Long Term Care Protection and/or Medicaid Eligibility: -
With the passage of the federal "Deficit Reduction Act" signed into law February 8th 2006,
many old plans, legal documents like Durable Powers Of Attorney, and asset protection strategies
need immediate and major review. Most old strategies will no longer work under this new law and may
in fact prove harmful.
Example: CPA advises annual gifting to children and their spouses and
maybe even grand children. Accountant recommends you gift to the limit of the annual per
year/per person exemption of $12,000.00 to each.
The good news is grandma pays no gift tax on these funds; but say these grand parents,
like most, don't have any Long Term Care Insurance and can't get it.
The new law will impose a major period of Medicaid ineligibility starting when one of them
enters the nursing home or later in time when & if they apply for Medicaid in the future.
Translation: The first 6 months- 2 years or more will be private pay.
Another old strategy that can now cause major problems in the future is the deeding to children
of the homestead and retention by parents of a "Life Estate" for themselves in
the home. The same new law will see this as a gift of a lot of money and penalize years later
any parent or their spouse who then applies for Medicaid.
Long Term Care Insurance can be 50% to 60% less than your prior quotes, what
you think it would be, or what others have told you about their cost. Why? Easy, buy only what you
need in coverage not what the salesperson wants you to buy. Custom designed
plans, some without annual premiums [yes these are asset based plans and you can use a portion of
an IRA to fund them], can make these plans affordable for most middle-class families.
Richard Pelletier educates pre & post retirees
about their financial and long term care alternatives and then
assists them to implement the proper solutions. The firm holds
seminars throughout the western counties of
Massachusetts.
Mr. Pelletier is available to employers,
corporations and organizations wishing to sponsor seminars and
speaking engagements on retirement issues. Please
contact him at: 413-747-5500, or
800-552-5449.
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