It’s one of those painful, “don’t make me deal with this” issues that eventually confronts most of us: Mom or Dad’s health is failing, and she or he needs nursing home care. It’s an issue that especially confronts baby boomers, who now look out for their aging parents while still raising their own families.

Meet Randy Boggio.

Boggio is a partner in the Bloomington law firm of Garvey & Boggio, which specializes in a relatively arcane field called “elder law.” Unlike estate-planning law, which deals primarily with the establishment of trusts, wills, and the legal aspects of other instruments for passing wealth from one generation to another, Boggio’s practice also extends to legal questions surrounding nursing home care.

“Elder law tends to be a crisis-oriented practice,” Boggio says. “Typically, it’s the children coming in with a parent who is showing signs of needing nursing care, or the spouse has been told, ‘You can’t take care of your husband or your wife any longer.’”

Lately, his clients have new challenges to contend with. As of last February, the new Federal Deficit Reduction Act has significantly tightened the eligibility requirements for medical assistance through Medicaid. Specifically, it takes a much stricter stance on the amount of time that must elapse after a person has transferred assets—in the form of gifts to family members, for instance—before that person is eligible to receive assistance from Medicaid, which in Minnesota is administered through the state’s Medical Assistance program.

“Medical Assistance rules and regulations become more restrictive each year,” Boggio says. Effective estate planning or disability planning should not include reliance on Medical Assistance if at all possible.”



››› First, understand that the elderly in the United States are eligible for Medicare no matter what their income. That’s a federally funded entitlement program to help pay the health care expenses of those over the age of 65. Medicare covers some care in a nursing home, but only up to a limited dollar amount, only after a three-day hospital stay, and for a maximum of only 100 days.

Then there’s Medicaid, alias Medical Assistance. This is a need-based welfare program, for which an individual has to meet certain asset and income limits.

Boggio’s job is to help the elderly and their families deal with the need for and costs of nursing home care. Full-time nursing home care now costs about $5,000 a month in the Twin Cities area, and about $4,000 a month outside the metropolitan area, he says.

While, “a nursing home is not designed to sap a couple’s life savings,” Boggio says, “it can deplete those savings in a relatively short period of time, potentially putting a heavy burden on their children, especially if they want to avoid tapping into Medical Assistance.”

For many people, though, Medical Assistance will be unavoidable. When that’s the case, Boggio says, the first priority in protecting some of those personal savings is to look at the exempt expenses allowed for a spouse under the Medical Assistance guidelines. Two exempt items are the couple’s home and a car. Given that, Boggio urges his elderly clients to use excess assets to pay down—or pay off—any remaining mortgage on the house. Likewise, it’s a good time to get a new roof and do other major home maintenance and repairs that will be needed in the relatively near term. Need a new car? Buy one now, Boggio says—and get an extended warranty. How about covering your burial and funeral home expenses? Those, too, are exempt, so use some of your assets there.

The new federal law extends the “look-back period” that’s used to tally an individual’s assets and determine when that person is eligible for Medical Assistance. Rather than counting as existing assets anything that the person has transferred to others within the past three years, Medical Assistance now looks back five years and requires that people report any gifting or transfer of assets within that period. The value of those assets, divided by an average current nursing-home cost of $4,400 per month, will determine the number of months that person must wait to receive Medical Assistance.



››› A Quick Example: Say your father gave your nephew $44,000 for college four years ago. That gift could delay your father’s eligibility for Medical Assistance by 11 months from the date of his application. Given that delay, who will pay for care, and how? Those questions can add to the “crisis” nature of Boggio’s practice. Before a financial crisis develops, he says:

››› Consider long-term care insurance, if the possibility of nursing home expense is a concern in your family—and do so before the need for nursing-home care becomes evident;

››› Begin any gifting program and restructuring of your assets well before the possibility of a nursing home enters the picture;

››› Make sure all the necessary documents are in place in good time, too: your will; your power of attorney, which designates the person authorized to handle your financial affairs; and a health care declaration, which provides instructions as to your care should you be unable to express your wishes.