Tag Archives: asset protection

Medical Assistance Asset Protection Technique

One of the most often used techniques to protect assets for a single individual is the use of the Reverse Half a Loaf technique. With this technique the higher the fixed income and lower the nursing home costs the greater the savings.  This technique involves controlled gifting and most likely the use of a financial power of attorney.  Where the financial power of attorney is insufficient (for a variety of reasons) court intervention may be the only method by which to protect the assets. 

The amount of assets that can be protected may well be significant but is usually in the range of 40%-60% of the exposed assets.   This technique is complicated and must be done under the supervision of an elder law attorney familiar with this technique.   

We often retain clients in situations where the client’s parent is in rehabilitation at a local nursing home.  Often, Medicare has just run out and the client just received the first nursing home bill equal to the current month and the next month.   Clients are often stunned and realize quite quickly that all of the assets will be gone very soon.   Using the Reverse Half a Loaf even under this scenario may well be an attractive route to take to protect the assets at issue and to set them aside to pay for the wide range of items and services that Medical Assistance will not pay.  Remember, once on Medical Assistance, the recipient can only have $71/day for his/her needs.

Pooled Trusts

In a landmark opinion by the Department of Health and Mental Hygiene, clarity was reached that transfers into a pooled trust can occur without triggering the Medicaid penalty even if the trust beneficiary is over 65 years of age.  The question for many is: 1) when a loved one is in a nursing home can the assets be protected from nursing home expenses and 2) can we set aside and used a loved one’s assets to pay for things Medicaid cannot pay?  For years, the frustrating answer for the use of pooled trusts was “no.”  The problem was the transfer into the trust created a Medicaid penalty.  This is a period of time were the applicant will not qualify for Medicaid (i.e. Medical Assistance in Maryland) under any circumstances for a period of months. So, if the applicant transferred $68,000 into the pooled trust (in 2010), then if she needed Medicaid relief within the next five years she will not qualify for Medicaid relief for ten months (at best, starting when she first seeks benefits).   Removing the penalty period makes sense both from a Maryland policy perspective and a would be applicant’s perspective.  However, even lifting the penalty transfer provisions, the use of a pooled trust is not for every would be Medicaid recipient interested in asset protection.   Please contact your elder law attorney to see if the pooled trust route is the right choice for your circumstance.