Protecting assets from the rising cost of nursing care has become a very important concern for aging Pennsylvania residents. So over the next year we will be preparing articles for you on how to protect these assets for yourself but also for your family. In this article, we will discuss “crisis planning”. Immediate annuities are among the tools our elder law attorneys use to help both single and married nursing home residents qualify for Medicaid coverage to either:
1. protect the standard of living of the healthy spouse at home; OR
2. help preserve assets for the families of unmarried or widowed nursing home residents.
First, many spouses of nursing home residents face a dramatic reduction in income when the nursing home spouse qualifies for Medicaid. Purchasing an immediate annuity can convert assets into an income stream for the healthy spouse while avoiding a penalty for transferring assets.
Second, an institutionalized individual can buy an annuity that will provide income to pay the nursing home while waiting out a Medicaid ineligibility period caused by a gift made within the previous five years. Often, these latter annuities are of short duration, usually only as long as the penalty period.
For a better understanding of this strategy, read my earlier article on the “Reverse Half A Loaf” crisis Medicaid planning. And, there is also a recent federal court case that’s good news if you need nursing home care.
The Zahner Case And How It Helps You: Some states, including Pennsylvania, have maintained that short-term annuities, usually two years or less, are still subject to a transfer penalty. This should change now that the Third Circuit Court of Appeals has ruled that Pennsylvania’s Medicaid officials must accept applicants’ short-term annuities, and that these types of annuities cannot be counted as resources and be made subject to penalty. Zahner v. Secretary Pennsylvania Dept. of Human Services (3rd Cir., Nos. 14-1328, 14-1406, Sept. 2, 2015). This was a huge win for the Elder Law community and for anyone who finds themselves in need of Medicaid asset protection planning.
Please go to http://bit.ly/1WPqvTe to read the full article on PA Elder Law Solutions.