Medicaid Planning with Cathy Sikorski

Have you ever thought about Medicaid Planning? What is Medicaid Planning and is it right for you?

I chatted with Cathy Sikorski, Esq., an elder law attorney, speaker and caregiver, about the intricacies and details regarding Medicaid Planning and who it is a good fit for, and  for those who should look into other options.

In this episode we covered:

🔹 The issue of giving away assets to qualify for Medicaid coverage for long-term care 

🔹 Government examination of financial history for the past five years

🔹 Warning against mistakes and importance of consulting experts

🔹 Being prepared and exploring other options

🔹 Choosing the right facility and considerations for Medicaid Planning 

🔹 Implications of relying on Medicaid for care 

🔹 Estate recovery and partnership programs in reciprocity

🔹 Keeping assets and not needing to spend them down before qualifying for Medicaid

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Watch this episode on YouTube: https://youtu.be/akNGzvAyRss

 #LongTermCare #FinancialPlanning #SteadfastCarePlanning #MedicaidPlanning #PlanningForCare

For additional information about Kelly, check her out on Linkedin or www.SteadfastAgents.com.

To explore your options for long-term care insurance, click here.

Steadfast Care Planning podcast is made possible by AMADA Senior Care and Steadfast Insurance LLC.

Come back next time for more helpful guidance! 

Transcript

Kelly Augspurger [00:00:02]:

Hey, everyone. Welcome to Steadfast Care Planning, where we plan for care to live well. I'm your guide, Kelly Augspurger. Today with me is Cathy Sikorski. Cathy is an elder law, attorney, speaker, author and family caregiver. Cathy, thanks so much for being here.

Cathy Sikorski [00:00:17]:

Thanks for having me, Kelly. I told you I'm excited about today's conversation.

Kelly Augspurger [00:00:20]:

Me too, which is quite controversial and there's lot of things to consider. So today, we are going to be talking about the good, the bad, and the ugly of Medicaid Planning. So Cathy, can we jump right in?

Cathy Sikorski [00:00:36]:

Let's do it because let's very first thing say Medicaid and Medicare are not the same thing. Yes. Such a big confusion, right?

Kelly Augspurger [00:00:44]:

Yes. So let's start there. Cathy, what's the difference between Medicaid and Medicare?

Cathy Sikorski [00:00:49]:

The easiest way to understand it is this medicare is health insurance. This is your health insurance, or your parents health insurance that they get at age 65. And it's their health insurance parts A-B-C and D. Or Medicare Advantage. Right? Medicaid...And there's lots of Medicaid out there, but we're only talking about Medicaid for long-term care, long-term care supports and services. When you get into a long-term care issue, that's the Medicaid we're talking about. When does the government, because that's what Medicaid is, jump in and help pay for some long-term care supports and services.

Kelly Augspurger [00:01:22]:

So what level of care is needed, Cathy, in order to qualify for Medicaid and where is care provided?

Cathy Sikorski [00:01:28]:

Interestingly enough, this is not true in every state and this is why people get crazy, right? You're in Ohio and I'm in Pennsylvania. It is different. Not completely, but sometimes significantly in every state. One of my neighbors is New Jersey and in New Jersey you can get Medicaid, which is help to pay for care in assisted living as well as a nursing home. You cannot get that in Pennsylvania and I don't think you can get it in Ohio.

Kelly Augspurger [00:01:56]:

You can't. No, it's nursing home and sometimes in-home care, but sometimes it can be hard to get.

Cathy Sikorski [00:02:00]:

In-home care seems to be everywhere, but of course has big limitations, which we're trying to break down every day because people want to be in their houses. But that assisted living and what they call a SNF, which is a skilled nursing facility. You're going to hear SNF a lot in this world. And that's what it means everybody. It means a skilled nursing facility. Everybody can get it in a skilled nursing facility. Some states allow it in assisted living.

Cathy Sikorski [00:02:26]:

When it gets tricky is if your loved one is in an assisted living place and they need Medicaid dollars because they ran out of money but they don't qualify for skilled nursing care. Right. Then you're in trouble because there's nowhere to get money.

Kelly Augspurger [00:02:38]:

It's a big time problem. What do you see are the Medicaid eligibility rules? I know this is going to differ depending on your area where you are in the country. But what do people need to consider?

Cathy Sikorski [00:02:50]:

It's two things. It's number one, what is the person's body? Right? What is their need for assistance with daily living, washing, bathing, medication, et cetera, et cetera? You have to qualify to be in a skilled nursing facility in Pennsylvania and Ohio, for example. You have to qualify. You need skilled nursing care. So if you don't need skilled nursing care, you won't get Medicaid dollars.

Kelly Augspurger [00:03:16]:

Which is high level. We're talking about a high level of care. This is not, oh, I just need help taking a shower, I need just assistance and help throughout the day. Right? No, this is a high level of care.

Cathy Sikorski [00:03:26]:

You just forget to take your Meds. Right, exactly. A high level of care. So there's that piece, and if we don't even get to that piece, we don't even get to the dollars and cents piece, which is the next big piece, which is to qualify, you have to have a certain amount of assets and monthly income, and it's actually very little. The system is designed for either you already are in a place of poverty, or it will impoverish you. It will make you poor in order to get these government dollars. That's how you have to do it. So, classically, you can only have somewhere between $2,000 and $8,000 in savings.

Cathy Sikorski [00:04:05]:

That's it. And if you're married and you even have what we call a community spouse, a healthy spouse, they can only keep at a maximum $148,000. I wrote it down. $148,620. Not a lot. Right. So if your husband has a stroke at 67 and your wife is healthy at 62, she has to live on savings of $148,620 for the rest of her life.

Kelly Augspurger [00:04:30]:

Good luck.

Cathy Sikorski [00:04:30]:

According to the Medicaid rules. Now, there's lots of exceptions and lots of ways to do what we call Medicaid Planning, which is why we're here. Right?

Kelly Augspurger [00:04:42]:

Right. And so what does that consist of?

Cathy Sikorski [00:04:44]:

And wait, I skipped one more thing, which is you can have a monthly income of $2,740...I think it's $2,742 a month, or less. You can have more than that, but then that gives you other restraints financially. Okay? Right. So let's work with that. You can keep $148,000 if you're a healthy spouse. You can only have $2,700 in monthly income, and you can only keep $2,000 to $8,000 in a savings account if you're the sick person, right? Right. So, that's when Medicaid Planning comes in.

Cathy Sikorski [00:05:13]:

This is what Medicaid Planning is not, in my opinion, and this is where it gets controversial. Medicaid Planning, for me and for lots of elder lawyers, and elder lawyers, are the kind of lawyers who help with this kind of work we are not estate planning attorneys. Those are for dead people. We're for live people who are sick. Okay? Our job, as we see it generally, is to protect the healthy spouse. What can we do in a Medicaid Planning situation to make sure that that healthy 62 year old woman is not herself destitute 2, 5, 7, 8, 10 years down the road, we have been given legal tools.

Cathy Sikorski [00:05:51]:

We do this legally. We know the rules, in order to protect her. Yes. Our focus is absolutely, can we get government dollars to pay for the sick person in the nursing home? That's our focus. I'm not going to pretend that it isn't. However, the reason that we're doing that is to protect a healthy spouse or maybe a child with special needs, an adult child with special needs. And some people again, I'm not going to lie, because, Kelly, you know I'm very honest about all of this.

Kelly Augspurger [00:06:19]:

You are.

Cathy Sikorski [00:06:20]:

Some people want to protect their legacy, right. The big thing, and I'm sure you hear this all the time, I've worked all my life for this money. Why should I have to give it to a nursing home, right? Of course, the opposite is everybody else has worked hard for their money. Why should they pay for you to be in a nursing home? Right? Right.

Kelly Augspurger [00:06:36]:

And do you really want to be in a nursing home? Is that where you want to receive care? I mean, let's be real here. That's the last place most people want to be, Cathy, right? Most people want to stay at home and be in control of their care options and choose where they receive care, if they need care. And so if we are depending on Medicaid and a skilled nursing facility is where we have to go, that goes against our plan. So I think people need to consider this, right? If you are considering Medicaid Planning, knowing that you are not in control 100% of where you're going to receive care, and so you have to be okay with that, right?

Cathy Sikorski [00:07:19]:

Well, yes and no. Because if you plan early enough and that's why you and I try to get people into our offices, right? If you plan early enough, you can choose the facility that has Medicaid. And some are better than others, let's be honest, because they want someone who's going to come in and pay. And what if you would say, Kelly, I'm okay with paying for five years with my long-term care insurance, right, with some of my assets, but I want to make sure that my spouse is not going to walk away at a young, healthy age with only $148,000. So I'm going to choose the great facility that I know. Ultimately, I might be able to get on Medicaid with and also protect some dollars for her, or my special needs child, or give my grandchildren some college money, right?

Kelly Augspurger [00:08:05]:

Yeah.

Cathy Sikorski [00:08:05]:

This is...the beauty of this, and I would even say Medicaid Planning is a misnomer, just like long-term care planning is kind of a misnomer. We're not planning for you to go into a nursing home. We're planning for you to have the life experience you want. If you, in fact, become an ill person. We don't want you to have long-term care in a nursing home. That's the worst case scenario.

Kelly Augspurger [00:08:26]:

Right.

Cathy Sikorski [00:08:27]:

But if it comes to that, and sometimes it just does it comes to that. We want to make sure that we have talked to you about every possible permutation, that we can provide for, for the plan that you want, not just for you, but for your family. You need to look at what are all the things that could happen and how can I make a plan for that. Now, you and I know that crises happen and people have planned the best and it still doesn't make a difference.

Kelly Augspurger [00:08:56]:

Right.

Cathy Sikorski [00:08:57]:

And that's often when a Medicaid plan kicks in, because it kicks in during the crisis, it kicks in when the nursing home is on the table. It kicks in when it looks like nobody is going to be able to avoid a $10,000/$12,000 a month issue, whether that be in-home care, 24/7 round the clock in home care. Imagine how much that would cost, right?

Kelly Augspurger [00:09:19]:

Super expensive. Oh, over $20,000 in today's dollars.

Cathy Sikorski [00:09:23]:

And that's fine because that is as much a Medicaid plan as anything else, right? I would like to say that the legal community in this space is really, really working towards, and I think you're probably seeing it as well, getting people to stay at home. We're trying to beef up home health aid capability, getting it paid for. Of course, we have a labor problem we don't have anybody to do the work.

Kelly Augspurger [00:09:47]:

We need the caregivers. Yeah, definitely.

Cathy Sikorski [00:09:49]:

And we need to be able to pay them. And the other thing that we're doing is trying to get family caregivers paid because they are doing the work unpaid. And if we can get them paid, maybe people can stay in their homes, which is cheaper for everyone.

Kelly Augspurger [00:10:02]:

Totally. And now for a brief message from our show's sponsor. The Steadfast Care Planning podcast is sponsored by Amada Senior Care, Columbus Amada is your one stop shop for in-home caregivers, senior housing advice and long-term care insurance claim assistance. Visit www.AmadaSeniorCare.com/Columbus-Senior-Care to learn more. Cathy, so talk to us about estate recovery because this is something that we need to consider if we do end up having to go on Medicaid. So what does that mean and what does that look like?

Cathy Sikorski [00:10:33]:

Yeah, because a lot of people don't know about this. They think they get on Medicaid and then it's a free ride. Right? They think it's a free ride. I got to keep my house. I got on Medicaid, I'll give my house to my kids in my will and everything will go. It's never a free ride because what a state recovery means is, let's say you're taking care of your mom and she has to go into a nursing home and then she passes away. If your mother owns any assets at the time of her death. Let's say you never sold her house.

Cathy Sikorski [00:10:58]:

She still had a house in her name. Those assets...Let's say she had some kind of an investment account and she was only in a nursing home for two months. Well, no, let's say ten months. Let's say it's $120,000. And they paid the whole thing because the only thing she had was a house. But her house is worth half a million dollars. That half a million house has to go to reimburse the state for what they paid for her care.

Cathy Sikorski [00:11:20]:

Because your mom had no cash, she wasn't able to pay her bill. You immediately got her on Medicaid, which is awesome. You got her in a facility that you were happy with and you liked. The only thing she kept was her house, which you're allowed to do. That money has to be used to pay back the state for her care. That's estate recovery.

Kelly Augspurger [00:11:36]:

Okay, so upon the death, after the death, the house is going to be sold, and then they're going to recover. Let's say it was $120,000.

Cathy Sikorski [00:11:44]:

Yes.

Kelly Augspurger [00:11:45]:

After the sale, that $120,000 is going to the state to be able to pay back the care.

Cathy Sikorski [00:11:50]:

And it's going to be more than that because that's what it costs to be in the nursing home. But they also always have incidental costs, don't they?

Kelly Augspurger [00:11:58]:

Sure.

Cathy Sikorski [00:11:58]:

So just know that. Just know that, but let's say it's $120,000. You don't get to keep all that money. They immediately have a claim, and they are going to let you know that, "We have a claim. We know that your mother passed away. This is how much you owe the state," and they want their money back, and you have to pay it.

Kelly Augspurger [00:12:14]:

Any good elder law attorney is going to tell you this upfront. I recently read an article about a family, you know they applied for Medicaid for mom. They got care paid for, and then upon her death, they were shocked to hear that, "Oh, now, well, guess what? The state wants paid back for that care." So if you're working with a reputable elder law attorney, they're going to tell you this.

Cathy Sikorski [00:12:37]:

Yes. And there's one other thing called filial responsibility. Cross your fingers, guys, that this goes away. But there are 27 states. I think Ohio is one. I know Pennsylvania is because we started this horrible thing where they can actually ask adult children to pay their parents nursing home bill just right up front. Yeah, nobody seems to be doing that as long as you're honest about your parents assets. Another reason to be brutally honest about what mom and dad own, and go to an elder attorney to figure out what you can legally do to protect anything and what you can't do and what you have to pay.

Cathy Sikorski [00:13:12]:

Because if they think that you are trying to scam the system in any way, this filial responsibility which says you have to pay for your destitute parent could very well kick in and you will end up paying the whole bill.

Kelly Augspurger [00:13:23]:

Oh my goodness. Good info. Thanks Cathy.

Cathy Sikorski [00:13:25]:

Estate recovery and filial responsibility just encourages you to plan properly and be honest about what assets you have and what we're talking about.

Kelly Augspurger [00:13:34]:

Thanks for clarifying that. Something else to consider is the State Partnership Program, which is a partnership between the state government and private insurance. It was created to encourage Americans to plan for their LTC needs and buy LTC insurance. When you buy a partnership qualified long-term care insurance policy, the state will actually reward you by allowing you to disregard or protect assets from Medicaid spend down rules, which provides dollar for dollar asset protection. For each dollar of benefits paid out by the insurance company, $1 of assets is not counted toward the eligibility limit. So this means you can keep those assets and don't have to spend them down before qualifying for Medicaid. Let's look at an example. If you have a policy with $250,000 of benefits and you use what money on long-term care, you can apply for Medicaid.

Kelly Augspurger [00:14:31]:

And if eligible, if you meet their other requirements, you get to keep $250,000 worth of assets over and above the state's Medicaid asset threshold. So, for instance, in states like Ohio, our asset threshold is $2,000 for a single person, and if you're married, it's more generous. These partnership policies must meet certain requirements that can differ a little from state to state. Most states require partnership policies to be federally tax qualified, offer comprehensive benefits that cover facility and home care, have inflation protection, which is going to allow your benefits to grow over time, and specific consumer protections. Keep in mind, only traditional long-term care insurance policies qualify for this partnership asset disregard benefits, not hybrid long-term care life insurance policies. These are specific to standalone traditional policies. With a partnership qualified long-term care insurance policy, not only can your assets be protected from Medicaid spend down while you're alive, but your assets can even be protected from estate recovery after you pass away, which is what Cathy and I just talked about. The state will not try to recover money spent for your care from your estate

Kelly Augspurger [00:15:46]:

if you have a partnership qualified policy and you received those benefits, estate recovery is when that state can require repayment from your estate for any cost paid by Medicaid. Currently, most states have partnership programs in reciprocity, which means they will honor partnership policies from other partnership states when it comes to allowing asset protection when filing for Medicaid. So if you buy a policy, for instance, you live in Ohio, but then you move to another state that also has reciprocity, then you'll be able to have asset protection there too. So if you're concerned about protecting assets, you should look into partnership qualified long-term care insurance. Let's talk about, which we didn't touch yet, which I think is important is the five year look back period.

Cathy Sikorski [00:16:31]:

Really important. Right. In a nutshell, what this says is you can't say, "Oh, I have Alzheimer's, or I have Parkinson's. I know that if I'm around in five for seven years, I'm going to need extraordinarily expensive care. I'm going to start giving away my assets, I'm going to give my beach house to my kids, I'm going to give all my investments to my grandchildren." You cannot give your money away, especially when you know you have an incident coming. Right. You're going to need care for quite frankly, if you're 90, it looks like you're giving away money because you feel like you might need care in the future that you expect the government to pay for. If you're going to ask the government to pay for your care under Medicaid, they're going to look back five years at all of your money and say, "Where did it all go?" And if it went to Gifting, they're going to say, "It has to come back and we're not paying for it until we cover the period of time that you would have paid for out of those gifts."

Kelly Augspurger [00:17:30]:

And that's a penalty period.

Cathy Sikorski [00:17:32]:

That's a penalty period, exactly.

Kelly Augspurger [00:17:34]:

And there's a formula for that. Cathy, is that formula the same in each state, or does that differ?

Cathy Sikorski [00:17:40]:

The formula is the same, the numbers are different. So it's the divisor of how much does a month cost for care in a SNF in a skilled nursing facility in your state. And we'll divide that by how much you gave away, and that's how many months you got to pay. You got to figure out how to pay for it, because we're not paying for it. Right.

Kelly Augspurger [00:17:56]:

So if you did transfer assets in the last five years, then you're going to have to come up with money for a certain amount of time, months or years, whatever that penalty period is, to be able to pay by yourself. And then Medicaid will step in after that penalty period is over. What a tricky system, right. Like people try and I know this has been elongated, too, like, it used to be, what, three years? I don't know how many years ago they changed it and then now it's five years, because I think people were probably working the system, is that it, Cathy?

Cathy Sikorski [00:18:25]:

They're on to us lawyers, they're on to us. Our job was to help keep families solvent. The craziest part about this is that 62 year old woman, right, whose 67 year old husband is now in a nursing home with a stroke and she only has $148,000 for the rest of her life. We were looking at these people saying she's going to end up in poverty, going on government benefits. Like, there's two sides to this coin. Who cares where government money comes from if you're impoverishing her, if she can't afford her own rent, if she can't afford food, if she can't afford medication, if she can't afford to pay for her own Medicare premiums. What are you doing? Right.

Kelly Augspurger [00:19:02]:

Yeah.

Cathy Sikorski [00:19:02]:

So we were trying to figure these things out, and we still have some other tricks up our sleeves, but that's why it was extended to five years, because they're like, "Okay, lawyers are figuring out the system." We're not, quote, getting people on Medicaid. Sure we are, but it's because who has $10,000 a month to pay for a nursing home?

Kelly Augspurger [00:19:23]:

Yeah, it's a lot. It's a big ask.

Cathy Sikorski [00:19:24]:

It's a lot.

Kelly Augspurger [00:19:26]:

It's a big ask. Which is why I'm a huge proponent and I know you are, too, Cathy, of planning in advance right. As we are before retirement and as we're working in our career, if we can have a plan for the future, to be able to pay for our lifestyle in retirement and thinking ahead for the future hey, just due to aging, if I end up needing some help, if I end up needing some care, how am I going to pay for that? Am I going to self fund? Am I going to have long term care insurance? Am I going to do a combination? Am I a veteran? Do I have VA benefits available to me? Do I have equity in my house?

Kelly Augspurger [00:20:05]:

That

Kelly Augspurger [00:20:05]:

I could do reverse mortgage. Like, so many different ways to pay for care. But if we plan in advance, we're going to be able to protect our future selves and families better.

Cathy Sikorski [00:20:18]:

And stop assuming that your kids are going to step in and help you. Yes. Oh, my word. Either financially or physically, because they may not be able to do that. And guess what you're doing? You're depleting their assets and their capability to create some kind of a fund for their future. I was thinking about this the other day. Like, why didn't my mom's generation...My mom will be 95 in two weeks. She just bought a new car. This woman is such a positive thinker.

Kelly Augspurger [00:20:46]:

Did she really? Oh, my gosh, that's hysterical.

Cathy Sikorski [00:20:49]:

Used, but new to her.

Kelly Augspurger [00:20:50]:

No, I mean, still.

Cathy Sikorski [00:20:53]:

Wow, she's awesome. But I'm trying to think, why did my mom's generation have this? Now my grandmothers did both live into their 90s, actually, but, there's so many more people who are living so much longer. We are keeping sick people alive much longer than we used to. And so the burden of family caregiving is getting spread wider, and there's a wider swath all the time. And family caregivers are healthy people who have jobs, who are now suffering financially, as well, because of the lack of, or failure to have a plan. So, if this is you and you see it with your parents, or your grandparents, or whoever's, note that you to need to make a plan.

Kelly Augspurger [00:21:31]:

Who's going to provide care? Where do we want to receive care, and how are we going to pay for that care? Get that plan together. And now for a brief message from our show's sponsor. The Steadfast Care Planning Podcast is sponsored by the CLTC Certified in Long-Term Care Training program, which gives financial advisors tools to discuss extended care planning with their clients. Look for the CLTC designation when choosing an advisor. So, we talked about who it might be a good fit for Medicaid Planning. Now who could it hurt? Who is Medicaid Planning not a good fit for?

Cathy Sikorski [00:22:03]:

Okay, well, it's not going to hurt people who have no assets because it's automatically there for them. I would say the only way I think it could hurt is if you do it wrong. If you decide you know what to do and you haven't consulted an expert, whether it be an insurance, a financial advisor, or a lawyer, and quite frankly, you should consult all of them. If you decide I'm just going to give my assets away and that'll take care of it, and then you have an event and then you're in that five year look back that penalty period, it can really harm you. Or if you decide I'm not doing any planning and all of your money starts to go to your care and you're leaving your family in a destitute situation, it can also hurt you because Medicaid doesn't want to step in and help you until you run out of money. So if you're going to take the plan, then I'm not going to do any Medicaid Planning, or my Medicaid Plan is I'll wait till I run out of money. Trust me, you're going to run out of money. And if it's only you, that's fine.

Cathy Sikorski [00:22:58]:

But if you have people in your life that are dependent upon you, especially for finances, it's going to hurt them terribly if you don't at least get the information. You can't do this by yourself. It's too hard and too complex and it's purposely made to be complex.

Kelly Augspurger [00:23:15]:

So that you don't do it on your own. You need to seek out professionals, speak to a qualified elder law attorney to be able to see, "Is this feasible, is this the right fit for me? Are there other plans that are better for me? What is going to work for my situation and my family and my finances?"

Cathy Sikorski [00:23:30]:

And they should be working hand in hand with your insurance professional and your financial professional. They should be working together.

Kelly Augspurger [00:23:37]:

That's right. A team of people. Absolutely. I know that I do in my circles, working with financial advisors and people's attorneys, and I know you do too, Cathy, working with insurance people and financial advisors. So it is really important that people have a team of people and if you don't...find them, find qualified, trustworthy people.

Cathy Sikorski [00:23:58]:

If something is on your table already, you have a family history of Parkinson's disease, or Alzheimer's, or dementia, right? If you already know that, that should be an impetus for you to just at least have a plan or have a thought about a plan this is what I will do if I find that I'm in that situation.

Kelly Augspurger [00:24:15]:

Well, Cathy, so how does Medicaid Planning work? What does it involve? There are trusts. What does the paperwork look like? What's the process? I know it's so complicated. I know it's so complex. Can you break it down into know Medicaid planning for Dummies? What does that look like?

Cathy Sikorski [00:24:36]:

Would be a good book, right? Okay, so the first thing we all have to say is, it depends, right? Your family situation is different. Every state is different. But generally, here's the deal. Medicaid planning from the big picture, from the top is, "If I ever get sick, what I want to have." So you go to somebody like Kelly and your elder lawyer and you get your powers of attorney in place. You get your long-term care. I have long-term care insurance.

Cathy Sikorski [00:24:57]:

I've had it for 25 years. Just in case you look at what your finances are and how that will be affected in a long-term care situation. So, for example, in my house, my husband has a big, huge, fat IRA. I don't have one. I worked for myself. And we got a beautiful match of IRA money when he was working. And that's free money. Why wouldn't we take that? Right?

Kelly Augspurger [00:25:17]:

Yeah.

Cathy Sikorski [00:25:17]:

But because IRAs are only owned by one person, he has all the money, right? So we need to know, if he gets sick, that money is on the table. So we have a plan for the future about how to move that money when the time comes, if we need to, right? So that's the big picture now. "Oh, my God. We're in a crisis. Somebody got sick. Somebody had a stroke.

Cathy Sikorski [00:25:36]:

What's going on?" We need to make sure we don't violate that five year look back rule. But there are some protections for spouses. Now we're talking to an elder lawyer. Seriously? Now we're in the mix. We have all our paperwork set up. We know what our finances are. We've got our long-term care policy. What else can we do? All right, so there are ways to move money around.

Cathy Sikorski [00:25:57]:

There's something called a Medicaid annuity, which you only use in a situation like this. Now, you're in a crisis because it has very, very specific painful requirements, but it moves the money to a place to protect the healthy spouse. So I can move my husband's IRA money over to a Medicaid annuity for me, it's got some downsides. There's a tax issue, but at least it's then protected from his nursing home costs. Right? So there's that. There's some financial moving around that you can do. Then you have to apply for Medicaid.

Cathy Sikorski [00:26:29]:

Right? So now my husband is now impoverished, right? I'm not, but he is. Yay, because I need money. And you go through the application process, and they ask you, as soon as he goes to a nursing home where's all your money been for the last five years, and you show them, and they let you keep your house, and they let you keep your car, and they let you keep anything that's my own. I can keep my own pension, my own IRA, but his is up for grabs. But we did this thing that we were allowed to do.

Cathy Sikorski [00:26:55]:

Okay, fine. You were allowed to do it. It may invoke a penalty period, but we still have enough money to pay for his care. See, the penalty period is there, but we've also kept money to pay for his care. The complexity that I'm throwing at you is probably making you sick to your stomach, right?

Kelly Augspurger [00:27:11]:

It's awful.

Cathy Sikorski [00:27:12]:

I get it. So all of this is how Medicaid Planning works. And I will tell you, this is why people with a lot of assets and I'm sure Kelly, you see this all the time in your business say, "Ah, I'll just pay for it myself." Don't let the complexity scare you away from looking at the planning. Right? When you buy a house, you're not doing the house inspection if that's not your deal, you're not doing the radon inspection if you're like Kelly and I and live in radon country, right? I don't even think about radon.

Cathy Sikorski [00:27:43]:

I just know it's in my house and I got to do something about it. I'm hiring experts to check the well to make sure that's working. The complexity of actually buying a house seems easy to people now. It's the same. Don't let the complexity scare you away from pre planning and during planning.

Kelly Augspurger [00:27:59]:

What about the irrevocable trust, Cathy, can you speak to that? You talked about the Medicaid annuity.

Cathy Sikorski [00:28:04]:

Trusts do great things. They can do awesomely, wonderful things. Again, states have different reasons and ways you would use trusts. So there's revocable trusts, which means you're still in control of all your stuff, and there's irrevocable trusts, which once you put stuff in there, medicaid usually can't have access to it because you've made it that you have no access to it. The downside of those is people don't like that. They don't like not having access to their...(giving up control)...makes them extremely uncomfortable.

Kelly Augspurger [00:28:34]:

Yeah, for sure.

Cathy Sikorski [00:28:36]:

What do you mean I can't get my money? And you can't. So has to be done at the right time, has to be done in the right way, has to be done with an attorney who knows how the rules work, because just creating a trust doesn't protect you. You got to know how the rules work. And the second thing that most people do is they don't fund the trust. They never put anything actually in the trust.

Kelly Augspurger [00:28:54]:

Oh, interesting.

Cathy Sikorski [00:28:55]:

Because you have a piece of paper that says you have a trust. Like, if you say, my house is in the trust, but you don't re-deed your house to the trust. Your house is not in the trust. Yeah. That costs money. That's a transfer. It got to go to the courthouse. Right. Re-deed the trust.

Cathy Sikorski [00:29:09]:

Often people get trusts created by financial advisors, but they don't fund the trust. Trusts are also tricky, but a really good tool.

Kelly Augspurger [00:29:17]:

So all of these complex things Cathy just talked about are very complicated, right? There's a lot of moving pieces. There are a lot of I mean, this is why you went to school for so many years, right? This is why you went to law school.

Cathy Sikorski [00:29:29]:

And still go, I still go to school.

Kelly Augspurger [00:29:30]:

And continuing ed, right? You continue to stay up on law. Laws change, things get amended. And that's why it is important to work with professionals. So the question of who can help you decide what kind of plan to do, whether that's Medicaid Planning, whether that's long-term care insurance, VA benefits, reverse mortgage. The answer is, Cathy...

Cathy Sikorski [00:29:56]:

Listen to her. Because what she's telling you is there are so many options, there are so many ways to put a plan in place in case you find yourself in this terrible situation, you can already be ready to say, "Okay, look, I know I have VA benefits. I know I have the capability of a reverse mortgage if that need be, would be something that I could use for myself. I know that I bought long-term care insurance, or I know I didn't buy it," Okay? "I know that's not something I did." If you know what you have and what you can use in a crisis, you're already ten steps ahead of most people. I really, really want people to understand that Medicaid Planning is not making yourself poor to steal from the government so that somebody can have a party on a yacht. Medicaid Planning is to help protect your family, because the whole point of Medicaid Planning is somebody is going to be poor. It could be the person in the nursing home, or it could be your entire family. I got to tell you, I even had an estate lawyer tell me the other day, yeah, I'm not a fan of Medicaid Planning, even though some lawyers in my office do it.

Cathy Sikorski [00:31:06]:

And I said to him, "I think you don't understand it. Give me the opportunity to educate you about why your clients need it."

Kelly Augspurger [00:31:11]:

Yeah, and I think depending on your perspective right. I think experience. So just to throw this out there and, Cathy, we talked about this even before we recorded. I'm like, "Cathy I have some real negative perceptions of Medicaid Planning," and that's really based on my experience, Cathy. One of my grandmas was on Medicaid, and it was just downright awful. I mean, my grandma and grandpa...She was in a terrible facility.

Kelly Augspurger [00:31:35]:

She was. That was it. She was in a terrible facility. She had to share a room. It smelled awful. It was a really crummy situation. So, you know, looking back at that and I remember visiting as a kid and being like, "This is the worst place. Like, why is Grandma here?" Not understanding what was going on and so I have these awful vivid memories of that.

Cathy Sikorski [00:31:58]:

Yeah. And they're not false. They're true. And that experience could be true, but you can also empower yourself to choose your Medicaid facility. You can also empower yourself to choose at-home care what you might qualify for from a Medicaid perspective if you are able to reposition your assets.

Kelly Augspurger [00:32:18]:

Yeah. Different points of view, Cathy, and you know, I know people are all over the board with how they feel about it, and I think a lot of that is personal experience. And so I understand your point of view here, and I understand protecting the family, and that is really important.

Cathy Sikorski [00:32:33]:

To be fair, we also felt that way about reverse mortgages, didn't we?

Kelly Augspurger [00:32:37]:

Oh, for sure. Yeah.

Cathy Sikorski [00:32:39]:

It was just a charlatan's way of doing things. I got to tell you, a long time ago, I felt that way about trusts, also. A charlatan's way of doing things. And this is what's so great about us continuing our education, Kelly, you and me personally and our industries, right? Is if we feel we can use these tools and find reputable people who know how to help us use these tools reputably. I think we continue to come into places where our families and our clients and our friends need to know that there are ways to make your end of life at least respectable and with dignity, good for everyone.

Kelly Augspurger [00:33:23]:

Right, and I think that's so key, Cathy, is working with reputable people that know what they're doing and they want to do the right thing. Obviously, they're going to follow the rules. But looking at your situation and not just, "Oh, yeah, you're coming to me. Of course you're going to get a Medicaid Plan like we're going to do that right." It's, "You know what? Let's assess the situation, because this might not be the right fit for you," someone that's going to be straightforward and honest with you.

Cathy Sikorski [00:33:46]:

A Medicaid Plan, yeah, is mostly the exception rather than the rule. But I'm sure people come to you and say, "I want long-term care insurance," and you look at it and you say, "You know what? Your finances don't fit this picture, but there's another way we can help with that." Right?

Kelly Augspurger [00:33:59]:

That's right. It's not a right fit for everybody.

Cathy Sikorski [00:34:02]:

Right.

Kelly Augspurger [00:34:03]:

Yeah. Everybody's situation is unique in family and finances, and so let's talk to professionals that know the industry and they know the legal terms and they know how to navigate that to be able to come up with the best plan for you. Well, Cathy, thanks so much for your time today. Any final advice on how people can plan for care to live well?

Cathy Sikorski [00:34:23]:

I always say this, and, you know, I do. I have to. I can't help it. Get your documents, get your powers of attorney in order, right now. If you haven't done them for ten years, review them. Things have changed, people change, your life changes, but the laws also change, and those documents are what allow you and your advisors, Kelly and me and anybody else to actually do our job. Especially in a crisis, you have to have those documents.

Cathy Sikorski [00:34:52]:

You have to have powers of attorney. Good thing to have a living will, or advanced directive, and also get your will updated, make sure those things are updated because those care the tools we need to be able to do our job, to do all this kind of planning that we're talking about. That's my final word.

Kelly Augspurger [00:35:07]:

Wise advice, Cathy. Well, where can people find more information about you and your resources?

Cathy Sikorski [00:35:12]:

Okay, so, CathySikorski.com, my website is under construction, I will tell you, but CathySikorski.com, but if anybody wants to email me, you are welcome to do so. Cathy.Sikorski. And I think you can see my name spelled over there...

Kelly Augspurger [00:35:26]:

We'll have it certainly in the show notes. We'll have the right spelling.

Cathy Sikorski [00:35:30]:

Yep. Cathy.Sikorski@gmail.com just email me if you have any questions. I'm only licensed in Pennsylvania, but I can give you general knowledge and you can take it to your attorney and ask them.

Kelly Augspurger [00:35:39]:

You're the best, Cathy. Thank you.

Cathy Sikorski [00:35:41]:

Thank you so much.

Kelly Augspurger [00:35:42]:

Thank you so much for joining me in this adventure of a conversation we've had. I think this is probably the most controversial episode I've done is around Medicaid Planning. And so I knew you were the person that I needed to talk to about this. So thank you for agreeing to do it.

Cathy Sikorski [00:35:59]:

I just hope you feel just a little bit differently about the positives of it. I get the negatives, and I'm not saying they went away, but there are positives there. Yeah.

Kelly Augspurger [00:36:09]:

No, I appreciate that. I think it's good to know the pros and the cons and weigh them to be able to make that choice and go to professionals to see, "Hey, what options do I have on the table? Does this make sense for me?"

Cathy Sikorski [00:36:21]:

Yeah. I appreciate it. Yeah.

Kelly Augspurger [00:36:22]:

Okay.

Cathy Sikorski [00:36:23]:

Thanks, Kelly.

Kelly Augspurger [00:36:23]:

All right, well, have a great day. Thanks, Cathy.

Cathy Sikorski [00:36:26]:

You too. Bye.