Dec
21
2016
0

Medi-Cal Recovery Will Be Limited to Probate Estates after January 1, 2017

We have recently blogged about the new legislation Governor Brown signed, effective January 1, 2017, which changes the rules regarding recovery by the state for payments it has made to nursing homes for Medi-Cal recipients. Under the old law, the only way we could avoid recovery was to ensure that there was nothing in the Medi-Cal recipient’s name at the date of his death. Under the new law, for Medi-Cal recipients who die after January 1, 2017, recovery will be limited to those estates that are subject to probate under California Probate Law. Assets transferred from a revocable living trust of the Medi-Cal recipient will not be subject to recovery under California Law, because assets in a revocable living trust are not be subject to probate.

For example, if Mary the Medi-Cal recipient leaves her home to her son in her will, the home will be subject to a probate. If the state paid $30,000 to a nursing home for Mary, the state will be able to recover the $30,000 from the probate of the home. If the home was in Mary’s revocable living trust at the time of her death, the state will not be able to recover against the home, because the home will transfer from the trust to Mary’s son, and will not be probated.

The new rules, effective for Medi-Cal recipients who die after January 1, 2017, also exempt certain assets from state recovery. For example, property transferred prior to death, that are no longer in the beneficiary’s name, are not subject to recovery. However, any transfers must be made within the Medi-Cal regulations in order to avoid periods of ineligibility when applying for Medi-Cal. Also, the state cannot recover against your life insurance policy as long as you name one or more beneficiaries under your policy. If you do not name a beneficiary, or if the beneficiary you have named dies before you do, there will be a probate to determine who the beneficiary is. The state will be able to recover against the probate.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help the older client and their families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

Dec
08
2016
0

John Hancock Has Dropped Traditional Long Term Care Insurance – But All Is Not Lost!

Forbes Magazine has recently reported that John Hancock is the latest insurance company to drop out of the traditional long term care insurance market. John Hancock has been one of the largest providers over the years, having sold some 1.2 million traditional long term care insurance policies. It is estimated that there are now less than 20 companies that are selling these traditional “use it or lose it” style of policies. Forbes says that, “This withdrawal signals what many financial planners, government officials, and financial service firms have known for years—that the United States is nearing a long-term care planning crisis.”

The reason that so many insurance companies have dropped out of the traditional long term care insurance market is because they are losing money on this type of policy. The insurance companies set initial premiums too low and they underestimated how long people would live. They also underestimated the cost of long term care and how much the cost of that care would increase over time.

Fortunately however, there are new insurance options that you can explore to help pay for your long term care. In 2010, an amendment to the Pension Protection Act (PPA) of 2006 was passed which can be very advantageous to Americans struggling to find ways to pay for long term care. As an example, many seniors own annuity contracts. Individuals who own annuities can now exchange those annuities, on a tax free basis, for Pension Protection Act style annuities that have long term care riders. The long term care rider in the new annuity contract can create multiples of the amount in the annuity that can be used for your care. For instance, $100,000 moving from your existing annuity into a Pension Protection Act style of annuity could create $300,000 in a rider to be used for your care. If you need help with two out of the six activities of daily living, you can “go on claim,” and the amounts distributed to you from the annuity for your care are distributed tax free.

You can also transfer money from any source into a Pension Protection Act style annuity or life insurance policy that has a long term care rider. The healthier you are, the easier it is for you to qualify for these new financial instruments. However, they are easier to qualify for than traditional long term care insurance policies because you are using your own assets to fund the long term care annuity or life insurance policy.

While you are updating your estate planning documents for long term care planning and asset protection with us, and if you are interested, we can help you explore these Pension Protection Act asset protection possibilities with you.

This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com, we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help the older client and their families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.

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