The issue of gifts and penalties for Connecticut Title 19 Medicaid keeps coming up on a regular basis in recent meetings so I thought I would take a moment to specifically answer some of the common issues.

First – any transfer of any asset within five years of applying for Connecticut Title 19 Medicaid benefits creates a penalty period of ineligibility. There are a few very narrow exceptions of transfers that do not create a penalty, however the burden is on you to establish by the evidence that you qualify within one of the exceptions. Now let’s go over some basics.

You will notice all types of transfers are included in the rule. Be it writing a check payable to someone, handing them cash, signing a deed over to someone etc. As it says, any and every transfer is included in the scope of the rule. A simple way to look at it is if the person gives away an interest and access to property, you are at risk for your transaction being labeled a penalizing transfer and resulting in a period of ineligibility for Connecticut Title 19 Medicaid benefits.

One popular transaction that comes up often is taking a joint account and removing the Medicaid applicant’s name from the account. This is a gift. The Medicaid applicant had unrestricted access to the full value of the account on one day and after his or her name was removed from the account they no longer had access to the account. This transaction results in a period of ineligibility.

Another popular question concerns Medicaid penalties and annual exclusion gifts. For tax purposes, each person is allowed to gift a certain value to any person tax free. That is where the annual exclusion gifts end, for tax purposes only. In the context of a Connecticut Title 19 Medicaid application, a gift that you made which is tax-free can very well be (and almost always is) a gift subject to penalties for Medicaid eligibility purposes.

Another example are special occasion gifts such as birthdays and graduations etc. There is no exclusion for these types of transfers no matter how noble or small they may be. Any and every gift is subject to the penalty period of ineligibility rules whether it is $5,000 or $500.

If you are considering a strategy of stonewalling the Department of Social Services by denying information think again. You bear the burden of proving your eligibility. If the law presumes a transfer is a penalty and you do not prove otherwise you will be denied benefits. A Connecticut Medicaid Attorney can help protect as much value as you are entitled to, without the negative consequences of ill-conceived transfers.

The treatment of assets owned by a revocable trust for Title 19 Medicaid eligibility in Connecticut has been clearly established by our Department of Social Services for many years. However, every once in a while I do run into someone that thinks somehow, in some way, using a revocable trust is competent Medicaid asset protection.

The thinking generally is along the lines of: “but I don’t own anything, my trust owns all my property.” Trust me, this is not a novel idea. People have tried to use that argument for many years. The Department and the Congress have evaluated countless Title 19 Medicaid eligibility cases involving revocable trusts and they have adapted.

The reality of the situation is that with a revocable trust, the trust owner continues to have complete control over their property even if they are no longer the owner of record. Connecticut’s Department of Social Services recognized this long ago and implemented regulations that in practical terms attribute the assets owned by a revocable trust to the owner of the trust. The bottom line is this: if you are using a revocable trust to shelter assets and create eligibility for Title 19 Medicaid benefits in Connecticut, I strongly recommend you obtain a second opinion on that strategy from a qualified Medicaid attorney.

My comments here are limited to revocable trusts. In some cases there are other trust planning options that do provide some degree of Medicaid asset protection; however, those trusts are not revocable.

If you are considering a Connecticut Revocable Trust for reasons other than Medicaid, visit http://CTLivingTrust.com/

What is the difference between a family that loses hundreds of thousands of dollars to nursing home costs and a family that preserves hundreds of thousands of dollars from nursing home costs? In many cases, the difference is time and the desire to obtain effective legal advice from an experienced Connecticut Medicaid Attorney.

Let me share the story of a client of mine. This client one day mentioned that her mother “Helen” resided in an assisted living facility. Helen was doing well with no chronic health issues, although naturally she was getting older and her risk for Alzheimer’s and other chronic health issues increased every year. Like many people, Helen preferred the majority of her life savings pass on to her family rather than be consumed or at risk for possible nursing home costs that exceed $90,000 per year in Connecticut.

After reviewing the situation with Helen and her family to gain a better understanding of her wishes and the financial realities of the situation, I put together a plan to accomplish Helen’s goals of keeping her life savings within the family without jeopardizing her own eligibility for Title 19 Medicaid benefits. Helen’s family promptly reviewed and acted on my recommendations. We did not give everything away and leave Helen at risk to her family’s desire to pay for expenses nor did we assume any risks without a thorough discussion of those risks and careful hedging against the unavoidable risks. Helen was my client and she was protected throughout the entire plan.

The reason I bring this up now is to remind everyone about time. My work with Helen began approximately three years ago. Back in 2004, I completed the initial analysis for Helen’s family which was the foundation for evaluating asset protection and Title 19 eligibility strategies. A critical portion of that analysis was making a reasonable, realistic, and informed estimate for how the next three to five years would unfold in terms of health and finances. I am proud to say Helen and her family have been exceedingly pleased with results. As we approach the third anniversary of Helen’s planning, her goals have been accomplished and the critical three year look-back window (this was before the DRA of 2005) is going to close in the very near future. The plan was carefully thought out and it was successful. I helped Helen and her family protect over $900,000.

Let’s consider an alternative for a moment. What if Helen’s daughter mentioned her mother’s situation to me back in 2004 and I told her that since everything was fine right now they should not consider any additional planning until it became obviously necessary? Well, as you may know the Deficit Reduction Act of 2005 was enacted which extended the look-back period to five years. This change alone would have had a significant impact on Helen’s ability to achieve her goals. There were additional restrictions on Title 19 eligibility included in the Deficit Reduction Act of 2005 that would have also had adverse effects on Helen’s options.

It is an unfortunate fact that Connecticut nursing homes are expensive. They average over $9,000 per month. It is also an unfortunate fact that none of us know who is going to need nursing home care and who will not need nursing home care. For many people, nursing home costs are the single greatest threat to their life savings and their estate plan. An annual bill of more than $90,000 can devastate a modest family.

What’s the difference between protecting over $900,000 and risking over $900,000? As we can see, in many cases it is a matter of time and getting the right legal help. I don’t know when the next wave of regulations or case law that further restrict Title 19 Medicaid eligibility in Connecticut will come along and in general I don’t recommend my clients wait to find out either. I do know what I can do today to secure my client’s estate plan and life savings. Medicaid planning and protection does not happen overnight. In Helen’s case, it took three years; and she is in a much better position than if she waited until the last minute.

Do you have a plan?

Are you protected? Do you want to be in charge of what happens to you, or are you content to hope for the best? Speak with a Connecticut Medicaid Attorney today and take the first step to protecting your family.

It’s that time of year again, the critical numbers for Connecticut Title 19 Medicaid eligibility during fiscal year 2007-2008 have been released. Effective July 1, 2007:

• The average monthly cost of care has surpassed $9k and is set at $9,096.00.
• The minimum MMNA is now $1,711.25.
• The shelter adjustment is $513.37.
• The monthly personal allowance jumped an awe inspiring $2 to reach $63.00.