Veterand Benefits Estate Recovery and Updates to Medicaid Rules

THE ONLY THING CONSTANT IS CHANGE ITSELF: VETERANS BENEFITS, ESTATE RECOVERY AND UPDATES TO THE MEDICAID RULES

P. Haans Mulder, JD, MST, CFP®

Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) [email protected]

Background• Haans is a partner and has a Masters in

Tax, CFP®, and specializes in estates/elder law and business planning

• Cunningham Dalman, P.C. has been serving the greater Holland/Zeeland area since 1900

Serving the Holland area since 1900

Overview• Cover the VA’s Aid & Attendance benefit

and its eligibility rules• Discuss the Estate Recovery program• Finish with new developments under the

Medicaid rules


Veteran’s A&A Benefit• Single veterans are eligible for up to

$1,732 per month • Veteran with a spouse is eligible for up to

$2,054 per month• Surviving spouse is eligible for up to

$1,113 per month


Veteran’s A&A Benefit• The benefit will cover in-home as well as

care in an assisted living facility• Obtaining the benefit in someone’s home

can be difficult unless there are significant medical expenses


Veteran’s A&A Benefit• The veteran must have served 90

consecutive days of active duty and at least one day during a war-time period

• The veteran must have also received discharge other than dishonorable


Veteran’s A&A Benefit• Program has an income and asset test• Can either have low monthly income or

medical expenses that exceed income• Must have not more than $80,000 of

countable assets (single or married)• Is often much less


• The veteran can establish an irrevocable trust and gift “excess” assets to it

• There is no “look-back” period• The veteran’s child is often the trustee

and all of the children are the beneficiaries of the trust


Veteran’s A&A Benefit

• If the veteran needs the gifted funds, the trustee can take a distribution from the trust (because he or she is the trustee and a beneficiary)

• The trustee can then gift it back to the veteran


Veteran’s A&A Benefit

Medicaid and Estate Recovery• 40% of people 65 years and older will

stay in a nursing home• Average cost to stay in a local nursing

home is $7,500-$10,000/month


What is Medicaid?• State and federal program that pays

for medical treatment (including nursing home care)

• Oftentimes confused with Medicare


When does Medicaid apply?• Applies principally to care in a nursing

home• Applies to people who are blind or

disabled• Must pass the income and asset tests


Who does Medicaid apply to?

• Under income test, you cannot have enough income to pay the monthly cost of staying in a nursing home ($7,500-$10,000 in this area)



• Under assets test, a single person can only have $2,000 in countable assets

• Can keep your home (if it’s not in your trust) and a vehicle

• All other assets are countable



• Asset test allows a married couple to keep their home (again, if it’s not in a trust), a vehicle, and one-half of their other assets


Estate Recovery• It applies to assets that have to be

probated (has the potential to include all assets)

• The only assets that are typically left are: bank account, personal property (including vehicle), and the house


How do you protect against estate recovery?

• The most effective way to protect the house is with a “ladybird deed”

• A trust or individual’s are named beneficiaries on the deed


How do you protect against estate recovery?

• The house remains an exempt asset during the Medicaid recipient’s life

• The costs and hassle of probate are avoided

• The State can’t recover against it


Some other things to be aware of

• When a single person is on Medicaid, he or she can keep the house

• However, he or she will not be able to use Social Security and other income to pay the house expenses



• This typically means that a child or beneficiary must pay these expenses

• Children should protect their right to be reimbursed by executing and recording a mortgage against the house



• This gives a child’s reimbursement claim higher priority than the State of Michigan’s estate recovery right

• A child will get paid when the house sells



• You should make sure the Medicaid recipient has signed a financial power of attorney

• That way, the agent can execute the mortgage


New Developments-House• If the house is in your trust, it becomes

a countable asset• If it’s in your individual name, it will go

through probate• Don’t just leave it in an individual’s

name if you are single


New Developments-House• Don’t have enough cash to pay the

costs of maintaining the house• House can be rented to pay these

costs• Best option is rent to a family member

and then “sublease” it


New Developments-Short Deadlines to Respond

• Have spoken in prior years about long delays

• Now the issue is that the State of Michigan is pressuring case workers to respond quickly


New Developments-Short Deadlines to Respond

• It’s a significant problem because you may not have enough time to respond

• If the application is denied, you likely don’t have a basis to appeal


Questions……


Thank YouP. Haans Mulder, JD, MST, CFP®

Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) [email protected]


Veterand Benefits Estate Recovery and Updates to Medicaid Rules

Economy & Finance

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