PLANNING FOR LONG-TERM CARE IN ILLINOIS

What can be done to plan for long-term care, ensure that a health crisis or chronic illness will not erode an individual’s security and dignity, and provide for family and loved ones?  As you may have already gathered, the answer is not simple.  A careful analysis of each individual’s personal and financial situation must be done to formulate the proper plan. Factors such as income from social security, pensions and investments; the nature and value of assets; age and health; family situation, and other considerations must be evaluated in order to make the right choices.

If long-term care insurance is not an option, and personal income and resources are not sufficient, one planning technique is to transfer assets into a “Medicaid” Trust, retaining the income for the “Grantor” and preserving the principal of the assets (the assets held by the Trustee) for spouses, children or other beneficiaries.  When properly drafted, the trust will provide asset protection, with significant tax benefits as well, including avoidance of gift taxes, and elimination of capital gains taxes.

***In addition, trust assets will avoid probate. The trust allows the Trustee to access the principal of the trust during the Grantor’s lifetime for the benefit of the Grantor’s children or other beneficiaries, although the Trustee cannot give the principal directly to the Grantor.  Most Grantors also choose to maintain the right (called a Special Power of Appointment) to change the ultimate beneficiaries of the trust, by “reappointing” the assets to different members at a later date. This power retains control for the Grantor, and prevents transfers to the trust from being treated as taxable gifts.

In Illinois, a properly drafted “income-only” trust that gives a Trustee no discretion to distribute principal to the Grantor-Beneficiary, or to his or her spouse, is still a viable long-term care planning tool.  Therefore, a senior doing estate planning may keep the income from an irrevocable, “income only” trust for himself or herself, with the remainder distributable to specific beneficiaries, and qualify for Medicaid (once the applicable “penalty period” has expired) without the assets in the trust being considered by the Illinois Department of Human Resources as available to pay for the cost of long-term care.

If use of a trust is not desired, it is still possible to make “outright” gifts of property, wait until the expiration of the 36 month look-back period, and then apply for Medicaid, or use other planning techniques.

Even if nursing home care is imminent, planning opportunities exist to protect a substantial portion of the applicant’s assets.  Proper use of the Medicaid transfer rules allows individuals to provide security for themselves and a legacy to their families, while ensuring that they will receive long-term care.

One very important fact to remember is that if an individual can live at home with the assistance of home health care, it is possible to transfer assets and qualify for Medicaid immediately to cover home care costs.  Caution must be exercised, however, because home health care may be appropriate initially, but if the individual’s condition deteriorates to the point where he or she cannot be safely maintained at home, nursing home placement may be required.   If this higher level of care is needed, a new application is required, and the Medicaid transfer rules will be imposed.  Thus, when planning for home care, the possible need for institutional services must be evaluated before transfers are made.

Moving in with a relative or family member may also be an option for a senior.  There are several programs available through Medicaid to help pay for personal care aides and home health aides.

In the past, families facing a senior crisis could count on help from a variety of sources, including hospital social workers, discharge planning nurses or home care assistants.  These positions have in many situations been eliminated, however, due to vast upheavals in the health care system.  Comprehensive planning assistance for families and follow-through services for newly discharged older persons have all but disappeared from the hospital scene.

This is where the value of a Geriatric Care Manager (GCM) becomes apparent.  In consort with the attorney and the physician, the professional Geriatric Care Manager conducts a highly skilled clinical assessment of the long-term care needs of an older adult.  This includes consideration of all financial and other resources available to sustain an older person at the highest possible level of independence.  After a thorough assessment, care management is coordinated by the GCM.

When available we have found that our Illinois clients immediately benefit from the broad contacts with the local health care system, and our ability to develop a plan to meet long-term needs provided through the combined services of an experienced GCM and an attorney.  This attorney/GCM collaboration plays out during family conferences, and in follow-up activities.

The Kaufman Law Group helps clients understand their options and navigate through the complex rules that affect long-term planning. Based in  Northbrook, Illinois, we serve clients throughout Illinois, including the Chicagoland communities of Arlington Heights, Buffalo Grove, Deerfield, Des Plaines, Elk Grove Village, Evanston, Glenview, Gurnee, Highland Park, Lake Forest, Libertyville, Lincolnshire, Niles, Northbrook, Oak Brook, Palatine, Schaumburg, Skokie, Waukegan, Wheeling, Winnetka, Wheeling, and all cities within Cook County, DuPage County (Wheaton, Naperville), Lake County, Kane County (Geneva, Aurora, Elgin), and McHenry County.