Archive for the ‘Coastal Senior’ Category

Coastal Senior is a monthly periodical covering the South Carolina and Georgia low country.  Bob Mason is its legal columnist.

[Note:  The Georgia annuity rules described below are very similar to the North Carolina annuity rules - see discussion of annuities at Basic North Carolina Medicaid Nursing Home Rules]

The Georgia Department of Community Health recently changed Medicaid annuity rules to allow the use of some (not all!) annuities by someone entering a nursing home.

The Basic weight loss med Concept

First, understand the basic concept of an annuity. Someone pays money to a company. The company promises to pay the money back either in a lump sum in the future, or over time in regular installments. The payments could begin immediately (an “immediate annuity”) or start in the future (a “deferred annuity”).

The payments from the company will include a return of what was paid, plus some interest. Meanwhile, the company is taking the money and (it hopes) making more with it than it will have to pay back to the buyer.

There are many and complex reasons that such an arrangement might make sense with respect to a realistic portion of one’s nest egg (remember the old adage “don’t put all your eggs in one basket”).

The New Rules

If an annuity fits the new requirements, it will not count as an asset for Medicaid purposes (although the income will count). To be “noncountable” the annuity must be nonassignable, irrevocable, and have a steady stream of payments that will not extend beyond the life expectancy of the annuitant (the person receiving the payments).

Further, the annuity must name the State of Georgia as the remainder beneficiary to the extent the state has paid out Medicaid benefits. A spouse and a disabled child may take first place ahead of the state.

So?

Many seniors have a modest nest egg meant to sustain retirement. The problem is the egg may be too big for Medicaid. Most people entering their senior years understandably panic when a spouse goes into a nursing home to the tune of $5,500 or so a month.

A “new” annuity can take “excess” cash (which was an excess asset for Medicaid purposes) and put it into an annuity (the shorter time frame the better) to immediately begin paying the stay-at-home spouse income.

Voila! The excess asset (cash) is converted into income that is not counted for Medicaid purposes (the state would count the income of the spouse in the nursing home only).

On The Other Hand . . .

Any person who thinks he or she (or his or her spouse) might end up in a nursing home within several years and have a tough time paying for it better be very careful before buying an annuity.

Buy an annuity that is not designed correctly and Mom and Dad could have an expensive mess. If the annuity has substantial surrender charges the unfortunate buyer has a choice: Hang on to the annuity and never qualify for Medicaid or dump the annuity and take a bath.

Buy an annuity that is designed correctly and it could be part of a well-conceived plan.

There are plenty of great financial advisors out there who either know these rules or at least understand that this is an issue and will seek additional help.

Coastal Senior is a monthly periodical covering the South Carolina and Georgia low country.  Bob Mason is its legal columnist.

Last month Legal Lines looked at the best way to leave assets to a disabled child. In that case, someone other than the disabled child is setting up a trust and funding it with assets that are not those of the disabled child. The typical situation is a parent setting up a trust under a will or perhaps immediately while the parent is alive.

What if a disabled person already has assets? Perhaps the disabled person has inherited property. Or maybe a settlement of a personal injury case has left the disabled person (temporarily) flush.

This could be a real problem. Such a person may have huge medical expenses. If a disabled individual on Medicaid comes into a “windfall”, such as a personal injury settlement or an inheritance, those assets will quickly disappear after the person has online acomplia been tossed of Medicaid for having too many assets.

In many cases access to government entitlement benefits — whether Supplemental Security Income, state supplemental assistance programs, or Medicaid – is critical. How does one remain eligible for these valuable resources without first becoming impoverished?

The answer: By placing his or her property in another kind of special needs trust, a so-called “OBRA ’93 Trust” or “payback” trust, the individual will remain eligible for many important benefits, including Medicaid. The catch is that upon the beneficiary’s death, the Medicaid benefits must be repaid, with only the balance passing to other family members.

During the individual’s lifetime, however, the difference between an OBRA ’93 Trust and no trust can be the difference between having training and educational opportunities, a computer, music, regular outings and a vacation, and living a life of poverty or dependency.

The requirements of an OBRA ’93 Trust are simple. It must be established for the lifetime benefit of someone under age 65 who is disabled or blind. It must also provide for pay-back of Medicaid benefits paid by the state. In addition, only parents, grandparents, courts, or “guardians”, not the disabled individual directly, may establish a pay-back trust.

When deciding to establish an OBRA ’93 trust, the disabled beneficiary’s specific needs and the effect of the trust on the individual’s benefits must be taken into account. Also, in the context of a personal injury settlement, many common settlement options (such as annuities) may render an OBRA ’93 trust impossible. Because of this, early planning is a must when damages for a personal injury are involved.

Administration can be difficult. Also, for people with no parents, grandparents, or guardians available to establish a trust, these trusts may be unavailable. In that case, a community or pooled trust may be the answer. They work very much like pay-back trusts, but are administered by non-profit community-based trustees and are “pooled” with the trusts of other disabled beneficiaries. When the beneficiary dies, the assets either “pay-back” Medicaid or can be retained in the trust to provide for other beneficiaries in the community.

This is an exceedingly complex area of the law. I’ve tried to simplify it. Whatever you do, get good advice!

Coastal Senior is a monthly periodical covering the South Carolina and Georgia low country.  Bob Mason is its legal columnist.

An old rule says “Never say never”. Let’s break that rule. The parents of a disabled child should never disinherit that child simply because she is disabled. Never.

There is a better way.

Parents of a disabled child want to ensure that the child will receive adequate financial protection while at the same time providing equitably for other family members. Maybe a parent is worrying about her own nursing home care but wants to insure her assets can be used for her disabled child.

An inheritance left directly to a disabled child will soon be gone.

Sadly, many parents (with inadequate or no advice) simply leave everything to the “non-disabled” children with the hope those children will “look after” their disabled sibling. Not good. Unfortunately, greed, divorce, lawsuits or carelessness can throw this plan awry.

A “special needs trust” might be a great alternative. The trust holds the assets for “supplemental needs” only, and should not affect the disabled individual’s eligibility for entitlement benefits or be accessible to the individual’s creditors, including the government.

The idea is to supplement, not reduce or replace, entitlement benefits that may be available to the disabled individual. If no benefits are available, the trust assets stand ready to help. If the available benefits do not provide adequately for the beneficiary’s needs, the trust assets will fill in that gap.

Even if the available benefits adequately cover material needs, the trust assets may be used to enrich the beneficiary’s quality of life without jeopardizing the much-needed benefits. Finally, to the extent that the assets are not used during the beneficiary’s lifetime, they may pass to other family members.

If the disabled child is receiving benefits such as Supplemental Security Income or Medicaid, the trust will need to be submitted for approval to ensure that the trust meets the many rules that apply. After all, the goal is to maintain benefit eligibility without having the trust assets “count”.

A parent may set up such a trust one of two ways. First, a trust may be established at anytime while the parent is alive. The drawback, of course, is that the parent may be tying up assets that he may want to keep available for his own support acomplia online in case he needs them. Also, the parent may not want to contend with submitting the trust for approval and may not want to deal with people like me (lawyers). For a parent about to go into a nursing home and on to Medicaid himself, however, such a trust can be a great planning technique.

Second, a parent can insert such a trust into the terms of his last will and testament. He can avoid the hassles listed above and let the executor, named trustee and his child’s guardian worry about the details later. These trusts can be tricky. Make sure you get expert help.

Drop in next month to read about a similar type of trust a disabled person can set up directly with her own funds.