see how
a pool trust works. You want to see how Medicaid
homecare in the new assessment rules work. We cover those
in depth. To get Medicaid home care, you have to
go through an assessment process. How do you qualify medically
and we'll talk about that in a minute as well,
(27:48):
but financially, we cover it pretty well throughout this series.
Then you can get that at pyro law dot com.
Go to the videos and you can see all the
prior Medicaid Monday sessions. The other workshop that I want
to just mention is our Trust Administration Workshop, and we
have designed this to capture all of the questions that
come up from clients that have done trusts with us
(28:10):
and want to know how to file a tax return,
how to do the administration, Do I need to do
an accounting, how do I make distributions? How do I
terminate a trust? So we cover all of that in
the Trust Administration Workshop. It's ninety minutes. We have CPA
with us, and the CPA is going to be Gretchen
Gunther from teil Beecker and sheermante a local firm, very
good local firm, CPA firm. And this is January twentieth.
(28:32):
So if you want to learn about trust and what
I designed this because I got tired of answering all
the finds questions we would get in undated. No I
signed my trust, What do we do here? What do
I do there? I said, Okay, let's just do a
workshop every quarter for those people who have trusts and
we'll cover all of the details on trust administration in
one setting. And then people started to come just to
(28:55):
learn about trusts who didn't have one, because I want
to know what's on inside the trees trust sure before
I take it on. So if you want to learn
what a trust is, how it works, what it does,
why it works, come January twentieth. It's at twelve noon,
twelve to one thirty. It's at the Capital Region Chamber
of Commerce and we would love to have you join us.
(29:17):
You can sign up on our website at piolaw dot com.
Events and again the twentieth of January. It's a little
ways away, but mark it down on your calendar twelve
to one thirty we cover trusts, we cover the administrative issues,
we cover tax issues. And I'm just gonna throw this
out there again. January twentieth, twelve to one thirty sign
(29:38):
up on peierlaw dot com. We're walking out of or
walking into the studio this morning, and of course our
good friend Dave Kopik is on right before us, and
Dave pulls me aside in the hallway and says, you
gotta answer this question. I'm getting peppered by clients. There
must have been something published somewhere.
Speaker 2 (29:54):
That are they just somebody found, you know, the regulation
that I think they're referring to from.
Speaker 1 (29:59):
It and a big brewha two and a half years
ago when the revenue ruling came out and it said
if you have a grandeur trust, that does not automatically
qualify the assets in the trust for a step up
in basis. Now, to make that meaningful, we have to
(30:19):
explain what basis is. So, when you buy your home
or stock or any other capital asset that has appreciation,
if you sell it during your lifetime, you pay capital
gains on the difference between what you bought it for
and what you sell it for. With your primary residence,
you have exemptions from capital gains tax of two hundred
(30:40):
and fifty thousand dollars and if you're married couple, five
hundred thousand dollars, so you can exempt capital gains up
to that amount. And when you put it in this
particular trust that we design, the trust benefits from that
as well. But when you die owning those assets through
a trust and the trust then passes them on to
your heirs, your heirs get a new cost basis in
(31:01):
the assets. It steps up. So if you bought your
house for two hundred thousand dollars fifty years ago and
it's now worth five hundred thousand dollars, when the kids
inherit it, their new cost basis is five hundred thousand
dollars and they can sell it and pay zero capital
gains tax. And there are people out there saying that
you don't get a step up in basis if you
(31:22):
have it in an irrevocable trust, which is false. The
tax code sections, and if you want to know what
they are, it's internal Revenue Code sections twenty thirty six
and twenty thirty eight. The tax code sections say that
if an asset is included in your estate for tax purposes,
and those two sections hook these trusts into your estate.
(31:45):
Under section ten fourteen E you get a step up
in basis automatically, and nothing changed. None of that changed.
All they said is if you don't have any of
the provisions covered by twenty thirty six or twenty thirty eight,
and all you have is a grant or trust, that
you don't qualify for the step up in basis. So
it's scared people, and we got a ton of questions
(32:05):
and we answer them at the Trusted Men Workshop. But
for those of you who have trust and you're hearing
this rumor out there that you don't get a step
up in basis from a trust drafted properly with income
interests for you, with the power of appointment for you,
the things that we put in our trust that you keep.
You're hearing myths, you're hearing falsehoods. So be assured, rest
(32:28):
assured that you will get a step up in basis
from that trust. You can put your house, in your stocks,
in any appreciated assets in your business, and your heirs,
your beneficiaries will benefit from that step up in basis.
And if you want to learn more in depth, come
to the Trusted Men Workshop.
Speaker 2 (32:44):
On January twentieth, and U, Lou, I'm going to give you.
I'm going to give you some credit. That's that's meed.
So we actually have a statement in our trusts that
says that things in the trust are set up specifically
to pass through your estate and to receive a step
up in basis. And that's there because Lou personally added
(33:04):
it to our trust document. So what so what we're
going to say, So when that rate came out, all
we have to do is like literally point to the
sentence and the trust that says that, and that kind
of clears it up pretty pretty clearly for for people
that have done our trusts.
Speaker 1 (33:18):
Yeah, so let's get back to the income question because
that's where we left off in the first half of
the show. And again, give us a call. We're waiting,
give us a call. Pick up that phone. Eight hundred
eight two five five nine four nine. It's eight hundred
talk WGY. And when you have income and you go
to somebody and say, listen, I want to apply for medicaid. Oh,
you have five thousand a month of income. You're only
(33:39):
allowed how much.
Speaker 2 (33:40):
Rank eighteen or eighteen hundred twenty dollars hundred and twenty dollars.
Speaker 1 (33:45):
You have more than that, you don't qualify for Medicaid.
Speaker 2 (33:47):
See, but I don't. I really struggle with that, I
really really do. I'm not just fighting this for them.
I'm not. I'm saying I don't. I'm not just saying
this for the radio. Like I honestly really struggle with that,
because there is a spend down program, right if you
have more than eighteen hundred and twenty dollars, they could
just say you have a spend down and you must
pay it to us. They should not, at least in
(34:09):
my opinion, be issuing a denial because you have too
much income. They should just be budgeting you with a
spend down. And I don't know if maybe that's county
specific of how they do that or not, because luckily
we never really run into this issue because of the
planning that we're going to talk about of how you
deal with excess income. But in my mind, the only
way that you should get denied for Medicaid if you
(34:31):
have income above an allowance is if you have enough
income to pay for all of your care. Right, So
let's flip it on its head for just a second.
If you're in a nursing home and the nursing home
cost is sixteen thousand dollars. Well, if your income is
seventeen thousand dollars, then you shouldn't need to qualify for Medicaid.
(34:51):
You're ineligible because you don't need Medicaid to pay for
your nursing home because you can pay for it. You
shouldn't be asking the government for entitlements when you can
pay for it. Barring that scenario where your income can
pay for your care, I don't see how you can
have too much income to pay for Medicaid or to
be eligible for Medicaid.
Speaker 1 (35:10):
Right, But there is a more elegant and beneficial solution. Yes,
that is a pooled income trust. Yes, so regardless, as
Frank I said, regardless of your income, you should qualify
for Medicaid either at home or in a nursing home,
because they should tell you that. Well, you need to
(35:30):
pay for the first part of your care, and then
you can keep eighteen hundred and twenty dollars and Medicaid
will pick up the balance.
Speaker 2 (35:39):
If you're home.
Speaker 1 (35:39):
If you're at home, yes, but typically we don't make
people pay the providers. You know how to check.
Speaker 2 (35:48):
No, the only time we ever recommend that you pay
anybody is if it's so small, it's so small of
an amount it's not worth saving. Or if you have
a five dollars spend down, then we're going to tell
you write a five dollars check to the care. That's
not going to hurt too bad. But that's so rare
that we see such a small gap between the allowance
and the person's income, it hardly ever happens. So instead
(36:09):
we used a trust. We just use a different type
of trust.
Speaker 1 (36:12):
And this is a carve out in New York State,
and a lot of things were carved out twenty to
thirty years ago by litigators in I was one that
litigated these cases to get the state and back them
off and to get the ability to use a pooled
income trust for people who are not truly disabled, but
they have to meet a certain definition. They have a
(36:33):
chronic illness, yes, and even if they're over sixty five, Yes,
you're able to do this because there is no rule
that prevents you from transferring income.
Speaker 2 (36:42):
Right.
Speaker 1 (36:43):
So just briefly, we have a caller on the line,
we're going to take that. But briefly, just go through
the mechanics of a pooled Income Trust.
Speaker 2 (36:48):
So essentially, it's so, let's say you have twenty eight
hundred dollars of income. Right, Let's say your allowance is
eighteen hundreds. You have one thousand dollars too much. Well,
when you get the medicaid approval, they should say you
have a spend down for a thousand none because you
make too much money. You make too much income by
one thousand dollars. Every month, we set up this pool
trust account with a charity that runs a pool trust.
(37:09):
Every month, you send them the thousand dollars overage. They
put in an account that's associated with your loved one
or with yourself, and then you can then send bills
invoices things you want the pool trust you pay using
your money on your behalf. And if you kind of
put all those pieces together, we've preserved your income because
it's sitting in your pool trust account where you still
(37:29):
have full access to it. You still have full ability
to direct how it's used, and you don't have to
pay it to medicate it.
Speaker 1 (37:34):
And you can get creative on how you spend the
money in the pool trust. You can hire children under
a caregiver agreement if you have a written agreement, which
we do for clients exactly right a lot of ways,
and we've had a lot of money flow through Pool
Trust on a monthly basis, and we've been able to
put new roofs on homes and new kitchens and homes
and spend money provided you have the right to do so,
and we design it specifically for that. Exactly so we
(37:56):
have Peter and Nisky, you know, with a call, Good morning, Peter, Welcome,
life happens.
Speaker 3 (38:01):
Good morning, gentlemen, thanks for taking my call. I've got
a question regarding irrevocable trust These are the the trustee
if you could speak to what? What? What are the
duties and responsibilities of a trustee? Do they have to
fill out these disclosure forms? Is there such a thing
(38:24):
as an institutional trustee? Can I as owner, I guess
it's grant or be the trustee, et cetera. Let's just speak, okay.
Speaker 1 (38:32):
So it's great questions and we hope you can joined
us on January twentieth our trust administration. These are all
the issues that I may dig into in depth, and
I'll cover them quickly. Here. We do not advise our
clients to be their own trustee of a Medicaid Asset
Protection Trust, which is an irrevocable trust. We believe that
that gives you too much control over the trust, and
(38:53):
that Medicaid will look at the trust as still available
to you because you're still in control of it.
Speaker 3 (38:59):
So excuse me. This has got nothing to do with Medicare, though.
This is a trust that's being set up into which
I'm going to put a life insurance policy.
Speaker 1 (39:07):
Okay, all right, so again for tax purposes? And what's
the purpose of the trust? Let me ask that. Is
it for tax reasons or just administrative reasons.
Speaker 3 (39:20):
It's a term life insurance policy that is being created
on a family member and we're putting that into trust
to protect it from predator's creditors, et cetera.
Speaker 1 (39:32):
Okay, so you're not the insured, no, So you can
be the trustee. That's that's okay.
Speaker 3 (39:40):
I'm gonna I'm gonna pay.
Speaker 4 (39:41):
I'm gonna pay for it, and I I.
Speaker 3 (39:42):
Okay, I can be the trustee then, okay, and you.
Speaker 1 (39:45):
Would have you have to have ways to get money
into a trust if you're gifting it in, and we can.
There's something we call a demand power or crummey demand
right that we build into a trust that allows you
to do that on a tax free basis, and you
can gift to pay. I think on how many beneficiaries
there are on the trust. You can give nineteen thousand
dollars for every beneficiary into that trust and not have
(40:08):
to file a gift tax return. So we structure it
for for all those purposes, very flexible. You can be
the trustee. Who are the ultimate beneficiaries?
Speaker 3 (40:18):
My grandchildren there's two.
Speaker 1 (40:19):
Of them, okay, so and.
Speaker 3 (40:22):
They're they're miners, and I'm this is going to be
on their mother's life. So should something happen to her
before they reach majority, then there would be a trustee,
as I understand it, who would perfect act in their
behalf perfect.
Speaker 1 (40:37):
So you can be the initial trustee, that's not a problem.
You want to make sure that you have success or
trustees behind you because this you know, your daughter's younger
than you, and your grandchildren are younger than her, so
we want to make sure that we have a succession
of trustees. There is an institutional trustee that you can
have banks, trust companies, and in fact, one of the
(40:57):
speakers at our program on January twenty is a representative
of trust Co and he talks about corporate trustees and
fiduciaries and what Trustco is one of the local institutions
that provides that service. So that's covered a possibility. We
work with professional trustees all the time, different banks and
trust companies that will fill this role. But what you're
(41:19):
doing is great. The trust can be very flexible. You
can have a lot of control over it because the
insurance policy is not on your life, and it can
be there for your grandkids if and when something unfortunate happens. Correct,
So all doable, all very possible, and under those circumstances,
(41:42):
it's what we call a third party trust. You're creating
it for the benefit of the grand kids. Very very
flexible drafting that.
Speaker 2 (41:49):
We can do in that case.
Speaker 3 (41:52):
I'll see in January twentieth.
Speaker 1 (41:53):
Thank you very much, gentlemen, appreciate the call we have
Brian and east Greenbush.
Speaker 4 (41:58):
Good morning, Brian, oh, good morning, thanks for taking my
call our pleasure. A question on that step up and
basis and the air revocable trust. Yes, I what about
an annuity that's in an air vocable trust?
Speaker 1 (42:15):
Okay, so you have to look at asset classes and
this is why we do our very detailed deep dive
into clients' assets. Annuities are insurance products. They are in
an insurance wrapper. And when you I'm assuming this is
a non qualified annuity. Yeah, it's not from retirement funds
(42:37):
pre tax dollars. You had an IRA, you rolled it
into a tax qualified annuity, money that you put into
an investment. It's in the annuity contract. Inside of an annuity,
you get tax deferral, so there is no tax being
paid on income inside that annuity. And because of that,
(42:59):
when the annuity out there are income taxes. It's ordinary income.
It's not capital gain. So step up annuities, whether they're
in trust or out of trust, do not get a
step up in basis. Oh well yeah, so you have to.
Speaker 4 (43:20):
Be aware of those tax codes don't apply.
Speaker 1 (43:23):
They do not apply. It's called income in respect of
a decedent or ird. So if you pull it out
during your lifetime, you have a cost basis in that
annuity what you paid for it. But all of the
gain and the annuity, whether it's gain or income, dividends, interest,
all of that is income within the annuity contract. If
(43:45):
you cash the annuity, you pay income tax on it.
When your beneficiaries receive the annuity, they pay income tax
on it, so they get a ten ninety nine if
they liquidate the annuity for all of that increased value.
Speaker 4 (44:00):
Oh so that's that's not good.
Speaker 1 (44:04):
It's not a good result, but it is. You have
to be aware when you buy the annuity and what's
the purpose of the annuity. It could have been life insurance. Right.
Life insurance pays out without any income tax. So if
his true life insurance policy, it can grow and build
and the death benefit is full of income. Tax free
(44:25):
annuity has tax advantages during lifetime. You get a lot
of energy from tax free growth within the annuity. But
it isn't really tax free. It's tax deferred, and that's
why they call it tax deferred.
Speaker 4 (44:35):
A new even though it's in the trust, irrevocable trust.
Speaker 1 (44:39):
Yeah, the trust doesn't doesn't help you there. It's it's
not going to give you a change in the character
of the income from the annuity. Sorry to bring the
bad news.
Speaker 4 (44:54):
There's nothing, okay, I mean, if I come to that
seminar in the twentieth there's no other options or nothing.
Speaker 1 (45:00):
I'd be happy to sit down with you and answer
your specific questions on that at any time, and we
do offer if you want to come in. We do
offer a free consultation. If you want to come in
and talk about your planning and how you can put
all of this together, we'd be happy to sit down
with you.
Speaker 4 (45:15):
All right, Thank you, and have a nice Thanksgiving.
Speaker 1 (45:17):
All right, you two happy Thanksgiving. We got to take
one more short break and then we're gonna come back
and close it out with the last myths of Medicaid.
Stay with us, We'll be right back. We're back. I'm Lupiro.
Frank Heming live in studio. We have time for one
more caller before we close out. We have Bob in Greenfield. Bob,
thanks for hanging on staying with us. Now you're gone,
(45:38):
all right, Bob, if you want to call back, we
will take your call. Frank, we have some other myths.
We've talked about the asset myth. Yeah, we talked about iras.
What are some of the other exempt assets that people
are told? Well, you know, if you have fifty thousand dollars,
you got to spend eighteen on your care. Are there
other ways to spend down? Sure, let's let's keep the
(46:02):
good vibes going. You can pay for your funerals. Yeah,
I love this.
Speaker 2 (46:05):
I say, you could pay for your funeral, so they
exempt any amount in an irrevocable burial agreement, so you
can do your pre planning for your funeral, which we
do advise clients if they haven't done that, because you're
going to need to pay for that at some point.
And not just you or yeah, it's you, your spouse,
your kids in laws are my favorite one for that class.
Speaker 1 (46:24):
Oh yeah, Christmas is coming, folks. So if you want
to send a message and you need to do a
spend down for Medicaid purposes and you want to shelter
some assets.
Speaker 2 (46:32):
Buy your son in law a funeral. Yeah, and it
just tell it's for planning purposes. Since it's don't read
more into that. It's just we got advice from an
elder law attornty. We're just trying to plan for our care,
that's all.
Speaker 1 (46:44):
You're the only one. We're buying it for nothing.
Speaker 2 (46:47):
Meant there, But what are some of the other apps
you can have a car regardless of its value. You
love this, I do because we've used it a few times.
Like I once had a lady that I think she
was like thirty grand over they allowance, and son said, well, well,
you know, even though she needs a nursing home, she's mobile.
She wants to go to lunch, and the nursing home
she's in, we'll let her go to lunch and do things.
And I always use her car to take her around.
(47:10):
And I said, well, can you buy mom and new car?
And that's what he did. He went and he bought
mom and a new car, and she could look at
it out her window. So I was joking, say, you
can have a Ferrari because it doesn't matter what kind
of car you have, right.
Speaker 1 (47:22):
But you just need a driver. Yes, but in order
to have a driver, she had to have a car.
Speaker 2 (47:26):
Yeah, exactly. So you can have a car regardless of
his value. So sometimes we spend that on that. If
you have a home, if it's a home care situation,
you can always spend on home repairs and things, because
sometimes you need to make home improvements for you to
age in your house. Right, So we use that one
a lot. Sometimes there's an operator this is what This
one's a little more rare, but sometimes there's an operating
(47:46):
business that you have, So sometimes you need to funnel
more money into the business to have that continue to
operate while you're receiving your care. You know, sometimes people,
I think mistakenly think that just because you're on Medicaid
means that you're old in free and don't have the
ability to do things. Sometimes we work with young people
who need Medicaid because they're physically disabled. They're otherwise very
(48:07):
very well rounded. They have very regular lives, they lead
regular jobs, and they do all kinds of things. They
even run businesses. So we have used that one too.
Speaker 1 (48:15):
I want to close out in our last three minutes
with another situation. Well, my mom just went into a
nursing home. She has three hundred thousand dollars of assets.
There's a five year look back. I was told there's
absolutely nothing I can do. I just have to spend
the three hundred thousand dollars down to thirty two thousand.
As we talked about, yep, is that true.
Speaker 2 (48:34):
It's not. We don't have enough time to go into
the nitty gritty of this. But essentially, we have a
tool in our toolbox called a promissory note plan, or
a rule haves or a half a lope. There's lots
of names, but essentially we can save about half generally
of what you have if you've done no previous planning
and you come in and you do what we tell
you to do. So, if we had that situation, roughly
(48:56):
three hundred thousand, we're probably going to save in the
neighborhood of one hundred and fifty one hundred and seventy
thousand dollars, probably out of there, depending on some other factors.
But there is a lot more you can do than nothing.
Speaker 1 (49:07):
Even if people are already in the nursing No. Yeah,
we've had families come in and say, well, you know,
I consulted with an elderly attorney and they told me
I had nothing at five years to wait. There's nothing
else I could do. We've spent one hundred thousand, we
have two hundred thousand left. Can I do anything even now?
Speaker 2 (49:24):
Yeah, you can always start doing the promisory NOE plan.
It's really just a matter of is there enough money
still available to make it worthwhile. You know, if you
had seven hundred thousand, you're down to fifty thousand, then
you come in it's too late, we can't get the
money back. But if you had seven hundred, you still
have five hundred. We have plenty of room to help
you with something like that, all right.
Speaker 1 (49:43):
So stay with us. Check out our website. We have
seminars coming up, the Trust Administration Workshop. I would highly
encourage you to attend. It goes into all of the details,
tax and otherwise about trusts, Medicaid, revocable trusts, irrevocable trusts,
my favorite beneficiary controlled trust. Patty and I talked about
these last week. How to leave an inheritance properly to
(50:05):
your children. All of that is covered in the Trusted
Men Workshop. Join us for Medicaid Mondays every Monday, not
every Monday, the second Monday typically of the month. And
this time looking at the dates, Frank, could you just
verify the date? It says December eighth, and then again
it says December seventh, So which one is it?
Speaker 2 (50:25):
It should be? Hold on the eighth, should be yeah,
I believe that's yeah. It should be the.
Speaker 1 (50:30):
Eighth, December eighth, from noon to twelve thirty pm. It'll
be Frank, Aaron, myself, we'll all be there to unravel
this year's Medicaid mysteries. Stay with us. Hope to see
you back next week
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