Women's Retirement Radio

Dan Munster, Eldercare & Special Needs Attorney - Medicaid: It's Not Just Poor Care For Poor People - Episode 42

November 29, 2021 Russ Thornton Season 2 Episode 26
Women's Retirement Radio
Dan Munster, Eldercare & Special Needs Attorney - Medicaid: It's Not Just Poor Care For Poor People - Episode 42
Show Notes Transcript

In this episode of Women's Retirement Radio, I'm joined by Dan Munster.

Dan is an Eldercare and Special Needs attorney in Atlanta.

He focuses exclusively on helping senior Georgia residents evaluate whether Medicaid (or other resources) can play a role in their care as they age.

A couple of key points we covered:

  • Why Medicaid isn't sub-standard care.
  • How you can often qualify for Medicaid even if you have assets and income.
  • Why the best time to plan for your care is before you need it.
  • And much more...

For more on Dan, please check out these resources:

Get in touch and let me know what you think or if you have any questions.

And thank you for listening.

Visit my website to learn more.

Disclosures

Russ Thornton:
Hey everyone. It's Russ Thornton, the host of Women's Retirement Radio, and I'm excited today to welcome Dan Munster to the show. Dan is a local Atlanta-based elder care attorney. And we've got a lot to talk about. I think the challenge today will be limiting the conversation. So we don't go on for hours and hours, which we could probably easily do, so Dan, welcome.

Dan Munster:
Thanks. It's good to be here. Appreciate it.

Russ Thornton:
Yeah. Super glad to have you. I know prior to hitting record, you had shared a ton of information with me, including your bio and some other information, but why don't we start by you just telling us a little bit about who you are and what it is you do.

Dan Munster:
Okay. I'm now somewhere between 25 and 30 years out of law school, so at this point I'm at what you might call the center of my professional career. The first few years I practiced back in the mid '90s. I had just an amazing opportunity to work with the Senior Citizens Law Project, which is a unit within the Atlanta legal aid society. Then back in 1999, I set up my own practice and have been practicing as a solo attorney since 1999, so that would be 22 years of the total.

Dan Munster:
During that time, all I've ever done is elder care. Over time, that grew a little bit into special needs planning, but I don't do what a lot of other estate planning attorneys and even other elder care attorneys do, which is dabble in things like guardianship or probate or social security disability. My practice is fairly narrow in its focus, and that focus is primarily long term care, Medicaid and VA planning for families that are struggling with financing the cost of expensive long-term care, whether that be at home or in an assisted living setting or in a nursing home.

Dan Munster:
That's a little bit about my practice. I'm not sure how much ... Are you asking about personally or? You tell me. it's an open book.

Russ Thornton:
Yeah. Well, I think our listeners always enjoy getting to know the person beyond just the profession. So yeah, share a little bit about who you are as a person and what you do when you're not helping seniors with elder care law issues.

Dan Munster:
Sure. Well, I'm blessed to have an amazing wife, and though we got married a little bit later than normal, we were fortunate and have two wonderful little boys who are four and six and they definitely wear me out and keep me busy. I'm not sure about you or your listeners, but if you've ever had two boys close to each other in age, you don't really do much else at this point of life besides manage them from injuring themselves or burning the house down, or just keeping them safe.

Dan Munster:
Now they're back in school. Obviously COVID has really complicated things from that standpoint, but they are back in school and doing well. Right now, the majority of my time is spent either here at the office or with my family.

Russ Thornton:
If memory serves me, several weeks ago, when you and I first reconnected after having not spoken in a while, I think you were coming back from a camping trip. I want to say it was up in Michigan or Minnesota. Is that right?

Dan Munster:
One of the Ms. Yes, it was Minnesota. Each year my family has a ... This was the 17th annual family reunion where a bunch of us get together and go camping up in Northern Minnesota, and so we actually took last year off because of COVID and people needing to fly, but this year we decided to make the trip and it was a great trip, caught a lot of fish, just had a wonderful time. Definitely.

Russ Thornton:
Nice. Well yeah, thanks for sharing all that. Back to your work in elder care law, when you were introducing yourself and what it is you do, you highlighted several things, everything from long-term care to Medicaid planning, to VA benefits, and things like that. But what would you say, from your perspective, Dan, is the biggest challenge that you help people address or solve?

Dan Munster:
Well, the biggest challenge, the reason people eventually find me is because there aren't very many attorneys out there, certainly ones who have a depth of knowledge in the area of long-term care planning. I literally just got off the phone four minutes ago with a daughter, she's an only child. Her mother is bedridden. Her father is 87 trying to take care of her. She's having to leave work twice a day to go home and change her mom's depends.

Dan Munster:
They own a house and have life savings of a couple hundred thousand dollars. And everybody is terrified about, how are we going to afford the care that's needed? How is the burden of caregiver impacting dad's health as an 87-year-old man? And is there any way where we can get help, either at home, or God forbid, if she ever needed to move out into a nursing home setting, is there a way we can get some help? Because the cost is otherwise prohibitive.

Dan Munster:
That's an average client. That would be somebody whose net worth might be, including their home, sub $500,000, and yet that's still more than Medicaid allows now. I mean, this is as good a chance as any or opportunity as any to clarify that the rules are greatly misunderstood when it comes to how one qualifies for Medicaid or VA benefits and what's permitted. There's quite a few urban legends and myths that maybe we can talk a little bit about today, which relate a lot to the quality of care someone might receive, relate to the idea that somebody has to be bankrupt or virtually destitute before they can get help.

Dan Munster:
Those are, like I said, those are just urban legends. My role, when helping families address this primary challenge that I help families do, the primary concern is figuring out a way we can navigate within the rules without breaking the law, without doing anything unethical, without cutting corners. Where are the four corners of the law and what can we choose to do within those four corners, which would just be smart?

Dan Munster:
It's amazing how much misunderstanding and misinformation is out there about this. I get to be the good guy and help people understand that the sky isn't falling and that, in this case, for example, we can preserve 100% of all of that property and we can minimize estate recovery, and we can pursue in-home help from Medicaid if ever needed, pursue nursing home assistance if ever needed. I get to help families overcome a lot of and anxiety and fear. It's part of why I love what I do.

Russ Thornton:
Yeah. Just to kind of set the table, you threw out some terms in there, maybe one of the biggest being Medicaid itself. Could you take just a moment and explain, at least at a high level, what Medicaid is?

Dan Munster:
It's funny because sometimes, I should have learned this by now, but sometimes I take for granted that people do have at least a basic understanding, and the reality is, until somebody faces the need, they would have no reason to really know about or understand what Medicaid is, and in particular, how to contrast it with Medicare. The best way to explain what Medicaid is conceptually is to contrast it with Medicare. The first big difference between the two is that Medicare is a national program. Most folks have the impression that Medicaid is also a national or a federal program, and that's theoretically true.

Dan Munster:
And yet it's administered on a state by state basis. Really what you have is a country consisting of 50 states each with its own Medicaid program. Medicare is national, and everywhere you go, it's the same. Your Medicare goes with you across state lines, and there's only four types of Medicare. Part A for hospital coverage. Part B is outpatient doctor office medical care for the most part. Part D is prescription, drug insurance. Then I skipped C. C is the advantage plan experiment where people can go off of Medicare and onto a private insurance plan designed to mirror A, B and D.

Dan Munster:
That's national. Medicaid is very state specific. Another big difference is that Medicare is something that we pay into during our working years, or our spouse does. As a result, when we later qualify for Medicare, we're actually getting back something that we funded through our salary deductions. It's not need based. Literally, Warren Buffet or Bill Gates, or anyone else you can think of, is Medicare eligible without regard to how many millions or billions of dollars they have. The difference is that Medicaid is a need-based program.

Dan Munster:
So, Medicaid will look at someone's assets and income, and certain types of Medicaid, they will look at historical transfers, meaning divestitures of assets, gifts, the use of trusts, things which people often, when trying to invent the wheel for themselves, will decide they're going to pursue those sorts of divestitures. There's quite a few rules, as you know, that forbid that. That's the biggest difference between Medicare and Medicaid is one is need-based and one isn't. And if you have too much savings, or if your income is too high, then their perspective is you don't need help yet. Go away and come back later when you do.

Dan Munster:
Going away and coming back eligible is a function of spending or getting advice from an elder care attorney about how to adapt one's finances to navigate within the rules and then file an application and be approved. That's the difference between the two. Medicaid is a healthcare program. Medicaid does not pay, this is a little bit disappointing, it doesn't pay for assisted living, not in Georgia. If you have clients who are outside of Georgia, the state they're in might have assisted living Medicaid, but here in Georgia, we don't.

Dan Munster:
This gets back to the idea that there are many types of Medicaid. It's not just being on Medicaid. In Georgia, I think we have 34 now classes of Medicaid, and the two that come up most for my practice are nursing home and what's called the community care services program, which is an in-home long-term care Medicaid program that, up until recently, wasn't really viable because it had a long waiting list. But through effective management and all so additional funding, they've managed to whittle down the waiting list.

Dan Munster:
Now I'm able to help families qualify for, on average, about four to six hours a day of in-home personal careunskilled support, things that Medicare won't pay for. So, it's a wonderful sort of program that dovetails with nursing home Medicaid. If someone needs more than four to six hours of care at home, we don't have 12 or 24 hour Medicaid at home. We've just got the next option is, unfortunately, having to move out to a nursing home. That's a little bit about what Medicaid is and how it differs from Medicare, and hopefully that answers your question.

Russ Thornton:
It does, thank you, and super helpful. In fact, hearing that explanation, like another dozen questions come to mind. But maybe you could give a little bit more color, Dan, on the fact that ... or I shouldn't assume it's a fact. Do people really need to be destitute or hovering around little to no assets or personal wealth before they qualify for assistance under Medicaid or? I know you've referred to the fact that there are things that an experienced elder care attorney, like yourself, can help with to mitigate that. Could you speak a little bit about, not getting too deep in the weeds, but a little bit about what the rules are, maybe touch on estate recovery, things like that?

Dan Munster:
Sure. I think it would be helpful, before I do that, to circle back to one of the topics I mentioned a second ago, because a lot of people will tune out and be not all that interested in hearing about how Medicaid works or how they might qualify if they are suffering from the misperception that Medicaid is not my objective, because it's my understanding that if I ever go on Medicaid, then I'm going to be getting substandard bad care. I'll have to be in some sort of government Medicaid facility and therefore receive poor care. Why should I even bother trying to understand the rules and qualify for a program that's going to provide bad care to me?

Dan Munster:
From that standpoint, I want to make sure, Russ, to clarify that it's one of the biggest urban legends out there that Medicaid equals bad care or different care substandard care. To help exemplify that, in Georgia, we have somewhere in the neighborhood of 360 nursing homes. Approximately 97% of them are dual certified Medicare and Medicaid nursing homes. They provide both skilled nursing care and what's known as intermediate level nursing care. Across that whole spectrum, there are great nursing homes, there are good ones, there are average ones, there are poor ones, and there are terrible ones.

Dan Munster:
The point though, is that 97% of all of them, including some over at the excellent end, participate in Medicaid. It is not accurate to say, well, if I'm going to go on Medicaid, then by definition, I will receive substandard care. The real question that people should ask is, if I'm in a good nursing home and therefore will receive good care, how do I identify those places? And how do I get a bed there? That's where it's important to understand that walking up to the front door of a top rated nursing home and knocking on the door and saying, "I'd like to have a bed please, but I don't have any savings, and I'm destitute and the best I can offer you is Medicaid."

Dan Munster:
They are allowed to ask about people's finances, and they're allowed to decide that they don't want to do business with that person. They can decline admission. Understanding that all of these nursing homes are compensated on a three-tier system, post-hospital Medicare is at the top, rehab, and skilled therapy. Then the middle tier is private pay long-term care. Then the lowest rate of revenue is Medicaid long-term care. One of the biggest mistakes I see families make is the assumption that they're going to stretch mom's money as long as they can at the $6,000 a month assisted living facility.

Dan Munster:
Then after the money runs out, then, only at that point, will they consider moving mom to a nursing home? The problem with that is, is obviously that, if you wait until you have nothing to offer besides Medicaid, you're very unlikely to get a bed at a well-respected nursing home. It's typically a better choice to move mom or dad or spouse prior to being out of money, if you will so that you can offer something better than just the lowest rate of reimbursement. That's an important thing for folks to understand that, just because someone receives assistance through Medicaid, doesn't mean their care is going to be deficient.

Dan Munster:
You really just need to understand the three tier system that I just described and leverage, ideally leverage Medicare. If there's somebody who has a stroke or a fall and a broken hip, or some other medical event that necessitates a move into a nursing care setting, then that's going to be the moment at which they have the greatest leverage to get a bed there. As far as the question you've asked about finances, obviously a conversation like this is not designed to go into all of the fine print.

Dan Munster:
But in general, the eligibility rules that apply to everyone break down into four categories. The first is a medical level of care analysis. Then the other three relate to finances. One relates to monthly income, one relates to the value of someone's assets, and then the final one relates to historical transfers or gifts that have been made for less than a fair market value. So, selling someone an asset for $10 and calling it a sale doesn't count because it was not for fair value.

Dan Munster:
On the other hand, if you sell a house valued at $200,000 for $200,000, that's not a transfer subject to penalty. It's a transfer, but it wouldn't be penalized because it was for fair value. Those three tests, income, assets, and transfers are why I have a job. People need to understand what those rules, are and if they're outside those rules, how can they adapt? From a new income standpoint, the monthly income limit is $2,382.

Dan Munster:
That limit applies just to the spouse who's applying for Medicaid. Obviously if the client is unmarried, it applies to them and there's no confusion about that. However, going back to the example of the family I just spoke to, the husband, who would not be the applicant, he had income of more than $3,000 a month. The wife's only income is a $1086 social security check. Although together they have over $4,000 per month of income, she actually passes the income test because she is individually underneath the 2382 limit.

Dan Munster:
If someday they needed to file for Medicaid for him, and he's over the income limit, then we have an irrevocable Medicaid qualified income trust, a tool, in my tool belt, that we can use to cleanse failure of the income test. That's kind of how the income analysis works. The asset analysis is done differently. Whereas they look only at the income of the spouse applying, when it comes to the assets, they actually look at everything that both spouses own.

Dan Munster:
It doesn't necessarily accomplish anything to reposition assets from one spouse to the other, because when Medicaid views the couple as a unit, when it comes to the asset test, they see anything in either spouse's name. When they look at those assets, they'll categorize them into two sections. One section is exempt, and therefore the value of those assets does not impact eligibility and the other category, the non-exempt, or which you might call countable, those assets are limited.

Dan Munster:
For someone who's unmarried, that limit is just $2,000. For someone who is married, that number jumps all the way to $132,380 of accountable property. There are exceptions to the general rules that I'm about to share, but in general, one's home place for a couple, without regard to value, is going to be an exempt asset for purposes of eligibility. The fact that this couple, I'm using as an example, own a home valued at $275,000, that's not even part of the 132.

Dan Munster:
In addition to the home, they have about 200,000 other dollars, but we're talking about a couple that's allowed to have 132. They walked in my figurative door with a $275,000 house and $132,000 of countable property already off the table. The other 68 is really what we have to focus on. That's where they have exposure. Again, we're not getting into the specifics of how to plan for that family, but in general, we're going to look at paying debts and acquiring exempt assets, and making needed repairs to the home or trading in their car and paying cash for a new one, instead of the ...

Dan Munster:
Everybody seems to have an old Buick or Oldsmobile or Crown Victoria as well, is a big one. It's time to get a new car with airbags and antilock brakes. There are a lot of things that can be selected, which don't violate the five year look back rule, because you're just spending your money for fair value on things which are exempt. In an example like this, it's very simple to reposition $68,000 in a way where we get full value from it and don't necessarily have to write any $8,000 or $9,000, or even $10,000 per month checks for private pay long-term care because we can qualify real quickly.

Dan Munster:
Yeah, that's a little bit of a snapshot of how it works and I hope that was helpful. Did it answer your question?

Russ Thornton:
It did, and I appreciate that. You mentioned this, could you elaborate a little bit more about the five year look back?

Dan Munster:
Yes. You also asked about estate recovery, so I'm going to touch on that as well before we wrap up. The five year look back rule is, I guess the first thing to say is that it's not a cap on the duration of a penalty. If somebody gives away $1, they're not going to have a five year penalty. If somebody gives away a million dollars, their penalty is going to be far longer than five years if they are foolish enough to apply for Medicaid within five years. My point being that there's a formula that will be applied, which calculates the duration of a penalty, and it's a function of the size of the gift.

Dan Munster:
On the other hand, if somebody waits until after five years and the Medicaid case worker asks, "Have you made any transfers or gifts in the last five years?" Then the client can simply answer no honestly, and the case worker will go to the next question. That same client, if they applied the day before, within five years, their transfer could result in a six or seven or 10 or 20 year penalty, depending on how big it was.

Dan Munster:
The first thing to remember is that the five years is just the iteration backwards in time Medicaid will look to determine whether any transfers were made for less than fair value, and if the answer is yes, then a penalty is imposed based on the size of that gift. There are exceptions to the general transfer rules. That's a big part of what I'm looking for every time I am gathering facts from a new client, is to make sure to fair it out application of any exception hat might exist.

Dan Munster:
One that I'll give as an example, sort of generically, is that, under the right circumstances, if a child moves into a parent's home to provide care and they do it for a long enough period of time, then the parent can actually give that house to the child as essentially as a reward for providing care, which otherwise, without that care, mom would've needed to go into a nursing home.

Dan Munster:
The Medicaid program says, if that child provides care long enough, and it's a number of years, not days or something, it's got to be a substantial investment of sweat equity in taking care of mom, or dad, or whomever, then that transfer can be made and no penalty applies. There's a long list of potential exceptions, and that's definitely something that families need advice from an elder care attorney about before they start making gifts or transfers.

Dan Munster:
On that point, I'm sure you hear this all the time, people are ... They're under the impression that the "government" will allow gifts of $15,000 a year, and so they assume that, that applies to Medicaid. When, in fact, that's a rule that applies to multi multi-millionaires when they're divesting assets to avoid tax. That law is on the books, it exists, but it doesn't apply to any of my clients who are not multi-millionaires.

Dan Munster:
Medicaid doesn't really care what the IRS lets those ultra wealthy people give away, and therefore Medicaid penalizes all of those $15,000 gifts. It's important for folks to understand that, that's not one of the exceptions that they might otherwise think is on the list. It's probably a good idea to get advice before they start making gifts or the use of trusts comes up and penalties come up under the heading of the five-year look back, because in most cases, use of a trust is not going to add value unless you are way, way out in advance. I'm a little uncomfortable going into the specifics, but you probably know the look back period, right?

Russ Thornton:
Yeah.

Dan Munster:
As far as you know, how many years is it?

Russ Thornton:
Which look back? Are you talking about for transfers or?

Dan Munster:
The Medicaid transfer look back period.

Russ Thornton:
It's the five years, I believe.

Dan Munster:
Right. That's what I've heard as well. If somebody wants to use a trust as part of a preemptive Medicaid plan, then they need to have a variety of other plans lined up in case they were ever going to potentially need help within the next five years. You can't just set up a trust today and apply for Medicaid tomorrow in most cases. Going back to the list of exceptions, there are some exceptions on the list, which could ultimately rely on a trust. But in general, that's a greatly misunderstood area.

Dan Munster:
In fact, it's pretty common that somebody will call me and say, "A friend told me I can throw all my stuff in a trust and then I'll be safe." When in reality, there's more to it than that. As far as estate recovery goes, estate recovery is the idea that someone can go on Medicaid owning assets of significant value. Assets which are countable within that 132,000, or exempt, for example, a homeplace, and get help. However, when someone passes away, there's a rule that says Medicaid gets to seek repayment of the benefits they've spent for you.

Dan Munster:
A big part of a good elder care attorneys job is not just helping people understand how to qualify, but also how to do it in a way which minimizes the byte of estate recovery. Estate recovery, there are a variety of reasons why it's not the boogeyman that people feel that it is, particularly in a married situation. If I have a client who's married, we're usually able to avoid estate recovery altogether. For a client who's unmarried, that task is a little bit more challenging and maybe will not be fully avoided, but it is important for folks to know that with smaller estates, under $25,000, estate recovery is just automatically waived.

Dan Munster:
So, there's not going to be recovery if the plan that is designed leads to an estate valued below $25,000. Beyond that, there are other steps that can be taken to minimize it. I've been saying for many, many years, since 2006 basically, when we implemented our program, that if option A is pursue Medicaid and deal with estate recovery later, and option B is do not pursue Medicaid because you're so scared of estate recovery that you would rather just liquidate everything and pay privately, obviously option A is better than option B. Sometimes people have no choice, but to accept that option A is the better choice. It's the lesser of two evils, I guess you might say.

Russ Thornton:
Got it. Yeah, super helpful. You've mentioned several times understandably that the details are beyond the scope of this conversation and every situation will be a little bit different. For those that are interested in learning a bit more or seeing how you may be able to help in their situation, we would certainly encourage you to reach out to Dan and we'll provide his contact information before we wrap up the call today. In preparation for our today, Dan, you shared a couple of things.

Russ Thornton:
The first of which is that people should never assume that they won't qualify for Medicaid assistance because the rules are broader than many people realize. I think you've done a pretty good job of expanding on that and giving some examples. The other which I'd love for you to just share a little bit about, is that planning ahead, and this is going to sound kind of intuitive or common sensical, but I still think it bears highlighting, is that planning ahead is always better than planning during a crisis.

Russ Thornton:
People should try to acknowledge the possibility that they'll someday need long-term care in some form or fashion, and that they should, I guess, consider this as they're planning ahead, whether that's for care, estate planning, financial planning, things of that nature. As a financial advisor and a financial planner, I obviously kind of live in planning ahead and thinking ahead, but could you speak a little bit about the pros and cons of thinking of planning ahead versus unfortunately being in a situation where you deal with the here and haven't really given any thought to how you might deal with the consequences of care especially in a long-term need situation?

Dan Munster:
Yeah, sure. The point you're making, and I think it's ideal that the person hosting this is somebody who has knowledge about the value of including future long-term care costs as part of one's overall retirement plan, investment plan. Because for so many people, all they're looking at is the age at which they want to retire and how much income they want to have at that point. At no point, during that process, are they fast forwarding 10 or 15 or 20 years out from retirement to a point when it's going to be raining and they might've saved for a rainy day, but all my clients, at least, haven't saved enough to absorb rain at the rate of $8,000 to $10,000 a month for private pay nursing home care. They just haven't accounted for that.

Dan Munster:
I do think that it's wise for folks to have a financial planner who helps them recognize the importance of building that into their plan in case someday long-term care is ever needed. The best way to do that, at least from my standpoint, has historically been long-term care insurance, or more recently, a hybrid investment product that I'm sure you're familiar with, where you can look at an insurance policy or an annuity that has a long-term care rider, allowing access to that asset to finance long-term care if it ever is necessary, or just straight long-term care insurance.

Dan Munster:
It's not all that common, but more and more lately, I'm getting calls from families where they're younger and they're more financially secure, and it just hasn't occurred to them to explore the possibility of an investment product or an insurance product, which can help to answer this question, which very importantly means they never have to invite the government into their own personal finances, which is what Medicaid is.

Dan Munster:
if someone, through good planning, looking at what their investment income projects to be, looking at what their fixed income projects to be, if they can afford, even if just an old school month to month premium long-term care policy, a 10 pay policy, something that will allow them, during their final 10 years of work, to pay off something and have it paid up by the time they retire, I'm a huge proponent of all of that, because the system we have is not perfect. It's more or less broken.

Dan Munster:
Medicaid is the defacto long-term care insurance program for the United States. Somewhere north of 80% of all Georgia's nursing home residents are on Medicaid. At some point, that's going to have to change. I, for myself, certainly don't want to rely on the government taking care of me at that point in my life. I'd rather absorb some costs now and make sure that I have something that addresses those needs down the road. Now, I'm not going to get into all of the minutia about long-term care insurance, because I know that's something you can do with your clients, but I would encourage them to ask you about it, in particular, all of the industry gave itself a black guy here and there over time in terms of companies going out of business, in terms of rate hikes, in terms of use it or lose it because you might die and you've never used it.

Dan Munster:
All of that used to be relevant, and yet now the products have evolved in a way where a lot of that is no longer even relevant. A big part of planning ahead, back to your original point, is exploring whether somebody, without it dramatically changing their quality of life and their lifestyle, can they afford insurance or an investment product of some type, which will take the future costs off the table if ever needed?

Dan Munster:
If they can't or if they don't, then there are times when people call me and the help I can provide exists on the two polar opposite ends of the spectrum. One being crisis mode and the other being more than five years in advance. If somebody calls me who is 68 and recently widowed, but in good health, and between pension and social security, they've got $3,800 a month of fixed income coming in. Let's say they've got a retirement account with 500,000 in it and another $500,000 of investible savings, and a modest home worth a couple hundred thousand. If you do the math, that person has a net worth of $1.2 million.

Dan Munster:
And yet, at $100,000 a year for private pay long-term care, there's some significant exposure there. If that individual were to decide, hey, I'm going to account for the future risk that I have by using an irrevocable trust to protect my home and maybe some of my savings. And I'm going to invest a little bit of my income or savings in a product which will provide insurance, especially if I do end up needing care within five years. Then down the road, once I'm 73, or older, then I will have taken significant assets off of the table and protected them for purposes of my future ability to qualify for Medicaid.

Dan Munster:
There are times when it's smart to go ahead and use a trust, which would otherwise be a big problem if the person was older or in poor health, or had lower fixed income, or didn't have long-term care insurance, or didn't have such substantial savings. At some point, it's not smart to set up a trust that's biting off a five-year chunk of time. But for others, it can be a great option. At the other end of the spectrum, the crisis mode clients, that's the majority of the work that I do because human nature is to assume that we are immortal and that we'll never need long-term care, and that will die peacefully in our sleep when we're 93 and never have to ask anyone for any help.

Dan Munster:
As you can probably gather from the somewhat, I guess sarcastic way I said that, that's not a wise decision to assume those things. Unfortunately, that is the most common call I get, is the family I just described earlier during this call. Mom's at home, dad and daughter are being her nursing home, and they need to make some sort of change yesterday. With most of those clients, I'm able to help them in crisis mode, but it's a very different experience for them. It's done out of absolute necessity in an environment of stress and anxiety and fear, and not at a time when decisions can be made without emotion and just based on logic and preference.

Dan Munster:
I think it's a universal idea that it's always better to be making critical life altering decisions at a moment when we are not in crisis than when our judgment is clouded because we're in crisis.

Russ Thornton:
Yeah. I mean, you're preaching the choir here. Couldn't agree more, but I appreciate that. I appreciate you sharing your thoughts on that topic. I hope our listeners really take that to heart, that the best time to plan is ahead as opposed to being in a reactionary emotion-filled, what do I do right now mindset. A couple of things you mentioned, Dan, brought some other things to mind. First of all, I'd like to just remind our listeners, I'm a family advisor. I don't sell any insurance products, whether that's long-term care or hybrid life policies or annuities. But to Dan's point, I'm a big believer in long-term care insurance or some of these other products in the right situations.

Russ Thornton:
I've got some really great professionals that I can bring in to help with certain clients situations where those make sense. While that's not something that I personally sell, it's certainly something I consult on and help people with all the time. Another thing you mentioned too, was about just the need relative to the opportunity. I've seen, I've been watching with some interest, you're probably maybe familiar with this, Dan, that the State of Washington, I think recently has instituted some requirements that its residents have a kind of a minimal level of long-term care insurance.

Russ Thornton:
Presumably to lighten the burden on the state's Medicare program. Do you think that's something that might take hold and become more commonplace in the future as far as, maybe there being some mandated requirement for some level of long-term care coverage?

Dan Munster:
Well, remember that, as I said at the beginning of the conversation, that Medicaid is very state specific. So, I do not see the federal government, at any point in the near term, somehow instituting or dictating a national approach to this. Unfortunately, this is something that's going to be done on a postage stamp basis based on whether a state is red or blue. I don't want to have a big political conversation. I know your clients don't want that either, but what we're talking about, what you just described is happening in a state, which is blue, and there are other states, I'm sure, considering what you're talking about.

Dan Munster:
But states that don't want to expand their Medicaid program and have had the option, but chosen not to, and which have continually tightened the eligibility restrictions to get benefits at all because they want to keep the Medicaid scrolls as limited as possible, it's very hard for me to imagine that a state run by a GOP led legislature is ever going to implement a program that's designed to spend money on long-term care. That's, unfortunately, I think you have to weave politics into the answer to that question.

Dan Munster:
So, depending on what state someone is in, it's possible that could happen, but it's very unlikely in Georgia, I'm afraid. Having said that, this is a perfect opportunity to tie in something which you're probably familiar with. It's called the Georgia long-term care partnership program. I was negligent to not bringing this up a moment ago when I brought up long-term care insurance. Our long-term care partnership program is what you might say a joint venture between the state and private insurance.

Dan Munster:
How it works is, if somebody buys long-term care insurance and that insurance checks all the right boxes, which means that it is a Georgia long-term care partnership, certified long-term care policy, that's a big deal. The reason is that dollar for dollar, that policy raises their future Medicaid asset limit. For example, if someone buys a long-term care policy with a $250,000 pool of money, and they utilize that insurance, then, and I'm simplifying a little bit here, but in general, how it works is that person's asset limit is no longer $2,000. It's $252,000 because they thought ahead, they got a partnership certified policy, and they utilize those benefits to extend the period of time prior to ever having to ask Medicaid for help.

Dan Munster:
But if after all that insurance is used up, you still are alive and need help, now you can apply for Medicaid and your nest egg is safe because you've purchased insurance with a pool of money at, or approximately at what your life savings are, is I think what some people use it for. Another neat thing is that those dollars are also protected from estate recovery. I don't think anybody buys long-term care insurance because they're excited about how it might help them qualify for Medicaid someday, but a very nice inadvertent perk is that, if it's a partnership certified policy, then you will get those additional Medicaid related benefits down the road.

Dan Munster:
A rule of thumb is that any policy preexisting the partnership program, which is about 2007, is inherently not policy partnership certified. We're getting to be far enough out from 2007, that there probably aren't that many policies out there that are that old, and yet there still are some out there. Unfortunately, there's nothing that I'm aware of, and I've been told there's nothing that can be done to convert the policy into partnership certified policy if it predates 2007. Beyond that point, it's not that hard for a policy to check all the necessary boxes.

Dan Munster:
A good rule of thumb is that, if a policy satisfies the IRS rules for deductibility as a medical expense, then it's probable that, that policy would qualify as a Medicaid partnership program policy.

Russ Thornton:
Yeah. I'm glad you shared that. I know that'll be super informative and helpful for our listeners, especially those who are here in the State of Georgia. Listen, we're kind of knocking on the door of an hour here and I want to be respectful of your time. A couple of closing questions and there are some other things that maybe we can revisit in a future episode as well, because I just find your work fascinating, Dan, and I know our listeners are going to get a lot out of this conversation. We've covered a lot, if there were one thing that our listeners could take away from our conversation today, Dan, what would you want that one thing to be?

Dan Munster:
I think it would be a combination of two things that we've talked about. One is don't make the assumption that your loved one or you, yourself, would not qualify for Medicaid. Ask some questions, do some research, eventually call an attorney. But don't make the mistake that I've unfortunately seen many times, where someone is sitting in my office very sad, let's say, tears are flowing, because several hundred thousand dollars ago, they might've already qualified for Medicaid because they made an assumption.

Dan Munster:
That's in combination with the point that I made regarding the quality of care being seamless. A thousand plus clients, after almost 30 years, I've never had a single family come back to me and say, we regret asking Medicaid for help because the quality of care changed. The reality is it doesn't change. Mom's in the same bed at the same nursing care facility, and very wisely and importantly, the law actually says that the caregivers, the people walking up and down the halls taking care of our loved ones, they're not even allowed to know who's on Medicaid and who's private pay.

Dan Munster:
All that really matters is your loved one in a good nursing home, not whether or not they take Medicaid, which shines the spotlight back on how to get a bed in a better nursing home. And that means not going in on Medicaid. It means going in under Medicare or possibly private pay, and then implementing a subsequent plan. But don't assume that you have too much and don't assume that the care is going to be poor just because you get help from Medicaid. Now, if somebody has millions and millions of dollars, have a good financial planner like Russ invest it for you, and don't bother trying to invite the government in. There's no need for that.

Dan Munster:
But my average client is certainly under a million dollars of total net worth, and that's that's middle America, that's even blue collar nowadays. It's very common for my clients to be blue collar, lower middle-class, middle-class families that have never asked the government for a penny and never want to ask the government for a penny, and yet it's raining ... They save for that rainy day and it's raining at a rate that is going to devastate them financially, which is an extra big deal when we're talking about a couple, and a healthy spouse who might have five or 10 or 20 more years that we have to take care of her or him.

Dan Munster:
Watching life savings evaporate when we are facing the prospect of significant costs for that healthy spouse going forward, bad mistake, and certainly get help from an elder care attorney before you make a mistake.

Russ Thornton:
Speaking of which, we'll be sure to share your contact information here in just a moment. But Dan, I want to say thank you. This has been an interesting and fun conversation. I appreciate your time.

Dan Munster:
Thanks for having me. Definitely.

Russ Thornton:
Yeah. I appreciate your time and you sharing your expertise. I know leading up to this call, you mentioned that a lot of your unmarried clients are women that have survived their husbands, or whatever the case may be, so maybe that's something else we can revisit in a future conversation. But as we wrap up today, what is the best way for people to reach out, to learn more, to educate themselves about you, your services and how it might be a fit in their situation?

Dan Munster:
Well, I'm like pretty much any business nowadays. I've got a website and that web address, that URL is the word Georgia, spelled out, elderlaw.net, georgiaelderlaw.net. Then again, my last name, Munster, is fairly memorable. Most people can remember that. So, just Google Dan Munster and you'll find my website that way. Our phone number is (404) 920-0521, certainly can ring us up that way. The website offers an 800 number as well, depending on where people are calling from.

Dan Munster:
I think it's important at this point in the conversation to also share that we do things a little bit differently at the beginning of a relationship. Before a fee might ever even be discussed, much less charged, between my assistant and I, we're going to invest a significant amount of time in a fact finding conversation designed to identify those families who actually need what we do and those who don't for some reason. Statistically, only one or two calls out of 10 end up being clients.

Dan Munster:
And yet, I get to help 10 out of 10, because the other eight or nine, I'm able to get them to a CPA or a tax attorney, or a geriatric psychiatrist, or whatever it is they might need. I've been blessed to build relationships with people, and now I'm sort of the hub of a wheel, where I'm making referrals more than actually getting engaged by people who call. We're happy to invest that time with the idea that otherwise, people would end up paying for the time it takes me to figure out that they didn't need my help, and that's how most law firms operate, and I just don't feel comfortable charging for every moment of every day that I spend discussing the possibility of working with family.

Dan Munster:
There's not really any financial risk to calling and asking, are we a good candidate for long-term care planning?

Russ Thornton:
Yeah. Thanks for that, Dan. And we'll be sure to include your phone number and website address and other relevant links in the show notes for this episode so people can easily reach out if that's something they're interested in discussing or if they have questions about it. This has been great so thank you again. I'm really, really happy to have you join us here on the Women's Retirement Radio. For all you listening out there, thank you for joining us and we look forward to catching you on our next episode.