Saturday, December 17, 2011 There Go The Social Safety Nets (to help pay for catastrophic long-term care!!)
by Susan M. Graham, Attorney at Law, Senior Edge Legal, Boise, Idaho
We have no money in this country. We all know that. How does this impact on you if you need to pay for residential long-term care in a nursing home, assisted living or in your own home?
There are two government programs that are available to seniors to help pay for care - Medicare and Medicaid.
Medicare is a national health insurance program for people 65 and older. Medicare will help pay for a maximum of 100 days of care. To access this benefit a few requirements must be met. First, a person must be admitted to a hospital and stay there at least three days. Then, when they are discharged to a rehabilitative facility, such as the Boise Elks, if that person is improving, Medicare will pay 100% for the first 20 days of care. If the person continues to improve, Medicare will pay part and the individual or their supplemental insurance will pay part of the expense for the next 80 days.
What are the holes in this "safety net"? First, the Medicare recipient must be ADMITTED to the hospital and not there for OBSERVATION. The difference is huge. If a person is not admitted, Medicare will not pay a dime toward the rehabilitative care. If Medicare does not pay, then in most cases the supplemental health insurance coverage will not pay for the care as well. This problem is happening here in Idaho as well as nationwide. The bills for the first 20 days that I've seen range from $6,000 to $30,000. This is a huge bill for most individuals and families to absorb.
The next hole in the Medicare safety net requires that the person be "Improving" during their rehabilitative care. My cousin, Kathie, at age 98, went to the hospital for three days. She was admitted. They discharged her back to her nursing home and I was called two days later saying Medicare would not pay for her care because she was not "improving." She was old and could not follow instructions. I was not surprised that she failed this second test.
Another "safety net" is the federal and state Medicaid program. Part of this program helps to pay the long-term residential care expenses for people 65 and older who meet a list of criteria. The cost for privately paying these bills ranges from $20 per hour for a bath aide to $8,000 per month for skilled nursing care. To access this benefit, it is necessary to complete an application form and submit it to the Idaho Department of Health and Welfare. The last two application forms we submitted on behalf of a married couple were approximately 400 pages each.
There were at least six more inches of back-up information. It took hours and hours to sort out and complete the application and deal with the follow-up issues. All of our Medicaid applications have been approved in the past 5 years, but remember I have a law office. The process is onerous and next to impossible for regular families in crisis to complete on their own. That is not fair, but it is the real world.
We have no money in this country to continue to provide the safety nets that have been available.
What can you do to protect yourself and your loved ones?
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Make certain you have up-to-date legal documents that include your Living Will, Health Power of Attorney and Financial Power of Attorney.
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Let the people you plan to rely upon in a crisis know you have nominated them to help.
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If you need help, seek it out. Your failure to make informed decisions may cost you and your family thousands of dollars and unnecessary worry.
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Contact your government representatives and let them know you want honest safety nets that really work, not ones that exist on paper and are not really accessible to regular people.
Friday, January 07, 2011 How to Pay a Relative to Care for Dad Without Stepping on a Land Mine.
Landmines? What are they?
• What is the right amount to pay?
• Should there be a written agreement?
• What about taxes?
• Full discloser to all the family?
• How will this impact getting Veterans Benefits and Medicaid?
“According to a report by the National Alliance for Caregiving and AARP, 43.5 million Americans looked after a friend or relative age 50 or older in 2009, 28% more than in 2004.” [Source: Should You Pay A Relative to Take Care of Mom? by Anne Tergesen, The Wall Street Journal, December 11, 2010]
If care is required, many families prefer to pay a relative rather than hire a complete stranger. It is only fair to pay someone if they are working part-time or full-time to provide quality care.
What is the right amount to pay? That depends on how many hours, the skill level of the provider and the pay rates in the local area.
Should there be a written agreement? Yes, this will be required if the elder ever should need to apply for Medicaid and the future can’t be predicted. To make sure the legal standards for the agreement meet the Idaho Department of Health and Welfare requirements, contact an attorney who is knowledgeable in this area to assist in drafting this contract. Another advantage of the contract is the terms of employment are spelled out so there are no misunderstandings in the future. If you ignore creating a written agreement and pay the relative caregiver, this will create problems in the future for qualifying for Medicaid.
What about taxes? The provider will pay income tax on the wages received, and the elder may have to pay employer taxes. It is recommended that a Certified Public Accountant be contacted to be certain this is done properly.
Why provide full disclosure to the family? If the other family members are aware of the formal arrangement to provide care for an elder, there is less chance of family disputes about who is being hired and how much they are being paid.
How will this impact getting Veterans Benefits and Medicaid? The Veterans Non-service Connected Pension benefits and the Medicaid rules are complex and are not coordinated. That means you can provide care in a way that works for the Veterans Administration but that may not work to qualify for Medicaid.
So what is the bottom line? To make sure everyone is treated fairly and to get the maximum benefit for the elder, the caregiver and the family, get a written agreement that meets the needs of everyone and also meets the legal requirements for the government benefit programs if they should ever be needed. Paying for the preparation of a “Personal Service Contract” will save lots of heartache and money in the future.
P.S. If you need help with a “Personal Service Contract” or your estate plan contact us through our website (www.graham-lawoffice.com) or call 208-344-0375. Monday, November 22, 2010 Compare VA to Medicaid
If you need help paying for long-term care should you consider the Medicaid or the Veterans Administration programs? In earlier blogs the details of the programs were covered. Here is a chart to summarize the high points of the two programs.
COMPARE VA TO MEDICAID
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Basic Comparison Points for
Medicaid Institutional Benefit vs. Veterans Aid and Attendance Benefit
For the State of Idaho
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Issue
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Aid and Attendance (A&A)
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Medicaid Institutional
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Asset Test for a Single Person
The person can keep ….
Note: There are other assets allowed, the information presented here is general.
[Other assets include cash, CDs, investments, 2nd home, 2nd car, etc.]
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House unlimited value
Car unlimited value
Stuff
Prepaid irrevocable funeral
Other assets no fixed number, but anticipate below $40,000
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House with maximum value of $750,000
Car unlimited value
Stuff
Prepaid irrevocable funeral
Other assets $2,000
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Asset Test for a Couple
The healthy spouse can keep…
Note: There are other assets allowed, the information presented here is general.
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House unlimited value
Car unlimited value
Stuff
Prepaid irrevocable funeral
Other assets no fixed number, but anticipate below $40,000
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House unlimited value
Car unlimited value
Stuff
Prepaid irrevocable funeral for both
One-half of the Other assets
But no less than $23,912 and no more than $111,560.
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Penalty for transfer of assets?
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No
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Yes – 5 Year look back
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Joint accounts/asset attributed all to Applicant.
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No. Split among joint account/title holders not in household.
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Yes.
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Cash benefit?
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Yes 2010 levels are
Single Vet $1644
Married Vet $1949
Widow of Vet $1056
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No. Pays for medical services, doe not give cash to recipient.
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Pays NH costs in full?
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No. VA A&A is a fixed payment amount. This is cash to the recipient, If A&A recipient goes on Medicaid the VA benefit reduced to $90.
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Yes. Minus cost share. Cost of share is usually the social security and pension income of the Medicaid recipient.
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Attorney Fees
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Cannot charge to do application, other limitations, read the rules.
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Can charge for all services.
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Certifications required to represent as attorney?
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Yes.
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No.
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P.S. Barbara and I were gone last week to a conference for law offices who use Apple computers. We were amazed how many attorneys think outside the box and have come up with creative ways to use computers in their office and the courtroom. We plan to use some of the ideas to enhance the services we offer out clients.
Happy Thanksgiving to you and yours. I'll enjoy cooking for friends and making pumpkin and apple pie for desserts.
Friday, August 27, 2010 HOW TO PAY FOR LONG-TERM CARE? - THE MEDICAID PROGRAM CONTINUED - What if you have excess non-exempt assets
To meet the asset test it is often necessary to “spend down” excess non-exempt assets before applying for Medicaid. How can a single or married person “spend down” or make the excess non-exempt assets go away? There are four methods: 1) pay the bills for the Medicaid applicant, and the applicant’s spouse, if they are married, 2) purchase exempt assets 3) gift and 4) list non-exempt assets for sale.
1. Pay the bills.
• Pay the regular bills for the Medicaid applicant (and their spouse.)
• Pay off the house mortgage or other loans.
• Enter into a written “service contract” that meets the Health and Welfare Regulation standards that allows the Medicaid Applicant (and their spouse) to pay designated family members at a market rate for their help.
The family member is paid after the services are provided.
The income is taxable to the family member.
If there is no written contract, then the payment is a gift.
• Go on a nice trip and pay for 1 child to go along if you need a traveling companion to travel safely.
2. Purchase exempt assets
• Buy a more expensive home
• Remodel the home. Make the home handicap accessible.
• Buy a more expensive car
• Buy stuff: TV, mink coat, dining room set, computer, chair, bed and other household items.
• Prepay the funeral with an irrevocable funeral fund
• Pay for dental and eye care and hearing aids
• Purchase an Annuity that is paid out in equal monthly installments over the life of the single person or the life of the healthy spouse. Purchase the annuity from an insurance company that pays all the funds out in a time period that is less than the actuarial lifetime of the owner.
For a single person, name the State of Idaho as the beneficiary to be reimbursed for the Medicaid benefits paid on behalf of the Medicaid applicant.
For a married, healthy spouse, name the spouse first as the beneficiary and the State of Idaho as the contingent beneficiary to be reimbursed for the Medicaid benefits paid on behalf of the Medicaid applicant.
To my knowledge the first such annuity was approved by Health and Welfare in February 2010.
3. Make Gifts of assets
Understand there is a five (5) year “look back” for gifts. That means if you apply for Medicaid, Health and Welfare will “look back” to see if any gifts have been made during the five (5) years prior to applying for Medicaid.
If a gift was made within this five-year period the applicant will be assessed a penalty period. A penalty period means that even though a person meets all other tests to qualify for Medicaid, they must wait out the penalty period before they can reapply and qualify for Medicaid. The penalty period is calculated by dividing the amount of the gifts made in that 5-year period by $200 for a daily calculation. For example, a $13,000 gift will result in a 65-day penalty period. This means that the applicant must wait an additional 65 days before they can reapply for Medicaid.
One solution is to give back the gifted funds, and there will be no penalty period.
Another solution is make large gifts, and put them in an irrevocable trust to protect the assets, and retain sufficient funds to pay the bills for a least five years.
There is no penalty period if a home is gifted to:
• A child who has resided in the home for two years prior to the first time the Medicaid applicant went into a facility for 30 continuous days or more. The child’s care is expected to keep the parent out of a care facility for part of this time.
• A sibling who lived in the home for one (1) year and also has an ownership interest in the home.
• A disabled child.
4. List a non-exempt, real property or other illiquid asset for sale.
If the Medicaid applicant owns real property that is not a primary residence, this property can be listed for sale and will no longer be counted as a non-exempt asset.
Procedure for applying for Medicaid
Once the “spend down” is accomplished and the asset and other test requirements are met, then it is possible apply for Medicaid the next month.
Get Help!
The Medicaid rules are complex and change often. The information provided in this article is general information and not intended as legal advice. If you want to investigate whether you or a loved one may benefit and qualify for the Medicaid program to help assist pay for the cost of long-term care in the home, in an assisted living facility or in a long term nursing home (skilled nursing care) facility, it is recommended that you seek the advice of a Certified Elder Law Attorney or other professional.
Monday, August 23, 2010 HOW TO PAY FOR LONG-TERM CARE?-THE MEDICAID PROGRAM CONTINUED-THE MEDICAID ASSET TEST
Last week we discussed what it takes to meet the Income Test to qualify for Medicaid. This week we will address what it takes to meet the Asset Tests to be able to obtain Medicaid benefits.
There are two types of assets: Exempt and Non-exempt assets. The Idaho Department of Health and Welfare refer to “assets” as “resources.”
Medicaid applicants, who are single, are treated differently than married persons.
What is the Asset Test for a Single Person who is applying for Medicaid?
First consider the exempt assets. What are they? A single person can have the following assets:
One residence and the contiguous land with a maximum value of $750,000. This can be a farm, so long as the land is contiguous. Frequently the valuation can be proved by providing the county tax assessment statement.
One vehicle of an unlimited value.
“Stuff” in the home.
Prepaid irrevocable funeral plan or $1500 in an account identified for a “burial fund.” If the burial/funeral plan is “irrevocable,” that means the day of the funeral the family cannot ask for a lower cost funeral and be reimbursed the excess funds that were prepaid.
Funeral plots for family members.
Retirement accounts, so long as the Medicaid applicant is taking the minimum distribution required. If the Medicaid Applicant is under age 70.5, there are different rules that apply.
Less than $2,000 of other non-exempt assets, such as cash in a checking account, a 2nd car, a vacation home, certificates of deposit and all other non-exempt assets.
There are a number of other assets that can be owned by a single person and that single person will still qualify for Medicaid. The information presented in this article is intended as general information. If you have specific questions about your circumstances, it is recommended you contact a professional for legal advice.
Once a single person has the allowed exempt assets and has less than $2,000 in non-exempt assets, they will meet the Medicaid Asset Test.
The list of non-exempt assets is everything that is not an exempt asset. This list can include, but is not limited to the following:
Real property that is not the primary residence
Bank accounts, certificates of deposit, investments, brokerage accounts, and retirement accounts that are not subject to minimum distribution rules
Cash surrender value of life insurance
Other cars and trucks after taking into account the primary vehicle, which is an exempt asset.
Boats, motorcycles and other expensive “toys.”
What is the Asset Test for a Married Person who is applying for Medicaid?
The exempt asset test is slightly different than the test for a single person applying for Medicaid. The healthy spouse of the married couple (often referred to as the “community spouse”) is entitled to keep the following assets:
One residence and the contiguous land with no limit for the value.
One vehicle of an unlimited value.
“Stuff” in the home.
Prepaid irrevocable funeral plan for both spouses or have a burial account of $1500 set aside for each spouse.
Funeral plots for family members
Retirement accounts for the Medicaid applicant so long as the applicant is taking the minimum annual distribution.
All the retirement accounts of the healthy spouse.
One half of the other non-exempt assets but
No more than $109,560 (+$2,000) = $111,560 and
No less than $21,912 (+$2,000) = $23,912.
The non-exempt assets include separate as well as community property owned by either spouse. These non-exempt assets include but are not limited to:
All assets, including a home, titled in the name of a revocable trust in which either spouse has an interest.
Real property that is not the primary residence of the parties.
Bank accounts, certificates of deposit, investments, brokerage accounts, and retirement accounts of the Medicaid applicant that are not subject to minimum distribution rules
Cash surrender value of life insurance
Vehicles other than the one vehicle claimed as an exempt asset.
Boats, motorcycles and other expensive “toys.”
So how do you calculate the total value for non-exempt assets for a married couple?
Start with the “snap shot” date. This is the first day the Medicaid applicant was continuously in a nursing home or assisted living facility for thirty (30) days, or is expected to be in for thirty (30) days or a Registered Nurse administers the Universal Assessment Instrument (UAI) to the individual and finds that the Medicaid applicant meets the required level of care to qualify for Medicaid.
First identify the fair market value of all the exempt and non-exempt assets on the “snap-shot” date. The assessment values assigned by each Idaho county for real estate tax purposed in Idaho can be used as the fair market value for the real property.
Next blog will be on how to meet the asset test if you have to many non-exempt assets.
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