Although we have two federal statutes that basically govern Medicaid eligibility, OBRA ’93 and the Deficit Reduction Act, the State does not often honor pre-emption and that the rules of the federal government are to govern. Further, County Boards have different interpretations of various issues.
It is my policy to consult with a Medicaid supervisor before submitting an application so that I can review any issues and get the benefit of their expertise. For example, Post 6 indicates that in certain circumstances if a child resides with an applicant and the care by the child allows the applicant to remain at home, the home can be transferred to the child without penalty. However, each County Board has its own interpretation of the necessary care to be provided by the child.
Posts 27 and 28 discuss the effect of inheritance on the community spouse and the applicant, respectively. Basically, an inheritance is deemed to be an “inaccessible resource.” However, each County treats a delay in distributing an inheritance differently since once an inheritance is distributed it becomes a resource. The Internal Revenue Code in discussing the fiduciary income tax for the estate treats an estate closed and distributed after an unreasonable delay.
Another related area is Post 42 which discusses assets transferred to a disabled child. To qualify as a disabled child, the individual need not have an eligibility letter from Social Security. The State will make an independent determination. This does not exactly comply with the title of different approaches of each County Board, but I think the importance of the issue is relevant.
A very common issue is the exemption from the transfer rules for a transfer for purposes other than to qualify for Medicaid. It is particularly difficult to show that a transfer by an elderly person was solely for another purpose. However, I have succeeded in this area by pointing out the uniqueness of the situation of the transfer, the health of the elderly person at the time and the need of funds by the transferee. Generally, County Boards will not consider this exemption.
Of course, what one County Board may consider an “inaccessible resource” might be considered available by another County Board. For example, a parcel of land that is too small to meet the zoning requirements should be treated as “inaccessible.” I have had different County Boards treat this differently. My personal opinion is, that if a potential resource cannot be “converted to money,” it is “inaccessible.”
Post 53 discusses the fact that allowable expenses and such expenditures are limited by the concept of reasonableness. Obviously, this area and the decision made with respect to such expenditures would vary from County Board to County Board.
The above examples are for illustrative purposes and this article could be extended into a book as the differences by the County Boards are infinite.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post 65
Wednesday, December 23, 2009
Income Taxes and Medicaid Eligibility
Post 20 discusses the importance of liquidating assets in the Medicaid planning process. Events such as distribution of IRA’s, sales of securities and surrender of life insurance give rise to tax consequences. Therefore, prepayment of taxes is one of the spenddown techniques.
It is important to realize that nursing home costs may qualify for the medical deduction under Section 213 of the Internal Revenue Code. The applicant must have a “cognitive impairment” or fail two out of the four activities of daily living.
There are also unique sources of income that could have an effect on Medicaid eligibility. For example, Post 27, discusses the fact that although property in probate is treated as an “inaccessible resource,” the distributions made by an estate to a beneficiary result in taxable income. Fiduciary income tax is a course unto itself, but basically, the distributions result in income tax to the extent of the income of the estate for that year (technically called distributable net income).
Previously, County Medicaid Boards did not ask for verification of income for prior years (Forms 1099). Now such inquiry is made. The reason for this, is that Medicaid is looking for closed out accounts and the disposition of such accounts and also assets that may have inadvertently been omitted.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post 64
It is important to realize that nursing home costs may qualify for the medical deduction under Section 213 of the Internal Revenue Code. The applicant must have a “cognitive impairment” or fail two out of the four activities of daily living.
There are also unique sources of income that could have an effect on Medicaid eligibility. For example, Post 27, discusses the fact that although property in probate is treated as an “inaccessible resource,” the distributions made by an estate to a beneficiary result in taxable income. Fiduciary income tax is a course unto itself, but basically, the distributions result in income tax to the extent of the income of the estate for that year (technically called distributable net income).
Previously, County Medicaid Boards did not ask for verification of income for prior years (Forms 1099). Now such inquiry is made. The reason for this, is that Medicaid is looking for closed out accounts and the disposition of such accounts and also assets that may have inadvertently been omitted.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post 64
Wednesday, December 2, 2009
Life Insurance Issues Revisited
In prior Post 3, I discussed life insurance issues. This post will discuss them in greater detail with an emphasis on life insurance planning.
As indicated in Post 3, the cash value of a life insurance policy has an effect on Medicaid eligibility with the cash value being a resource. The solution to this problem is to borrow against the cash value or surrender the policy. As indicated, in a community spouse situation, a transfer to the community spouse might make sense.
"Paid up" insurance may or may not have cash value. Similarly, if dividends are used to increase the value of insurance, there may or may not be cash value. Keep in mind that the surrender of a policy is a taxable event with the gain being the difference between the amount realized and premiums paid. This results in ordinary income.
There are many uses for life insurance in today's world that do not have a direct bearing on Medicaid. For example, in the last twenty years, term insurance has become popular. Term insurance is used for purposes such as buy-sell agreements and to cover the costs of a child's college education. Such policies have no cash value.
As pointed out in Post 3, the key problem to avoid is the situation where there is group insurance ( no cash value) and the cash value policy is under $1,500. The rule is that the policies are aggregated for these purposes and the cash value counts towards eligibility.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
As indicated in Post 3, the cash value of a life insurance policy has an effect on Medicaid eligibility with the cash value being a resource. The solution to this problem is to borrow against the cash value or surrender the policy. As indicated, in a community spouse situation, a transfer to the community spouse might make sense.
"Paid up" insurance may or may not have cash value. Similarly, if dividends are used to increase the value of insurance, there may or may not be cash value. Keep in mind that the surrender of a policy is a taxable event with the gain being the difference between the amount realized and premiums paid. This results in ordinary income.
There are many uses for life insurance in today's world that do not have a direct bearing on Medicaid. For example, in the last twenty years, term insurance has become popular. Term insurance is used for purposes such as buy-sell agreements and to cover the costs of a child's college education. Such policies have no cash value.
As pointed out in Post 3, the key problem to avoid is the situation where there is group insurance ( no cash value) and the cash value policy is under $1,500. The rule is that the policies are aggregated for these purposes and the cash value counts towards eligibility.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
Child Moving In with Parent to Satisfy Caretaker Requirement
Post 6 and 23 discuss the planning technique of an applicant transferring property to a child whose care allowed the parent to remain at home for at least a two-year period prior to institutionalization. These articles assume the time period had been met.
However, as can be seen Medicaid planning requires creativity. For example, a parent/ possible applicant may be living at home and needs the care of a child (assumes single). If the child moves in and provides the necessary care, Post 6 sets forth the procedure for transferring the home to the caretaker child (i.e. transfer at Medicaid hearing). Therefore, i have had a client (potential applicant) request her daughter to move into the home and hopefully the parent will not go into a nursing home for at least two years. For a more detailed analysis, see Post 6.
This plan resulted from a lengthy discussion with the client of numerous possibilities regarding the home ( for such discussions, see Post 18 and 41).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
However, as can be seen Medicaid planning requires creativity. For example, a parent/ possible applicant may be living at home and needs the care of a child (assumes single). If the child moves in and provides the necessary care, Post 6 sets forth the procedure for transferring the home to the caretaker child (i.e. transfer at Medicaid hearing). Therefore, i have had a client (potential applicant) request her daughter to move into the home and hopefully the parent will not go into a nursing home for at least two years. For a more detailed analysis, see Post 6.
This plan resulted from a lengthy discussion with the client of numerous possibilities regarding the home ( for such discussions, see Post 18 and 41).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
Monday, November 30, 2009
The Effect of Disinheritance of a Medicaid Recipient by a Community Spouse
As stressed in prior posts, Medicaid eligibility may not be permanent. If the requirements for eligibility are not met at the first moment of the first day of a given month, eligibility will be lost. A general discussion of that problem is set forth in Post 21, which discusses loss of eligibility upon the death of another.
The salient development with respect to the community spouse is that the regulations to OBRA '93 (which are still in effect) appear to disqualify an individual from eligibility due to the existing of elective share rights.
Planning considerations for the will of a spouse of an individual who is or may be entering a nursing home are broader than the issue of Medicaid disqualification. However, Medicaid planning must address the possibility that the "healthy spouse" might predecease the potential Medicaid applicant or Medicaid recipient. Lack of planning in this area could undo lifetime Medicaid planning. For purposes of this discussion, the wife is assumed to be the potential Medicaid applicant, and the will under discussion is that of the husband.
Supposed the husband desires to "disinherit" his wife and preserve assets for the next generation if he dies first. See the New Jersey elective share provisions. N.J.S.A. 3B:8-1 et. seq. The regulations and comments would appear to treat the failure of the wife to exercise her elective share rights as a transfer, the amount of which would presumably be one-third the augmented estate of the husband (N.J.S.A. 3B:8-1,3).
Example 1: Husband predeceases wife (nursing home resident, not yet eligible for Medicaid) devising his estate to their children. Assuming elective share rights of $90,000, failure to exercise these rights would result in a period of ineligibility ( see post 15).
Such interpretation violates the federal statute and raises numerous preemption issues.
For a further analysis and the general estate planning issues if a community spouse predeceases The Final Medicaid Regulations (Finally!), 2001, "Estate Planning Issues", by Levin, Mark.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
The salient development with respect to the community spouse is that the regulations to OBRA '93 (which are still in effect) appear to disqualify an individual from eligibility due to the existing of elective share rights.
Planning considerations for the will of a spouse of an individual who is or may be entering a nursing home are broader than the issue of Medicaid disqualification. However, Medicaid planning must address the possibility that the "healthy spouse" might predecease the potential Medicaid applicant or Medicaid recipient. Lack of planning in this area could undo lifetime Medicaid planning. For purposes of this discussion, the wife is assumed to be the potential Medicaid applicant, and the will under discussion is that of the husband.
Supposed the husband desires to "disinherit" his wife and preserve assets for the next generation if he dies first. See the New Jersey elective share provisions. N.J.S.A. 3B:8-1 et. seq. The regulations and comments would appear to treat the failure of the wife to exercise her elective share rights as a transfer, the amount of which would presumably be one-third the augmented estate of the husband (N.J.S.A. 3B:8-1,3).
Example 1: Husband predeceases wife (nursing home resident, not yet eligible for Medicaid) devising his estate to their children. Assuming elective share rights of $90,000, failure to exercise these rights would result in a period of ineligibility ( see post 15).
Such interpretation violates the federal statute and raises numerous preemption issues.
For a further analysis and the general estate planning issues if a community spouse predeceases The Final Medicaid Regulations (Finally!), 2001, "Estate Planning Issues", by Levin, Mark.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
Wednesday, November 25, 2009
Trust for a Disabled Child
Medicaid has insisted that the first remaining beneficiary of all trusts be the State. This concept has been in effect since the institution of OBRA '93 and is based upon a misreading of the federal statute.
The administrative regulations (N.J.A.C. 10:71-4.10 (f) require that in order for a trust for the "sole benefit of" a spouse (subject to the community spouse resource allowance), disabled child or disabled individual under the age of 65 to be exempt, the State must be the first remaining beneficiary. That is, the reimbursement requirement imposed by New Jersey applies to all "sole benefit of" trusts. Response to Comment 33 (of the OBRA '93 regulations) indicates so long as the Medicaid claim is satisfied, the trust can provide for other remainder beneficiaries.
This interpretation that the State be the remainderman is a requirement based upon a misunderstanding of the federal statute.
OBRA '93 requires the State be reimbursed from trusts known as "(d)(4)(A)" trusts (trusts for disabled individuals under 65, Miller Trusts-no longer effective in New Jersey, pooled income trust-trusts for groups of disabled children). These trusts are known as exempt trusts. It is noted that the only "sole benefit of" trust referenced under this federal statute relates to a trust for a disabled individual under the age of 65. The exemption from the transfer rules for transfers for the "sole benefit of" a spouse or for the "sole benefit of" a disabled child is not based upon the aforementioned federal statute dealing with exempt trusts. The exemption for these transfers is based upon the federal statute which sets forth the list of exempt transfers. While the federal statute requires that the remainderman of "(d)(4)(A)" exempt trusts be the State, there is obviously no such requirement in the transfer provisions and Medicaid is being more restrictive that the federal law.
The administrative regulations (N.J.A.C. 10:71-4.10 (f) require that in order for a trust for the "sole benefit of" a spouse (subject to the community spouse resource allowance), disabled child or disabled individual under the age of 65 to be exempt, the State must be the first remaining beneficiary. That is, the reimbursement requirement imposed by New Jersey applies to all "sole benefit of" trusts. Response to Comment 33 (of the OBRA '93 regulations) indicates so long as the Medicaid claim is satisfied, the trust can provide for other remainder beneficiaries.
This interpretation that the State be the remainderman is a requirement based upon a misunderstanding of the federal statute.
OBRA '93 requires the State be reimbursed from trusts known as "(d)(4)(A)" trusts (trusts for disabled individuals under 65, Miller Trusts-no longer effective in New Jersey, pooled income trust-trusts for groups of disabled children). These trusts are known as exempt trusts. It is noted that the only "sole benefit of" trust referenced under this federal statute relates to a trust for a disabled individual under the age of 65. The exemption from the transfer rules for transfers for the "sole benefit of" a spouse or for the "sole benefit of" a disabled child is not based upon the aforementioned federal statute dealing with exempt trusts. The exemption for these transfers is based upon the federal statute which sets forth the list of exempt transfers. While the federal statute requires that the remainderman of "(d)(4)(A)" exempt trusts be the State, there is obviously no such requirement in the transfer provisions and Medicaid is being more restrictive that the federal law.
Wednesday, November 18, 2009
Transfer of an Excludable Resourse
There is a misconception that if an individual transfers an excludable resource that such a transfer is exempt from the transfer rules. This is incorrect.
For example, as indicated by "Real Estate Planning ideas for a Married Couple" - Post 11, the home is an excludable resource whether owned by the applicant, spouse or jointly.
Suppose the house is in the husband's name and he transfers the house to the child. This transfer is subject to the transfer penalty even though the transfer is of an excludable resource. The proper technique with respect to the home is to transfer the home into the sole name of the community spouse (whether owned jointly or by the applicant) at the time of institutionalization (the reason for such transfer are set forth in Post 11).
However, the house can be transferred by the community spouse to the child after the applicant receives Medicaid. This is consistent with the principles set forth in Post 13 that the community spouse is no longer limited to the community spouse resource allowance after the date of eligibility. Similarly, the appropriate time for transfer is at that time and when the house is in the sole name of the community spouse.
For example, as indicated by "Real Estate Planning ideas for a Married Couple" - Post 11, the home is an excludable resource whether owned by the applicant, spouse or jointly.
Suppose the house is in the husband's name and he transfers the house to the child. This transfer is subject to the transfer penalty even though the transfer is of an excludable resource. The proper technique with respect to the home is to transfer the home into the sole name of the community spouse (whether owned jointly or by the applicant) at the time of institutionalization (the reason for such transfer are set forth in Post 11).
However, the house can be transferred by the community spouse to the child after the applicant receives Medicaid. This is consistent with the principles set forth in Post 13 that the community spouse is no longer limited to the community spouse resource allowance after the date of eligibility. Similarly, the appropriate time for transfer is at that time and when the house is in the sole name of the community spouse.
Friday, November 13, 2009
Multiple Transfers During the Lookback Period
To understand the effect of multiple transfers during the current 60-month lookback period, a review of the prior law under OBRA '93 would be helpful.
Under the prior law, there are two basics situations with respect to such transfers. One relates to overlapping penalty periods and the other relates to a penalty period expiring prior to the date of the subsequent transfer.
Under OBRA '93, overlapping penalty periods were governed by N.J.A.C.10:71-4.10(m)2., which provides:
" In the case of an asset transfer which occurs during an existing transfer penalty period, the penalty for the subsequent transfer shall not begin until the expiration of the previous penalty period."
The regulations made it clear that if a penalty period expires prior to the date of a subsequent transfer, transfers would not be aggregated ( even if within the 36-moth lookback period). Under OBRA '93, consider the following example:
Individual transfers $24,000 on January 1, 2004 and another $24,000 on February 1, 2004. Individual applies for Medicaid on July 1, 2004. Assume penalty rate of $6,000 and other eligibility requirements have been met. The penalty for the February transfer cannot commence until the penalty for the January transfer expires on May 1. The penalty for the February transfer commences on May 1 and expires on September 1. Application for Medicaid will be denied.
The prior concept regarding multiple transfers have no applicability for multiple transfers under the Deficit Reduction Act. Keep in mind that the key date which triggers the lookback period is the date on which an individual is eligible for Medicaid but for the application of the penalty period ( see post 15 regarding the New Transfer Rules). Therefore, it is logical that any transfer 60 months prior to the new date would deemed to have been made at the date of application (since new rules commence February, 2006, the full 60-month lookback does not occur until February, 2011). Therefore, the new law aggregates all transfers made during the 60-month lookback period at the date of application.
Hopefully, this conundrum would not occur. For example, consideration could be given to a return of the monies transferred and the monies used on exempt resources such as prepaid funeral expenses, back taxes, or improvement of the home. The difficulty of justifying a transfer in most cases is discussed in Post 43. Parenthetically, the State is currently taking the position that any transfers by a resident of an assisted living facility cause permanent ineligibility.
Under the prior law, there are two basics situations with respect to such transfers. One relates to overlapping penalty periods and the other relates to a penalty period expiring prior to the date of the subsequent transfer.
Under OBRA '93, overlapping penalty periods were governed by N.J.A.C.10:71-4.10(m)2., which provides:
" In the case of an asset transfer which occurs during an existing transfer penalty period, the penalty for the subsequent transfer shall not begin until the expiration of the previous penalty period."
The regulations made it clear that if a penalty period expires prior to the date of a subsequent transfer, transfers would not be aggregated ( even if within the 36-moth lookback period). Under OBRA '93, consider the following example:
Individual transfers $24,000 on January 1, 2004 and another $24,000 on February 1, 2004. Individual applies for Medicaid on July 1, 2004. Assume penalty rate of $6,000 and other eligibility requirements have been met. The penalty for the February transfer cannot commence until the penalty for the January transfer expires on May 1. The penalty for the February transfer commences on May 1 and expires on September 1. Application for Medicaid will be denied.
The prior concept regarding multiple transfers have no applicability for multiple transfers under the Deficit Reduction Act. Keep in mind that the key date which triggers the lookback period is the date on which an individual is eligible for Medicaid but for the application of the penalty period ( see post 15 regarding the New Transfer Rules). Therefore, it is logical that any transfer 60 months prior to the new date would deemed to have been made at the date of application (since new rules commence February, 2006, the full 60-month lookback does not occur until February, 2011). Therefore, the new law aggregates all transfers made during the 60-month lookback period at the date of application.
Hopefully, this conundrum would not occur. For example, consideration could be given to a return of the monies transferred and the monies used on exempt resources such as prepaid funeral expenses, back taxes, or improvement of the home. The difficulty of justifying a transfer in most cases is discussed in Post 43. Parenthetically, the State is currently taking the position that any transfers by a resident of an assisted living facility cause permanent ineligibility.
Friday, October 16, 2009
Minimum Monthly Needs Allowance (m.m.n.a.)
Minimum Monthly Needs Allowance (m.m.n.a.)
Old and new laws allow post-eligibility income (pension, social security) to be shifted to community spouse. This is based upon theory that a spouse living in family residence should receive a certain minimum amount of income to pay for housing or "shelter" costs. Argument has been made on behalf of community spouse that principal generating the income needed (reasonable rate of return) should be shifted from applicant to spouse (in essence, increasing the community spouse resource allowance). The new law provides for the "income first" rule which requires that applicant's income be shifted first to make up the m.m.n.a., and if more income is needed (unlikely), then assets can be shifted.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
Copyright October 2009, Post 56
Old and new laws allow post-eligibility income (pension, social security) to be shifted to community spouse. This is based upon theory that a spouse living in family residence should receive a certain minimum amount of income to pay for housing or "shelter" costs. Argument has been made on behalf of community spouse that principal generating the income needed (reasonable rate of return) should be shifted from applicant to spouse (in essence, increasing the community spouse resource allowance). The new law provides for the "income first" rule which requires that applicant's income be shifted first to make up the m.m.n.a., and if more income is needed (unlikely), then assets can be shifted.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
Copyright October 2009, Post 56
Tuesday, October 6, 2009
The Medicaid Lien
The Medicaid Lien
As discussed in prior posts, Medicaid planning by counsel must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient. The Medicaid lien is discussed in N.J.A.C. 49:14.1. The lien is applicable to an individual’s “estate,” which is basically defined as real or personal property and other assets in which the Medicaid beneficiary had any legal title or interest at the time of death to the extent of that interest, including assets conveyed to a survivor, heir or assign of the beneficiary through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement . . . The regulation goes on to discuss certain types of trusts which are also subject to the lien.
There are many issues that could be discussed with regard to the coverage and the language of the lien statute, which are beyond the scope of this article.
Basically, the initial inquiry should be the factors that give rise to the existence of the lien. Firstly, in order for there to be a lien, a deceased individual must have an asset that did not preclude Medicaid eligibility. Secondly, such asset must come within the lien statute.
Typical examples of such assets have been discussed in prior postings, which would include both a discussion of the lien and, in certain circumstances, how to avoid the applicability of the lien:
1. Of course, the most obvious example of assets in one’s “estate” for lien purposes is joint assets particularly joint tenancies with right of survivorship and tenancies in common. For Medicaid purposes, such assets are treated as “inaccessible resources.” See Post 35 for a more detailed discussion of joint assets.
2. Property Owned By Applicant Residing With Caretaker Child (Post 6).
3. Although not discussed in great detail, the transfer of the home by a married couple to another would temporarily take the property out of the lien statute. Basically, the lien would not apply upon the death of the first spouse since property passing to a spouse is not subject to the lien. Medicaid would apply to the lien to such property upon the death of the second spouse.
4. The lien does not apply to the estate of deceased beneficiary if a family member of the deceased beneficiary had continuously resided in the home of the beneficiary (see Post 14 relating to Dependent Relative).
5. Post 23 discusses the transfer of a home owned jointly by an individual to a Protected Transferee (i.e. caretaker child) as removing the home from the lien as one of the benefits.
6. Post 42, which discusses assets transferred to a disabled child, which is an exempt transfer.
7. The most significant exemption from the lien statute, which previously had been allowed as administrative decision is incorporated in the regulations which state “a life estate in which the beneficiary held an interest during his or her lifetime.”
There are an infinite number of issues relating to the lien and the applicability of the lien which could be discussed. Of particular significance is the applicability of the lien to certain types of testamentary trusts. The above discussion is intended to familiarize the reader with the significance of the lien and some of the salient issues.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© October 2009, Post 55
As discussed in prior posts, Medicaid planning by counsel must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient. The Medicaid lien is discussed in N.J.A.C. 49:14.1. The lien is applicable to an individual’s “estate,” which is basically defined as real or personal property and other assets in which the Medicaid beneficiary had any legal title or interest at the time of death to the extent of that interest, including assets conveyed to a survivor, heir or assign of the beneficiary through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement . . . The regulation goes on to discuss certain types of trusts which are also subject to the lien.
There are many issues that could be discussed with regard to the coverage and the language of the lien statute, which are beyond the scope of this article.
Basically, the initial inquiry should be the factors that give rise to the existence of the lien. Firstly, in order for there to be a lien, a deceased individual must have an asset that did not preclude Medicaid eligibility. Secondly, such asset must come within the lien statute.
Typical examples of such assets have been discussed in prior postings, which would include both a discussion of the lien and, in certain circumstances, how to avoid the applicability of the lien:
1. Of course, the most obvious example of assets in one’s “estate” for lien purposes is joint assets particularly joint tenancies with right of survivorship and tenancies in common. For Medicaid purposes, such assets are treated as “inaccessible resources.” See Post 35 for a more detailed discussion of joint assets.
2. Property Owned By Applicant Residing With Caretaker Child (Post 6).
3. Although not discussed in great detail, the transfer of the home by a married couple to another would temporarily take the property out of the lien statute. Basically, the lien would not apply upon the death of the first spouse since property passing to a spouse is not subject to the lien. Medicaid would apply to the lien to such property upon the death of the second spouse.
4. The lien does not apply to the estate of deceased beneficiary if a family member of the deceased beneficiary had continuously resided in the home of the beneficiary (see Post 14 relating to Dependent Relative).
5. Post 23 discusses the transfer of a home owned jointly by an individual to a Protected Transferee (i.e. caretaker child) as removing the home from the lien as one of the benefits.
6. Post 42, which discusses assets transferred to a disabled child, which is an exempt transfer.
7. The most significant exemption from the lien statute, which previously had been allowed as administrative decision is incorporated in the regulations which state “a life estate in which the beneficiary held an interest during his or her lifetime.”
There are an infinite number of issues relating to the lien and the applicability of the lien which could be discussed. Of particular significance is the applicability of the lien to certain types of testamentary trusts. The above discussion is intended to familiarize the reader with the significance of the lien and some of the salient issues.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© October 2009, Post 55
Monday, September 14, 2009
Steps To Be Taken When Planning Is Uncertain
Steps To Be Taken When Planning Is Uncertain
A common situation for a lawyer is to confer with a spouse who explains that her husband’s physical and mental condition are unclear at this point. The husband is in the hospital with a serious and potentially life-threatening condition. If the problems can be cured, the husband will then go to rehab. If that is successful, a nursing home is a possibility.
The joint assets (basically bank accounts) are approximately $200,000, and the assets in the wife (also basically bank accounts) are approximately $100,000. Due to the husband’s tenuous situation, any Medicaid planning would appear to be inappropriate particularly in light of the fact that the husband might pass away.
However, there are basic steps that should be taken even in a situation such as the above:
1. Assets should be transferred into the name of the wife for management purposes as there is an appropriate power of attorney.
2. With respect to a will for the wife, see Post 21 and reference to my article Practical Medicaid Planning – Part II, 1999 “Estate Planning Issues,” by Levin, Mark. Home should be transferred into wife’s sole name (see Post 11).
3. Family should verify accessibility of all assets. That is, make sure that the power of attorney for the husband will be acceptable by all banks or financial institutions. If not, revise the power of attorney.
4. Leave one account for husband as a receptacle for social security and/or pension.
5. Prepare a list of any transfers after February, 2006, which will remain an issue until after February, 2011.
6. Do not acquire annuities with substantial penalty amounts in the event the annuity monies are needed for costs. If healthy spouse is working, that spouse should review company policy about taking a leave in case Medicaid becomes an issue in the future and the additional earnings become an impediment to eventually seeking Medicaid (see Post 33).
7. Confer with counsel as to the possibility of a foolproof plan without taking any steps at the present time. See Post 42 which discusses the transfer of assets to a “disabled child.”
8. Review pension and social security of applicant and spouse. In the above-referenced case, the total pension and social security equaled approximately $6,500. Therefore, if Medicaid did become an issue, these payments should cover the Medicaid reimbursement rate without the need for planning.
As in many of my prior postings, this list is not exhaustive, but rather is illustrative of issues to be addressed.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© September 2009, Post 54
A common situation for a lawyer is to confer with a spouse who explains that her husband’s physical and mental condition are unclear at this point. The husband is in the hospital with a serious and potentially life-threatening condition. If the problems can be cured, the husband will then go to rehab. If that is successful, a nursing home is a possibility.
The joint assets (basically bank accounts) are approximately $200,000, and the assets in the wife (also basically bank accounts) are approximately $100,000. Due to the husband’s tenuous situation, any Medicaid planning would appear to be inappropriate particularly in light of the fact that the husband might pass away.
However, there are basic steps that should be taken even in a situation such as the above:
1. Assets should be transferred into the name of the wife for management purposes as there is an appropriate power of attorney.
2. With respect to a will for the wife, see Post 21 and reference to my article Practical Medicaid Planning – Part II, 1999 “Estate Planning Issues,” by Levin, Mark. Home should be transferred into wife’s sole name (see Post 11).
3. Family should verify accessibility of all assets. That is, make sure that the power of attorney for the husband will be acceptable by all banks or financial institutions. If not, revise the power of attorney.
4. Leave one account for husband as a receptacle for social security and/or pension.
5. Prepare a list of any transfers after February, 2006, which will remain an issue until after February, 2011.
6. Do not acquire annuities with substantial penalty amounts in the event the annuity monies are needed for costs. If healthy spouse is working, that spouse should review company policy about taking a leave in case Medicaid becomes an issue in the future and the additional earnings become an impediment to eventually seeking Medicaid (see Post 33).
7. Confer with counsel as to the possibility of a foolproof plan without taking any steps at the present time. See Post 42 which discusses the transfer of assets to a “disabled child.”
8. Review pension and social security of applicant and spouse. In the above-referenced case, the total pension and social security equaled approximately $6,500. Therefore, if Medicaid did become an issue, these payments should cover the Medicaid reimbursement rate without the need for planning.
As in many of my prior postings, this list is not exhaustive, but rather is illustrative of issues to be addressed.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© September 2009, Post 54
Wednesday, September 9, 2009
Allowable Expenditures Limited by Concept of Reasonableness
Allowable Expenditures Limited by Concept of Reasonableness
Although many expenditures are allowable and are part of the normal spenddown, expenditures which are disproportionate or unreasonable will be denied. This concept is based upon my discussions with Medicaid supervisors rather than personal experience or regulation.
For example, if a single individual has a house and a $100,000 in cash, reasonable expenses on the house in preparation for sale are an acceptable spenddown. However, unjustifiable and unneeded expenses would be denied.
Post 8 indicates that family resources that are not part of the community spouse resource allowance, need not be spent on the nursing home. However, the expenditures that are not part of the protected amount are subject to reasonableness. Assuming $400,000 in resources and a community spouse resource allowance of $109,560, if the community spouse uses the balance to go on a trip around the world, this will be suspect.
Funds set aside for a family funeral plot are traditionally excludable under 10:71-4.4. However, expenditures for a plot during the Medicaid application process which are extraordinary will be carefully reviewed.
Prepaid funeral expenses (i.e. prepaid irrevocable funeral trust) must relate to actual expenses incurred. At one time, funds were paid in excess of the actual costs, and after the applicant received Medicaid, the balance of the monies paid were returned to the family. This is no longer allowable.
As indicated by Post 11, real estate owned by an applicant, spouse of an applicant, or jointly, is not counted as a resource. A spenddown technique which I have used has been to use funds to improve the property. My general approach has been to have the contractor verify the costs and have pictures of the property prior to the expenditure. Merely listing the expenditures on the home without verification could be denied as a spenddown.
Obviously, the list of such excess expenditures is infinite. Other thoughts that come to mind are the purchase of an inordinate amount of health insurance (see Post 1), payments by an applicant to a child in excess of what is reasonable in the community under a caretaker agreement (see Post 52), delay of inheritance to be received by the community spouse or applicant (not really excess funds, but in that category, see Posts 27 and 28), etc.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© September 2009, Post 53
Although many expenditures are allowable and are part of the normal spenddown, expenditures which are disproportionate or unreasonable will be denied. This concept is based upon my discussions with Medicaid supervisors rather than personal experience or regulation.
For example, if a single individual has a house and a $100,000 in cash, reasonable expenses on the house in preparation for sale are an acceptable spenddown. However, unjustifiable and unneeded expenses would be denied.
Post 8 indicates that family resources that are not part of the community spouse resource allowance, need not be spent on the nursing home. However, the expenditures that are not part of the protected amount are subject to reasonableness. Assuming $400,000 in resources and a community spouse resource allowance of $109,560, if the community spouse uses the balance to go on a trip around the world, this will be suspect.
Funds set aside for a family funeral plot are traditionally excludable under 10:71-4.4. However, expenditures for a plot during the Medicaid application process which are extraordinary will be carefully reviewed.
Prepaid funeral expenses (i.e. prepaid irrevocable funeral trust) must relate to actual expenses incurred. At one time, funds were paid in excess of the actual costs, and after the applicant received Medicaid, the balance of the monies paid were returned to the family. This is no longer allowable.
As indicated by Post 11, real estate owned by an applicant, spouse of an applicant, or jointly, is not counted as a resource. A spenddown technique which I have used has been to use funds to improve the property. My general approach has been to have the contractor verify the costs and have pictures of the property prior to the expenditure. Merely listing the expenditures on the home without verification could be denied as a spenddown.
Obviously, the list of such excess expenditures is infinite. Other thoughts that come to mind are the purchase of an inordinate amount of health insurance (see Post 1), payments by an applicant to a child in excess of what is reasonable in the community under a caretaker agreement (see Post 52), delay of inheritance to be received by the community spouse or applicant (not really excess funds, but in that category, see Posts 27 and 28), etc.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© September 2009, Post 53
Tuesday, September 1, 2009
Long-Term Care Insurance Considerations
Long-Term Care Insurance Considerations
All of my posts up to this point in time have been written by me based upon my research of law or actual cases. This post deals with questions posed to a long-term care insurance expert, Geoffrey S. Close, a Wealth Advisor with Morgan Stanley of Morristown, New Jersey. I have worked closely with Mr. Close on several matters and I am sure you will find this information valuable in both your Medicaid and long-term care activities.
1. Are there different types of long-term care insurance?
There are two types of long-term care insurance – pay-as-you-go and a single premium with refund.
2. Does long-term care insurance cost less than double for a married couple?
Yes, the married could pay less than double a single person.
3. What are the options under long-term care insurance?
Options relate to home care, institutional care, elimination time periods (deferral of coverage), inflation riders, etc.
4. Does the new law make long-term care insurance more significant?
Yes, mainly because of the 60 month look-back.
5. Explain the need for home care to be covered under long-term care insurance.
Many people will elect to remain in their homes with custodial care. Medicaid does not pay for long-term care at home.
6. Why should somebody pay for increased coverage due to the C.P.I.?
The increasing costs of nursing homes render a C.P.I. adjustment advisable.
7. Explain what “rated” long-term care insurance means.
Rated means increased costs due to a condition such as dementia or reduced mobility.
8. Explain the need for long-term care insurance for someone with little money and someone with significant money.
A person with little money may not need it because he will qualify for Medicaid. A person with significant money may want to preserve his estate if they go in a nursing home.
9. Is there a best age for purchasing long-term care insurance?
The earlier the start, the total overall out-of-pocket costs are less.
10. Do you recommend coordinating your long-term care insurance proposal with an elder law attorney if the family has one?
Absolutely, a family should coordinate their long-term care plans with an elder law attorney.
11. If a family’s income increases, is there a procedure for increasing their long-term care insurance?
You can always increase your long-term care insurance, but the age and medical status at the time of increase will be considered.
12. If one spouse is either uninsurable or highly rated and a second spouse is in excellent health, how is this situation resolved for cost purposes?
The rated costs for the unhealthy spouse can be ameliorated if there is a healthy spouse with a simultaneous application.
13. Is there a situation in which a person is not a long-term care insurance candidate?
If a person has limited means where his/her assets would be exhausted within a year and, thus, qualify for governmental assistance and the cost of the premium would be a burden, then long-term care insurance is really not an option.
14. Do you recommend long-term care insurance for the look-back period or a person’s lifetime?
As with question 10, it is recommended that the family coordinate their long-term planning with an elder law attorney to look at the cost benefit analysis of many courses of action. Having long-term care insurance gives the opportunity to pursue multiple planning options.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© September 2009, Post 104
All of my posts up to this point in time have been written by me based upon my research of law or actual cases. This post deals with questions posed to a long-term care insurance expert, Geoffrey S. Close, a Wealth Advisor with Morgan Stanley of Morristown, New Jersey. I have worked closely with Mr. Close on several matters and I am sure you will find this information valuable in both your Medicaid and long-term care activities.
1. Are there different types of long-term care insurance?
There are two types of long-term care insurance – pay-as-you-go and a single premium with refund.
2. Does long-term care insurance cost less than double for a married couple?
Yes, the married could pay less than double a single person.
3. What are the options under long-term care insurance?
Options relate to home care, institutional care, elimination time periods (deferral of coverage), inflation riders, etc.
4. Does the new law make long-term care insurance more significant?
Yes, mainly because of the 60 month look-back.
5. Explain the need for home care to be covered under long-term care insurance.
Many people will elect to remain in their homes with custodial care. Medicaid does not pay for long-term care at home.
6. Why should somebody pay for increased coverage due to the C.P.I.?
The increasing costs of nursing homes render a C.P.I. adjustment advisable.
7. Explain what “rated” long-term care insurance means.
Rated means increased costs due to a condition such as dementia or reduced mobility.
8. Explain the need for long-term care insurance for someone with little money and someone with significant money.
A person with little money may not need it because he will qualify for Medicaid. A person with significant money may want to preserve his estate if they go in a nursing home.
9. Is there a best age for purchasing long-term care insurance?
The earlier the start, the total overall out-of-pocket costs are less.
10. Do you recommend coordinating your long-term care insurance proposal with an elder law attorney if the family has one?
Absolutely, a family should coordinate their long-term care plans with an elder law attorney.
11. If a family’s income increases, is there a procedure for increasing their long-term care insurance?
You can always increase your long-term care insurance, but the age and medical status at the time of increase will be considered.
12. If one spouse is either uninsurable or highly rated and a second spouse is in excellent health, how is this situation resolved for cost purposes?
The rated costs for the unhealthy spouse can be ameliorated if there is a healthy spouse with a simultaneous application.
13. Is there a situation in which a person is not a long-term care insurance candidate?
If a person has limited means where his/her assets would be exhausted within a year and, thus, qualify for governmental assistance and the cost of the premium would be a burden, then long-term care insurance is really not an option.
14. Do you recommend long-term care insurance for the look-back period or a person’s lifetime?
As with question 10, it is recommended that the family coordinate their long-term planning with an elder law attorney to look at the cost benefit analysis of many courses of action. Having long-term care insurance gives the opportunity to pursue multiple planning options.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© September 2009, Post 104
Tuesday, August 25, 2009
State Takes Restrictive Position on Caretaker Agreements
State Takes Restrictive Position on Caretaker Agreements
Post 6 and Post 34 have discussed caretaker agreements extensively. Basically, we are talking about an agreement pursuant to which a child agrees, prior to rendering services, to care for a parent in consideration for the parent’s compensation to the child for such care.
The prior posts have indicated that in addition to the agreement, there should be a schedule of activities performed by the child and an independent valuation of services by a geriatric care manager or agency.
Properly structured, the payment by the applicant to the child for such services would not result in Medicaid transfers.
In early March, 2009, Medicaid, at a meeting of supervisors, set forth the following restrictions:
1. The amount that the child should be reimbursed for care is the amount of monies that an aide would receive for the relevant time period and not the amount of monies that the aide’s agency receives. For example, if the agency receives $20.00 per hour and the aide receives $10.00 per hour, the proper reimbursement for the child is $10.00 per hour. As the prior posts indicate, compensation in excess of that considered reasonable by the respective Board of Social Services is deemed a transfer.
2. Child must report any monies received from parent on income tax return.
3. There shall be no payments for future care. That is, some agreements have allowed the parent to make substantial payments “up front” rather than on a recurrent basis. This would not be acceptable to Medicaid.
Comment: Such an approach seems unduly restrictive. I have had clients who have provided virtually round-the-clock care for a parent and rendered services such as daily testing, taking the parent to the doctor, providing and administering medicines, coordinating care of the parent with the various physicians, taking the parent on a short vacation or stay (if possible), etc. The compensation for such services should not be limited to that received by an aide, but should be based upon an appropriate valuation by a geriatric care manager. Another example of additional compensation would be a situation in which the child actually builds a wing on his or her home or hires an architect to make the home accessible to a disabled parent. Restricting the compensation to the child as proposed by Medicaid appears to be unfair. Hopefully, the structure allowed for a caretaker agreement will be loosened.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 52
Post 6 and Post 34 have discussed caretaker agreements extensively. Basically, we are talking about an agreement pursuant to which a child agrees, prior to rendering services, to care for a parent in consideration for the parent’s compensation to the child for such care.
The prior posts have indicated that in addition to the agreement, there should be a schedule of activities performed by the child and an independent valuation of services by a geriatric care manager or agency.
Properly structured, the payment by the applicant to the child for such services would not result in Medicaid transfers.
In early March, 2009, Medicaid, at a meeting of supervisors, set forth the following restrictions:
1. The amount that the child should be reimbursed for care is the amount of monies that an aide would receive for the relevant time period and not the amount of monies that the aide’s agency receives. For example, if the agency receives $20.00 per hour and the aide receives $10.00 per hour, the proper reimbursement for the child is $10.00 per hour. As the prior posts indicate, compensation in excess of that considered reasonable by the respective Board of Social Services is deemed a transfer.
2. Child must report any monies received from parent on income tax return.
3. There shall be no payments for future care. That is, some agreements have allowed the parent to make substantial payments “up front” rather than on a recurrent basis. This would not be acceptable to Medicaid.
Comment: Such an approach seems unduly restrictive. I have had clients who have provided virtually round-the-clock care for a parent and rendered services such as daily testing, taking the parent to the doctor, providing and administering medicines, coordinating care of the parent with the various physicians, taking the parent on a short vacation or stay (if possible), etc. The compensation for such services should not be limited to that received by an aide, but should be based upon an appropriate valuation by a geriatric care manager. Another example of additional compensation would be a situation in which the child actually builds a wing on his or her home or hires an architect to make the home accessible to a disabled parent. Restricting the compensation to the child as proposed by Medicaid appears to be unfair. Hopefully, the structure allowed for a caretaker agreement will be loosened.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 52
Tuesday, August 18, 2009
State Takes Restrictive Position on Caretaker Agreements
State Takes Restrictive Position on Caretaker Agreements
Post 6 and Post 34 have discussed caretaker agreements extensively. Basically, we are talking about an agreement pursuant to which a child agrees, prior to rendering services, to care for a parent in consideration for the parent’s compensation to the child for such care.
The prior posts have indicated that in addition to the agreement, there should be a schedule of activities performed by the child and an independent valuation of services by a geriatric care manager or agency.
Properly structured, the payment by the applicant to the child for such services would not result in Medicaid transfers.
In early March, 2009, Medicaid, at a meeting of supervisors, set forth the following restrictions:
1. The amount that the child should be reimbursed for care is the amount of monies that an aide would receive for the relevant time period and not the amount of monies that the aide’s agency receives. For example, if the agency receives $20.00 per hour and the aide receives $10.00 per hour, the proper reimbursement for the child is $10.00 per hour. As the prior posts indicate, compensation in excess of that considered reasonable by the respective Board of Social Services is deemed a transfer.
2. Child must report any monies received from parent on income tax return.
3. There shall be no payments for future care. That is, some agreements have allowed the parent to make substantial payments “up front” rather than on a recurrent basis. This would not be acceptable to Medicaid.
Comment: Such an approach seems unduly restrictive. I have had clients who have provided virtually round-the-clock care for a parent and rendered services such as daily testing, taking the parent to the doctor, providing and administering medicines, coordinating care of the parent with the various physicians, taking the parent on a short vacation or stay (if possible), etc. The compensation for such services should not be limited to that received by an aide, but should be based upon an appropriate valuation by a geriatric care manager. Another example of additional compensation would be a situation in which the child actually builds a wing on his or her home or hires an architect to make the home accessible to a disabled parent. Restricting the compensation to the child as proposed by Medicaid appears to be unfair. Hopefully, the structure allowed for a caretaker agreement will be loosened.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 52
Post 6 and Post 34 have discussed caretaker agreements extensively. Basically, we are talking about an agreement pursuant to which a child agrees, prior to rendering services, to care for a parent in consideration for the parent’s compensation to the child for such care.
The prior posts have indicated that in addition to the agreement, there should be a schedule of activities performed by the child and an independent valuation of services by a geriatric care manager or agency.
Properly structured, the payment by the applicant to the child for such services would not result in Medicaid transfers.
In early March, 2009, Medicaid, at a meeting of supervisors, set forth the following restrictions:
1. The amount that the child should be reimbursed for care is the amount of monies that an aide would receive for the relevant time period and not the amount of monies that the aide’s agency receives. For example, if the agency receives $20.00 per hour and the aide receives $10.00 per hour, the proper reimbursement for the child is $10.00 per hour. As the prior posts indicate, compensation in excess of that considered reasonable by the respective Board of Social Services is deemed a transfer.
2. Child must report any monies received from parent on income tax return.
3. There shall be no payments for future care. That is, some agreements have allowed the parent to make substantial payments “up front” rather than on a recurrent basis. This would not be acceptable to Medicaid.
Comment: Such an approach seems unduly restrictive. I have had clients who have provided virtually round-the-clock care for a parent and rendered services such as daily testing, taking the parent to the doctor, providing and administering medicines, coordinating care of the parent with the various physicians, taking the parent on a short vacation or stay (if possible), etc. The compensation for such services should not be limited to that received by an aide, but should be based upon an appropriate valuation by a geriatric care manager. Another example of additional compensation would be a situation in which the child actually builds a wing on his or her home or hires an architect to make the home accessible to a disabled parent. Restricting the compensation to the child as proposed by Medicaid appears to be unfair. Hopefully, the structure allowed for a caretaker agreement will be loosened.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 52
Thursday, August 13, 2009
Upcoming Webinar for NJICLE - Planning Opportunities for Medicaid Eligibility
New Jersey Institute for Continuing Legal Education ("NJICLE") Webinar - Planning Opportunities for Medicaid Eligibility to be presented by Mark Levin on August 20, 2009 10:00 AM to 11:30 AM.
In Febuary of 2006, Congress enacted the Deficit Reduction Act with the intent of limiting Medicaid planning. While the Act largely succeeds in its purpose, there are still many opportunities that exist for attorneys and their clients.
Register today for this entirely new webinar to learn how you can take advantage of opportunities presented by the Deficit Reduction Act. You'll hear a thorough review of the planning ideas and concepts available prior to the Deficit Reduction Act that are still viable, as well as new planning ideas that work under the Deficit Reduction Act. You'll also hear strategies for successfully updating your pre-Act strategies, so that you comply with the new regulation.
For more information, contact:
New Jersey Institute for Continuing Legal Education
One Constitution Square
New Brunswick, NJ 08901-1500
Tel: (732) 214-8500
Fax: (732) 249-0383
www.NJICLE.com
Seminar No. W140-15191
In Febuary of 2006, Congress enacted the Deficit Reduction Act with the intent of limiting Medicaid planning. While the Act largely succeeds in its purpose, there are still many opportunities that exist for attorneys and their clients.
Register today for this entirely new webinar to learn how you can take advantage of opportunities presented by the Deficit Reduction Act. You'll hear a thorough review of the planning ideas and concepts available prior to the Deficit Reduction Act that are still viable, as well as new planning ideas that work under the Deficit Reduction Act. You'll also hear strategies for successfully updating your pre-Act strategies, so that you comply with the new regulation.
For more information, contact:
New Jersey Institute for Continuing Legal Education
One Constitution Square
New Brunswick, NJ 08901-1500
Tel: (732) 214-8500
Fax: (732) 249-0383
www.NJICLE.com
Seminar No. W140-15191
Wednesday, August 12, 2009
Change in Penalty Rate
Change in Penalty Rate
Under both OBRA ’93 and the Deficit Reduction Act, the penalty period is determined by dividing the amount of the transfer by the applicable average nursing home costs. In addition, in January of each year, the penalty is increased retroactively to November 1 of the prior year. Therefore, the penalty rate through October 31, 2008 was $6,942. Subsequently in January 2009 the penalty rate was adjusted to $7,282 per month retroactive to November 1, 2008. Assume a transfer on November 15, 2008, of $100,000. If all the requirements of Medicaid have been met but for the transfer, the penalty due to the transfer would appear to be 100,000 ÷ 6,942 = 14.4 months.
See Post 15 for the starting date of the transfer penalty under the Deficit Reduction Act.
However, the newly instituted rate, which is retroactive to November 1, 2008, requires a divisor of 7,282. The actual period of ineligibility giving consideration to the retroactivity is 13.73 months.
Key point: If a transfer occurs on or after November 1 of a given year and an application is made for Medicaid, anticipate a lesser penalty due to the above retroactivity rule.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 51
Under both OBRA ’93 and the Deficit Reduction Act, the penalty period is determined by dividing the amount of the transfer by the applicable average nursing home costs. In addition, in January of each year, the penalty is increased retroactively to November 1 of the prior year. Therefore, the penalty rate through October 31, 2008 was $6,942. Subsequently in January 2009 the penalty rate was adjusted to $7,282 per month retroactive to November 1, 2008. Assume a transfer on November 15, 2008, of $100,000. If all the requirements of Medicaid have been met but for the transfer, the penalty due to the transfer would appear to be 100,000 ÷ 6,942 = 14.4 months.
See Post 15 for the starting date of the transfer penalty under the Deficit Reduction Act.
However, the newly instituted rate, which is retroactive to November 1, 2008, requires a divisor of 7,282. The actual period of ineligibility giving consideration to the retroactivity is 13.73 months.
Key point: If a transfer occurs on or after November 1 of a given year and an application is made for Medicaid, anticipate a lesser penalty due to the above retroactivity rule.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 51
Wednesday, August 5, 2009
Community Spouse Resource Allowance Changes Annually
Community Spouse Resource Allowance Changes Annually
In Medicaid Communication No. 09-2, the community spouse resource allowance maximum is increased from $104,400 to $109,560. The community spouse resource allowance increases annually on January 1st of each year. The letter ruling indicates that the increased amount applies to “any case which has not yet been determined eligible, regardless of the date of application.”
The following example is set forth in the letter ruling:
Mr. Smith entered a long term facility on October 15, 2008. He and his wife had combined resources of $300,000. The community spouse’s share of the resources would have been established at $104,400.00 at the time of the resource assessment. Because the Smiths’ resources still exceeded $106,400.00 (the community spouse’s share plus the $2,000.00 resource limit), Mr. Smith had not yet attained Medicaid eligibility. Beginning January 1, 2009, the community spouse’s share in this case increased to $109,560.00. Resource eligibility will exist once the Smiths’ countable resources are equal to or less than $111,560.00.
In other words, although the figure used as a community spouse resource allowance is generally determined the first day of the first month of institutionalization, this is subject to change (if a determination of eligibility has not yet been made). Also, note in the example that eligibility is based upon total countable resources of $111,560.00 due to the 90-day rule (see Post 10).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 50
In Medicaid Communication No. 09-2, the community spouse resource allowance maximum is increased from $104,400 to $109,560. The community spouse resource allowance increases annually on January 1st of each year. The letter ruling indicates that the increased amount applies to “any case which has not yet been determined eligible, regardless of the date of application.”
The following example is set forth in the letter ruling:
Mr. Smith entered a long term facility on October 15, 2008. He and his wife had combined resources of $300,000. The community spouse’s share of the resources would have been established at $104,400.00 at the time of the resource assessment. Because the Smiths’ resources still exceeded $106,400.00 (the community spouse’s share plus the $2,000.00 resource limit), Mr. Smith had not yet attained Medicaid eligibility. Beginning January 1, 2009, the community spouse’s share in this case increased to $109,560.00. Resource eligibility will exist once the Smiths’ countable resources are equal to or less than $111,560.00.
In other words, although the figure used as a community spouse resource allowance is generally determined the first day of the first month of institutionalization, this is subject to change (if a determination of eligibility has not yet been made). Also, note in the example that eligibility is based upon total countable resources of $111,560.00 due to the 90-day rule (see Post 10).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 50
Thursday, July 30, 2009
Policy Decisions Affect Medicaid Rules
Policy Decisions Affect Medicaid Rules
Clients often feel that the Medicaid rules or certain rules are unfair. The purpose of this article is to discuss what I believe are the policy decisions behind certain rules.
1. Life Insurance Issues – As discussed in Post 3, the cash value of a life insurance policy or policies in excess of $1,500 constitutes a resource. The rationale behind such rule is that if such value were not counted, an applicant or a spouse could use substantial funds to obtain life insurance policies with large cash values that would not be considered for Medicaid purposes.
2. Spousal IRA’s – In Mistrick v. Division of Medical Assistance and Health Services 154 NJ 158 (1998), the Court held that the IRA’s of a spouse are a countable resource. This was a change from the prior law in which a spousal IRA was exempt.
The basis of this decision again was policy so that a spouse would not establish an IRA or would not rollover a retirement distribution to an IRA without limit. Under prior law, an individual could have an unlimited amount in an IRA and this would not preclude Medicaid eligibility.
3. 90-Day Rule – Post 10 discusses the significance of the 90-day rule. As an administrative decision, New Jersey has allowed eligibility if the total amount of resources held by the applicant and the community spouse equal the computed amounts whether they are held by the applicant, community spouse or jointly at the date of eligibility. However, within 90 days, the applicant must meet his or her requirement ($2,000 or $4,000) and the community spouse resource allowance amount must be in the sole name of the community spouse. The policy behind this decision is that if a couple inadvertently have not severed a joint account at the date eligibility is sought, they are not to be penalized. This makes sense in that most adults keep accounts with a spouse held jointly and should not be penalized.
4. Checks Written and Not Cashed – Post 4 discusses the significance of payment of debts and expenses. Examples in this post indicate that if a check is written before the date sought for eligibility, it is irrelevant whether or not such check has been negotiated. The policy reason for such a rule is that an applicant should not be penalized for the inaction of a payee (i.e. negotiating a check).
5. Real Property Owned Jointly With Other Than Spouse – In Post 35, the relevant regulation indicates that real estate owned jointly with a person other than a spouse is an “inaccessible” resource. Therefore, it is not a countable resource for Medicaid purposes unless the other person consents. The rationale behind this rule is that, if the property were treated as a countable resource, such decision would affect an interest in property held by someone not involved in the Medicaid proceeding (i.e. the co-owner).
The above constitutes a very brief summary of some policy positions taken by Medicaid in administering its eligibility decisions. Obviously, the number of examples is infinite.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2009, Post 49
Clients often feel that the Medicaid rules or certain rules are unfair. The purpose of this article is to discuss what I believe are the policy decisions behind certain rules.
1. Life Insurance Issues – As discussed in Post 3, the cash value of a life insurance policy or policies in excess of $1,500 constitutes a resource. The rationale behind such rule is that if such value were not counted, an applicant or a spouse could use substantial funds to obtain life insurance policies with large cash values that would not be considered for Medicaid purposes.
2. Spousal IRA’s – In Mistrick v. Division of Medical Assistance and Health Services 154 NJ 158 (1998), the Court held that the IRA’s of a spouse are a countable resource. This was a change from the prior law in which a spousal IRA was exempt.
The basis of this decision again was policy so that a spouse would not establish an IRA or would not rollover a retirement distribution to an IRA without limit. Under prior law, an individual could have an unlimited amount in an IRA and this would not preclude Medicaid eligibility.
3. 90-Day Rule – Post 10 discusses the significance of the 90-day rule. As an administrative decision, New Jersey has allowed eligibility if the total amount of resources held by the applicant and the community spouse equal the computed amounts whether they are held by the applicant, community spouse or jointly at the date of eligibility. However, within 90 days, the applicant must meet his or her requirement ($2,000 or $4,000) and the community spouse resource allowance amount must be in the sole name of the community spouse. The policy behind this decision is that if a couple inadvertently have not severed a joint account at the date eligibility is sought, they are not to be penalized. This makes sense in that most adults keep accounts with a spouse held jointly and should not be penalized.
4. Checks Written and Not Cashed – Post 4 discusses the significance of payment of debts and expenses. Examples in this post indicate that if a check is written before the date sought for eligibility, it is irrelevant whether or not such check has been negotiated. The policy reason for such a rule is that an applicant should not be penalized for the inaction of a payee (i.e. negotiating a check).
5. Real Property Owned Jointly With Other Than Spouse – In Post 35, the relevant regulation indicates that real estate owned jointly with a person other than a spouse is an “inaccessible” resource. Therefore, it is not a countable resource for Medicaid purposes unless the other person consents. The rationale behind this rule is that, if the property were treated as a countable resource, such decision would affect an interest in property held by someone not involved in the Medicaid proceeding (i.e. the co-owner).
The above constitutes a very brief summary of some policy positions taken by Medicaid in administering its eligibility decisions. Obviously, the number of examples is infinite.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2009, Post 49
Monday, July 27, 2009
Inaccessible Resources
Inaccessible Resources
Inaccessible resources (see Post 35) are treated as excludable resources for Medicaid eligibility purposes (N.J.A.C. 10:71-4.4(b)6).
The theory is that a countable resource is only such that can be converted to monies to pay nursing home costs.
Post 35 discusses in detail that a co-owner of real estate renders the real estate inaccessible if the co-owner (not the applicant) refuses to liquidate.
Similarly, the same regulation treats property in probate as an inaccessible resource. The effect of inheritance by the community spouse (Post 27) and the effect of inheritance by a Medicaid recipient (Post 28) discuss this topic in detail. Basically, the theory is that if an estate has not been administered and, therefore, not distributed, the inheritance only becomes a resource upon distribution. If distribution is delayed, the Internal Revenue Service for estate income tax purposes treats the estate as “closed.” I have not seen Medicaid take this position although it would make sense that an estate cannot be held “in probate” for an inordinate amount of time.
The relevant regulation (N.J.A.C. 10:71-4.4(b)6) treats as inaccessible “the value of resources which are not accessible to the individual through no fault of his/her own.” Therefore, the above are merely examples and the possibilities for inaccessible resources are infinite.
For example, small pieces of real estate, which have no value due to location and zoning are treated as inaccessible in my experience. Similarly, assets that are to be received in the future, such as royalties, would have a similar status.
Monies owed to a community spouse, but not paid because the employer of the spouse is having financial problems, in today’s environment would be a poignant example of an inaccessible resource for purposes of the community spouse resource allowance.
On the other hand, resources available only if a penalty is incurred, are treated as available resources. An example of such a resource would be an annuity subject to penalty if distributed.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2009, Post 48
Inaccessible resources (see Post 35) are treated as excludable resources for Medicaid eligibility purposes (N.J.A.C. 10:71-4.4(b)6).
The theory is that a countable resource is only such that can be converted to monies to pay nursing home costs.
Post 35 discusses in detail that a co-owner of real estate renders the real estate inaccessible if the co-owner (not the applicant) refuses to liquidate.
Similarly, the same regulation treats property in probate as an inaccessible resource. The effect of inheritance by the community spouse (Post 27) and the effect of inheritance by a Medicaid recipient (Post 28) discuss this topic in detail. Basically, the theory is that if an estate has not been administered and, therefore, not distributed, the inheritance only becomes a resource upon distribution. If distribution is delayed, the Internal Revenue Service for estate income tax purposes treats the estate as “closed.” I have not seen Medicaid take this position although it would make sense that an estate cannot be held “in probate” for an inordinate amount of time.
The relevant regulation (N.J.A.C. 10:71-4.4(b)6) treats as inaccessible “the value of resources which are not accessible to the individual through no fault of his/her own.” Therefore, the above are merely examples and the possibilities for inaccessible resources are infinite.
For example, small pieces of real estate, which have no value due to location and zoning are treated as inaccessible in my experience. Similarly, assets that are to be received in the future, such as royalties, would have a similar status.
Monies owed to a community spouse, but not paid because the employer of the spouse is having financial problems, in today’s environment would be a poignant example of an inaccessible resource for purposes of the community spouse resource allowance.
On the other hand, resources available only if a penalty is incurred, are treated as available resources. An example of such a resource would be an annuity subject to penalty if distributed.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2009, Post 48
Friday, July 24, 2009
General Discussion of the Medicaid Application Process
General Discussion of the Medicaid Application Process
In applying for institutional Medicaid, there are two basic documents that I present to my clients at the initial meeting. One document is a list of information required by the respective County Board of Social Services. For purposes of simplicity, this article shall relate to a single individual.
I. Typical information requested by a county board might include:
1. proof of age.
2. proof of citizenship.
3. proof of identity (such as driver’s license).
4. proof of marital status.
5. proof of residence.
6. proof of current gross income, which would include pension, social security, veterans benefits, earnings.
7. income tax returns for three years.
8. closed out accounts for the past period of time. The amount of time currently being reviewed by Medicaid increases each month with the initial month being February, 2006, so that for March, 2009, 37 months are reviewed and for April, 2009, 38 months would be reviewed.
9. life insurance policies.
10. prepaid funeral contract (if applicable).
11. health insurance ID information.
12. deed to house (if one is owned).
13. copies of nursing home bills.
14. social security and Medicare cards.
15. power of attorney (if applicable).
II. The second document that I present to the client is the application.
1. The application asks for clarity on much of the information discussed above, but includes questions such as transfers made during the aforementioned respective time periods.
2. Personal information relating to name, veteran status, history of residence, specific asset information, whether you are the beneficiary of someone’s insurance policy, pending lawsuits, medical coverage. Posts that discuss the information in detail are life insurance issues (Post 3), qualifying for Medicaid (Post 16).
III. At the initial meeting I discuss the facts to see if there are any obvious planning possibilities such as surrendering life insurance (Post 3), applicant residing with a caretaker child (Post 6), rules of Medicaid eligibility are reviewed (Post 7), resource limitations for community spouse not limited after applicant receives Medicaid (Post 13), whether a dependent relative resides in the house (Post 14), new transfer rules effective February, 2006 (Post 15), possibility of payment by applicant for care or services provided by child (Post 17), inadvertent disqualification of applicant (Post 21), methods of accelerating Medicaid eligibility (Post 4, 5, 7, 10, 12, and 20).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2009, Post 47
In applying for institutional Medicaid, there are two basic documents that I present to my clients at the initial meeting. One document is a list of information required by the respective County Board of Social Services. For purposes of simplicity, this article shall relate to a single individual.
I. Typical information requested by a county board might include:
1. proof of age.
2. proof of citizenship.
3. proof of identity (such as driver’s license).
4. proof of marital status.
5. proof of residence.
6. proof of current gross income, which would include pension, social security, veterans benefits, earnings.
7. income tax returns for three years.
8. closed out accounts for the past period of time. The amount of time currently being reviewed by Medicaid increases each month with the initial month being February, 2006, so that for March, 2009, 37 months are reviewed and for April, 2009, 38 months would be reviewed.
9. life insurance policies.
10. prepaid funeral contract (if applicable).
11. health insurance ID information.
12. deed to house (if one is owned).
13. copies of nursing home bills.
14. social security and Medicare cards.
15. power of attorney (if applicable).
II. The second document that I present to the client is the application.
1. The application asks for clarity on much of the information discussed above, but includes questions such as transfers made during the aforementioned respective time periods.
2. Personal information relating to name, veteran status, history of residence, specific asset information, whether you are the beneficiary of someone’s insurance policy, pending lawsuits, medical coverage. Posts that discuss the information in detail are life insurance issues (Post 3), qualifying for Medicaid (Post 16).
III. At the initial meeting I discuss the facts to see if there are any obvious planning possibilities such as surrendering life insurance (Post 3), applicant residing with a caretaker child (Post 6), rules of Medicaid eligibility are reviewed (Post 7), resource limitations for community spouse not limited after applicant receives Medicaid (Post 13), whether a dependent relative resides in the house (Post 14), new transfer rules effective February, 2006 (Post 15), possibility of payment by applicant for care or services provided by child (Post 17), inadvertent disqualification of applicant (Post 21), methods of accelerating Medicaid eligibility (Post 4, 5, 7, 10, 12, and 20).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2009, Post 47
Tuesday, July 21, 2009
The Necessity for Other Professionals
The Necessity for Other Professionals
I have often sought the need of other professionals in representing a client before the various County Boards of Social Services in seeking institutional Medicaid for a client. For example, the client may be coming to New Jersey and the family uncertain as to the appropriate type of facility available and appropriate. In such case, I recommend that the family consult with a geriatric care manager as to whether home, assisted living or institutional care might be the most appropriate place of residence. In this regard, the assessment of a geriatric care manager is necessary.
In preparing caretaker agreements (see Post 17), I seek an analysis by a geriatric care manager providing the prevailing rate for the value of services provided by a child. Pursuant to a properly drafted caretaker agreement, a list of services provided by the child is attached as is a valuation by a geriatric care manager. I have also found a geriatric care manager in conjunction with an accountant helpful in this regard.
An accountant is often necessary in the spenddown process. For example, we may want to prepay income taxes, not only for the spenddown, but also to avoid the situation of an individual or a community spouse having to pay income taxes after the date of qualification for Medicaid.
As discussed in Post 6, I often seek the assistance of a physician in describing the care provided by a child. This is helpful in establishing that a child had provided necessary care for two years in order to allow a transfer of the home (see Post 23).
I particularly seek counsel of lawyers from Legal Services. As a Legal Services volunteer, I have the privilege of having some outstanding Legal Services attorneys available for consult (I even call during a conference). The various benefits available to an individual are continually changing and Legal Services attorneys are generally aware of the status of waiver programs and similar issues.
Finally, but not least, no lawyer should function in the Medicaid area by himself or herself. Anonymously discussing complicated issues with various colleagues in the Medicaid area are often helpful to get another slant on a Medicaid plan. As lawyers are aware, many clients seeking Medicaid representation (and, of course, in other areas) anticipate one answer and that the answer will be simple. In this regard, it is my practice to have a telephone conference with a client before meeting, so that I can ascertain the facts as best as possible, so that the meeting is most productive.
That is, another helpful individual is the client. For instance, I am presently conferring with a client who owns the home as to whether the home should be sold and the client move in with one of her daughters who will provide care and the client will pay for such care pursuant to a caretaker agreement (see Post 17) from the proceeds of the sale of the client’s house. Another possibility is for the other daughter to move into the client’s house in hopes that two years pass so that the house can be transferred to the child as part of the Medicaid planning process (see Post 6). These issues were generated during telephone conference, not for purposes of resolving the issue, but for purposes of the client’s receptivity to discussing these alternatives.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2009, Post 46
I have often sought the need of other professionals in representing a client before the various County Boards of Social Services in seeking institutional Medicaid for a client. For example, the client may be coming to New Jersey and the family uncertain as to the appropriate type of facility available and appropriate. In such case, I recommend that the family consult with a geriatric care manager as to whether home, assisted living or institutional care might be the most appropriate place of residence. In this regard, the assessment of a geriatric care manager is necessary.
In preparing caretaker agreements (see Post 17), I seek an analysis by a geriatric care manager providing the prevailing rate for the value of services provided by a child. Pursuant to a properly drafted caretaker agreement, a list of services provided by the child is attached as is a valuation by a geriatric care manager. I have also found a geriatric care manager in conjunction with an accountant helpful in this regard.
An accountant is often necessary in the spenddown process. For example, we may want to prepay income taxes, not only for the spenddown, but also to avoid the situation of an individual or a community spouse having to pay income taxes after the date of qualification for Medicaid.
As discussed in Post 6, I often seek the assistance of a physician in describing the care provided by a child. This is helpful in establishing that a child had provided necessary care for two years in order to allow a transfer of the home (see Post 23).
I particularly seek counsel of lawyers from Legal Services. As a Legal Services volunteer, I have the privilege of having some outstanding Legal Services attorneys available for consult (I even call during a conference). The various benefits available to an individual are continually changing and Legal Services attorneys are generally aware of the status of waiver programs and similar issues.
Finally, but not least, no lawyer should function in the Medicaid area by himself or herself. Anonymously discussing complicated issues with various colleagues in the Medicaid area are often helpful to get another slant on a Medicaid plan. As lawyers are aware, many clients seeking Medicaid representation (and, of course, in other areas) anticipate one answer and that the answer will be simple. In this regard, it is my practice to have a telephone conference with a client before meeting, so that I can ascertain the facts as best as possible, so that the meeting is most productive.
That is, another helpful individual is the client. For instance, I am presently conferring with a client who owns the home as to whether the home should be sold and the client move in with one of her daughters who will provide care and the client will pay for such care pursuant to a caretaker agreement (see Post 17) from the proceeds of the sale of the client’s house. Another possibility is for the other daughter to move into the client’s house in hopes that two years pass so that the house can be transferred to the child as part of the Medicaid planning process (see Post 6). These issues were generated during telephone conference, not for purposes of resolving the issue, but for purposes of the client’s receptivity to discussing these alternatives.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2009, Post 46
Thursday, July 9, 2009
Transfers to Spouse
Transfers to Spouse
An individual shall not be ineligible for Medicaid under the transfer rules to the extent that assets are transferred to a spouse. The theory is that since all spousal resources are deemed available to the Medicaid applicant, such a transfer should not be penalized.
Transfers to the community spouse certainly make sense in terms of management of assets, particularly in light of the fact that the institutionalized spouse could become incompetent. Further, if the income generated by spousal assets could pay for nursing home costs and support of the community spouse with no or minimal invasion of principal, outright transfers to the community spouse could be a viable alternative without any additional planning. Of course, one would have to have substantial assets to generate such income.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2009, Post #45
An individual shall not be ineligible for Medicaid under the transfer rules to the extent that assets are transferred to a spouse. The theory is that since all spousal resources are deemed available to the Medicaid applicant, such a transfer should not be penalized.
Transfers to the community spouse certainly make sense in terms of management of assets, particularly in light of the fact that the institutionalized spouse could become incompetent. Further, if the income generated by spousal assets could pay for nursing home costs and support of the community spouse with no or minimal invasion of principal, outright transfers to the community spouse could be a viable alternative without any additional planning. Of course, one would have to have substantial assets to generate such income.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© July 2009, Post #45
Monday, June 29, 2009
Medicaid Reimbursement Rate
Medicaid Reimbursement Rate
In a prior post, there was an extensive discussion regarding such issues as when it is appropriate to make the nursing home representative payee, such decision and its relationship to Medigap insurance and the legend to be put on bank accounts for the community spouse and the applicant. This article ignores the Medigap issues and assumes that the nursing home should be designated representative payee (see Post 1).
A. Once eligibility is established, the nursing home receives the Medicaid reimbursement rate as payment. The actual amount paid to the nursing home by Medicaid is reduced by any recurring monies received by the individual such as social security and pension payments, which are to be remitted to the nursing home on a monthly basis.
B. Such payments received during any given month constitute resources on the “first moment of the first day” of the subsequent month.
C. The $2,000 threshold could be exceeded due to the lack of attention to automatic deposits of social security and pension payments to a Medicaid recipient’s checking account. As indicated in Post 1, pension payments cannot be assigned.
Planning Point: Once the date of eligibility is near, counsel should advise and assist the responsible family member to designate the nursing home as representative payee for social security benefits of the Medicaid recipient. Social security payments will then be made directly to the nursing home. The danger of disqualification due to inadvertent accumulation of social security monies will be eliminated.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2009, Post #44
In a prior post, there was an extensive discussion regarding such issues as when it is appropriate to make the nursing home representative payee, such decision and its relationship to Medigap insurance and the legend to be put on bank accounts for the community spouse and the applicant. This article ignores the Medigap issues and assumes that the nursing home should be designated representative payee (see Post 1).
A. Once eligibility is established, the nursing home receives the Medicaid reimbursement rate as payment. The actual amount paid to the nursing home by Medicaid is reduced by any recurring monies received by the individual such as social security and pension payments, which are to be remitted to the nursing home on a monthly basis.
B. Such payments received during any given month constitute resources on the “first moment of the first day” of the subsequent month.
C. The $2,000 threshold could be exceeded due to the lack of attention to automatic deposits of social security and pension payments to a Medicaid recipient’s checking account. As indicated in Post 1, pension payments cannot be assigned.
Planning Point: Once the date of eligibility is near, counsel should advise and assist the responsible family member to designate the nursing home as representative payee for social security benefits of the Medicaid recipient. Social security payments will then be made directly to the nursing home. The danger of disqualification due to inadvertent accumulation of social security monies will be eliminated.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2009, Post #44
Monday, June 22, 2009
Transfers for a Purpose Other than to Qualify for Medicaid
Transfers for a Purpose Other than to Qualify for Medicaid
Another exemption from the transfer rules is a transfer exclusively for a purpose other than to qualify for Medicaid.
I recently had a case in which a 78-year old father transferred approximately $40,000 to pay for his child’s wedding. The father was as healthy as an individual his age could possibly be and had no thought of going into a nursing home.
Generally, the position of Medicaid is that it is extremely difficult to show that Medicaid was not one of the reasons for the transfer. However, presented with such a case, points to be stressed are the health of the individual at the time, the uniqueness of the purpose of the transfer (i.e. wedding of child) and additional points that would negate Medicaid ineligibility (such as, the child voluntarily making payments back to the father before Medicaid was even an issue). The gentleman passed away before Medicaid was able to make its determination.
The key point of the above analysis is that a representative should never give up if there are valid arguments in favor of the applicant.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2009, Post #43
Another exemption from the transfer rules is a transfer exclusively for a purpose other than to qualify for Medicaid.
I recently had a case in which a 78-year old father transferred approximately $40,000 to pay for his child’s wedding. The father was as healthy as an individual his age could possibly be and had no thought of going into a nursing home.
Generally, the position of Medicaid is that it is extremely difficult to show that Medicaid was not one of the reasons for the transfer. However, presented with such a case, points to be stressed are the health of the individual at the time, the uniqueness of the purpose of the transfer (i.e. wedding of child) and additional points that would negate Medicaid ineligibility (such as, the child voluntarily making payments back to the father before Medicaid was even an issue). The gentleman passed away before Medicaid was able to make its determination.
The key point of the above analysis is that a representative should never give up if there are valid arguments in favor of the applicant.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2009, Post #43
Thursday, June 18, 2009
Assets Transferred to a Disabled Child
Assets Transferred to a Disabled Child
One of the areas often neglected in Medicaid is transferring funds to a disabled child. “Disabled” would be satisfied if the child were on S.S.I. or a social security disability.
Many “disabled” children can handle money depending the nature of the disability.
I had a matter in which a husband and a wife had a total of $750,000 and were both going into a nursing home. At the Medicaid meeting, I presented the plan to the County Board and the Board agreed that such a transfer would be exempt.
The nature of the child’s disability was psychological, but was not severe. Medicaid does not seem to inquire as to the disposition of funds by the disabled child. In this case, the disabled child (after both his parents got Medicaid) transferred the funds to his brother and the monies were protected and both parents immediately qualified for Medicaid.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2009, Post #42
One of the areas often neglected in Medicaid is transferring funds to a disabled child. “Disabled” would be satisfied if the child were on S.S.I. or a social security disability.
Many “disabled” children can handle money depending the nature of the disability.
I had a matter in which a husband and a wife had a total of $750,000 and were both going into a nursing home. At the Medicaid meeting, I presented the plan to the County Board and the Board agreed that such a transfer would be exempt.
The nature of the child’s disability was psychological, but was not severe. Medicaid does not seem to inquire as to the disposition of funds by the disabled child. In this case, the disabled child (after both his parents got Medicaid) transferred the funds to his brother and the monies were protected and both parents immediately qualified for Medicaid.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2009, Post #42
Friday, June 12, 2009
Practical Idea for Protecting the Home
Practical Idea for Protecting the Home
This article is another example of utilizing some of the theoretical rules discussed with respect to the home. This article addresses the two-year rule pursuant to which an applicant can transfer her home to a child and, if the child lives in the home for two years and provides care so that the mother need not go in a nursing home, the transfer would be exempt from the transfer rules (see Post 6).
The typical example would be Mrs. Jones owns a home and some other minor assets. Mrs. Jones is not ready to go into a nursing home but is declining to some extent.
Her daughter, Diane, is single and would like to take care of her mother.
Rather than the house be sold and the mother go into a nursing home, Diane would move in with Mrs. Jones and provide such care as to satisfy the two-year rule. Hopefully, Diane would be able to reside with her mother for two-years prior to application for Medicaid. In this way, the home would be saved and transferred to Diane, who happens to be the mother’s sole heir.
See Post 6, which discusses the two-year rule in more detail.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
June 2009, Post #41
This article is another example of utilizing some of the theoretical rules discussed with respect to the home. This article addresses the two-year rule pursuant to which an applicant can transfer her home to a child and, if the child lives in the home for two years and provides care so that the mother need not go in a nursing home, the transfer would be exempt from the transfer rules (see Post 6).
The typical example would be Mrs. Jones owns a home and some other minor assets. Mrs. Jones is not ready to go into a nursing home but is declining to some extent.
Her daughter, Diane, is single and would like to take care of her mother.
Rather than the house be sold and the mother go into a nursing home, Diane would move in with Mrs. Jones and provide such care as to satisfy the two-year rule. Hopefully, Diane would be able to reside with her mother for two-years prior to application for Medicaid. In this way, the home would be saved and transferred to Diane, who happens to be the mother’s sole heir.
See Post 6, which discusses the two-year rule in more detail.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
June 2009, Post #41
Monday, June 8, 2009
Caretaker Child - Practical Aspects
Caretaker Child – Practical Aspects
Prior posts have addressed mainly the rules and theoretical basis for various aspects of Medicaid planning. The next several articles will deal with practical applications of some of the aforementioned rules.
Suppose Mrs. Smith has a home, is competent, but is also a nursing home candidate. Susan, her daughter, has her own home and is willing to have Mrs. Smith move in and make improvements and/or expansions to her home to accommodate her mother.
The various posts (see Posts 6, 23)) that have been discussed are particularly applicable in this situation.
The plan would be for the daughter to make the necessary improvements and/or expansions on her home, Mrs. Smith would sell her home and move into Susan’s home. Prior to moving in there would be a caretaker agreement that would provide for the services and living arrangements to be provided by Susan in exchange for reimbursement by Mrs. Smith which would be set forth in a caretaker agreement.
Such an approach would not only save the value of the house of the family by way of payment to Susan, but would allow the mother to reside with her family and have care rather than live in a nursing home.
As indicated in Post 17, it is absolutely necessary that there be a third party valuation which sets forth the amount of payments to be made by Mrs. Smith. Such payments must be at the prevailing rate in the community. Any payments by Mrs. Smith in excess of that would be treated as a transfer.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2009, Post #40
Prior posts have addressed mainly the rules and theoretical basis for various aspects of Medicaid planning. The next several articles will deal with practical applications of some of the aforementioned rules.
Suppose Mrs. Smith has a home, is competent, but is also a nursing home candidate. Susan, her daughter, has her own home and is willing to have Mrs. Smith move in and make improvements and/or expansions to her home to accommodate her mother.
The various posts (see Posts 6, 23)) that have been discussed are particularly applicable in this situation.
The plan would be for the daughter to make the necessary improvements and/or expansions on her home, Mrs. Smith would sell her home and move into Susan’s home. Prior to moving in there would be a caretaker agreement that would provide for the services and living arrangements to be provided by Susan in exchange for reimbursement by Mrs. Smith which would be set forth in a caretaker agreement.
Such an approach would not only save the value of the house of the family by way of payment to Susan, but would allow the mother to reside with her family and have care rather than live in a nursing home.
As indicated in Post 17, it is absolutely necessary that there be a third party valuation which sets forth the amount of payments to be made by Mrs. Smith. Such payments must be at the prevailing rate in the community. Any payments by Mrs. Smith in excess of that would be treated as a transfer.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2009, Post #40
Tuesday, June 2, 2009
Medicaid Eligibility before a Favorable Determination
Medicaid Eligibility Before a Favorable Determination
Ideally, an application should be submitted several months before eligibility and updated each month until qualification. Under such a fact situation, the issuance of an eligibility letter is predictable. However, the statements may not reflect the amount actually in an account as a check written before the first of the month that has not cleared (see Post 4). Medicaid will issue an eligibility letter retroactive to the application date in such a case.
A more problematic situation is eligibility is met on the first of the month, but Medicaid does not process the application for several months. In such case, the date of eligibility is retroactive to the date that an individual is actually eligible rather than the date that Medicaid reviews the papers and has been dilatory in coming to this conclusion.
Once an applicant has been advised by counsel that he or she is eligible for Medicaid, no further payments are to be made to the nursing home regardless of whether the actual eligibility letter has been issued.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2009, Post #39
Ideally, an application should be submitted several months before eligibility and updated each month until qualification. Under such a fact situation, the issuance of an eligibility letter is predictable. However, the statements may not reflect the amount actually in an account as a check written before the first of the month that has not cleared (see Post 4). Medicaid will issue an eligibility letter retroactive to the application date in such a case.
A more problematic situation is eligibility is met on the first of the month, but Medicaid does not process the application for several months. In such case, the date of eligibility is retroactive to the date that an individual is actually eligible rather than the date that Medicaid reviews the papers and has been dilatory in coming to this conclusion.
Once an applicant has been advised by counsel that he or she is eligible for Medicaid, no further payments are to be made to the nursing home regardless of whether the actual eligibility letter has been issued.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© June 2009, Post #39
Thursday, May 28, 2009
Significant Language in Power of Attorney Regarding Primary Residence
Significant Language in Power of Attorney Regarding Primary Residence
Prior Post 11 discussed the advantages of a jointly-held residence being transferred to the community spouse for Medicaid purposes. The general idea presented was that after the applicant receives Medicaid, the community spouse would be free to sell the residence and the funds received would not be part of the Medicaid “pot.”
Therefore, a power of attorney must currently include language that indicates that if an individual enters a nursing home, the residence should be transferred to the community spouse. Such language should be in the power of attorney currently.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #38
Prior Post 11 discussed the advantages of a jointly-held residence being transferred to the community spouse for Medicaid purposes. The general idea presented was that after the applicant receives Medicaid, the community spouse would be free to sell the residence and the funds received would not be part of the Medicaid “pot.”
Therefore, a power of attorney must currently include language that indicates that if an individual enters a nursing home, the residence should be transferred to the community spouse. Such language should be in the power of attorney currently.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #38
Tuesday, May 26, 2009
Transfer of Home to Caretaker Child - Revisited
Transfer of Home to Caretaker Child - Revisited
Post 6 stresses that property owned by applicant residing with a caretaker child is to be transferred at time of application for Medicaid. The article suggests that a current power of attorney be drafted so that if the applicant is incompetent at the time of application, a power of attorney can be used to transfer the residence to the caretaker child.
This is an example of tailoring the power of attorney for a client in an elder law situation.
That is, the power of attorney should be provide that in the event an applicant is in a nursing home and an application for Medicaid is submitted, approval by the Medicaid authorities that the child has provided the requisite care for two years is necessary before the property is transferred.
If the applicant is incompetent at the time, the power of attorney can accomplish this result.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #37
Post 6 stresses that property owned by applicant residing with a caretaker child is to be transferred at time of application for Medicaid. The article suggests that a current power of attorney be drafted so that if the applicant is incompetent at the time of application, a power of attorney can be used to transfer the residence to the caretaker child.
This is an example of tailoring the power of attorney for a client in an elder law situation.
That is, the power of attorney should be provide that in the event an applicant is in a nursing home and an application for Medicaid is submitted, approval by the Medicaid authorities that the child has provided the requisite care for two years is necessary before the property is transferred.
If the applicant is incompetent at the time, the power of attorney can accomplish this result.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #37
Friday, May 22, 2009
Sale of Remainder Interest
Sale of Remainder Interest
The technique discussed in this article is another planning idea for a single individual owning a home and living with a child. However, the child has no special status such as having provided care or being dependent. The potential applicant has been advised to have private funds approximating one year’s nursing home costs to provide flexibility in choice of facility. Protection of the home is desired.
Recommendation: Remainder interest should be sold to child. The tables for determining the remainder interest can be obtained from your Medicaid office.
The transaction results in the parent having retained a life interest in the property and the child having purchased the remainder for an assumed amount of $60,000. Consequences are as follows:
A. there will be no transfer penalty;
B. applicant will be eligible when resource requirement is met;
C. eligibility can be accelerated by the payment of debts and the acquisition of excludable resources;
D. the retained interest of the parent (i.e. life estate) has special administrative treatment by the State of New Jersey (no value assigned to retained interest, retained interest not subject to Medicaid lien).
Note: If remainder interest were deeded to a “protected transferee,” there would be no period of ineligibility with respect to the transfer (see Post 6).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #36
The technique discussed in this article is another planning idea for a single individual owning a home and living with a child. However, the child has no special status such as having provided care or being dependent. The potential applicant has been advised to have private funds approximating one year’s nursing home costs to provide flexibility in choice of facility. Protection of the home is desired.
Recommendation: Remainder interest should be sold to child. The tables for determining the remainder interest can be obtained from your Medicaid office.
The transaction results in the parent having retained a life interest in the property and the child having purchased the remainder for an assumed amount of $60,000. Consequences are as follows:
A. there will be no transfer penalty;
B. applicant will be eligible when resource requirement is met;
C. eligibility can be accelerated by the payment of debts and the acquisition of excludable resources;
D. the retained interest of the parent (i.e. life estate) has special administrative treatment by the State of New Jersey (no value assigned to retained interest, retained interest not subject to Medicaid lien).
Note: If remainder interest were deeded to a “protected transferee,” there would be no period of ineligibility with respect to the transfer (see Post 6).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #36
Monday, May 18, 2009
Property Owned Jointly With Other Than Spouse
Property Owned Jointly With Other Than Spouse
Applicant may own property jointly with a person other than a spouse. Typical events that give rise to joint ownership would be inheritance or acquisition of such joint property.
Joint property with right of survivorship with a caretaker child has been discussed in Post 23.
Generally, the two types of joint tenancy are joint ownership with right of survivorship (interest passes to survivor by operation of law upon death of co-owner) and tenancy in common (interest passes under person’s will). The administrative regulations provide that co-ownership will not preclude eligibility if the property cannot be sold because of the refusal of the co-owner to liquidate and is deemed to be an inaccessible resource. (N.J.A.C. 10:71-4.4(b)6.)
Therefore, any type of joint ownership will not preclude eligibility. However, as discussed in Post 23, the three inter-related goals of Medicaid planning are to establish Medicaid eligibility, avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient of benefits.
Although a joint tenancy or a tenancy in common will not affect eligibility, the other goals of avoiding disqualification after eligibility and avoidance of the lien after the death of the recipient of benefits are not accomplished by co-ownership. With respect to disqualification after eligibility, if the owner of a survivor interest predeceases a Medicaid recipient, the decedent’s interest will pass by operation of law to the recipient and will then constitute an “available resource.” Therefore, eligibility would be lost. If the recipient predeceased, recipient’s one-half interest would be subject to the Medicaid lien.
With respect to tenancy in common, the death of the co-tenant would sever the ownership of the property so that it would no longer be held jointly and the applicant’s interest would disqualify the applicant from Medicaid. If the applicant predeceased, the applicant’s one-half interest in the tenancy in common would be subject to the Medicaid lien.
A sale of either type of tenancy would result in one-half the cash proceeds passing to a Medicaid recipient, which would then disqualify the individual from Medicaid.
As in prior posts (for example Post 6), I have used the word “protected transferee” to mean an individual who can be gifted an applicant’s home without transfer penalty. Another category of protected transferee is a sibling (i) who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstance of joint ownership with a child.
An interesting point regarding any form of joint ownership discussed in this article is the concept that a Medicaid recipient must use recurring monies to defray Medicaid’s outlay (i.e. the Medicaid reimbursement rate). Included in this contribution is one-half the property owned with the other individual. For these purposes, hypothetical deductions such as depreciation are not considered. The contribution to be made by the Medicaid recipient (assuming the house is rented) is one-half the net rental proceeds.
Conclusion: Although ownership of property with another will not preclude Medicaid eligibility, it can result in disqualification from eligibility or be subject to the Medicaid lien. Some, but not all, of those results have been discussed above.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #35
Applicant may own property jointly with a person other than a spouse. Typical events that give rise to joint ownership would be inheritance or acquisition of such joint property.
Joint property with right of survivorship with a caretaker child has been discussed in Post 23.
Generally, the two types of joint tenancy are joint ownership with right of survivorship (interest passes to survivor by operation of law upon death of co-owner) and tenancy in common (interest passes under person’s will). The administrative regulations provide that co-ownership will not preclude eligibility if the property cannot be sold because of the refusal of the co-owner to liquidate and is deemed to be an inaccessible resource. (N.J.A.C. 10:71-4.4(b)6.)
Therefore, any type of joint ownership will not preclude eligibility. However, as discussed in Post 23, the three inter-related goals of Medicaid planning are to establish Medicaid eligibility, avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient of benefits.
Although a joint tenancy or a tenancy in common will not affect eligibility, the other goals of avoiding disqualification after eligibility and avoidance of the lien after the death of the recipient of benefits are not accomplished by co-ownership. With respect to disqualification after eligibility, if the owner of a survivor interest predeceases a Medicaid recipient, the decedent’s interest will pass by operation of law to the recipient and will then constitute an “available resource.” Therefore, eligibility would be lost. If the recipient predeceased, recipient’s one-half interest would be subject to the Medicaid lien.
With respect to tenancy in common, the death of the co-tenant would sever the ownership of the property so that it would no longer be held jointly and the applicant’s interest would disqualify the applicant from Medicaid. If the applicant predeceased, the applicant’s one-half interest in the tenancy in common would be subject to the Medicaid lien.
A sale of either type of tenancy would result in one-half the cash proceeds passing to a Medicaid recipient, which would then disqualify the individual from Medicaid.
As in prior posts (for example Post 6), I have used the word “protected transferee” to mean an individual who can be gifted an applicant’s home without transfer penalty. Another category of protected transferee is a sibling (i) who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstance of joint ownership with a child.
An interesting point regarding any form of joint ownership discussed in this article is the concept that a Medicaid recipient must use recurring monies to defray Medicaid’s outlay (i.e. the Medicaid reimbursement rate). Included in this contribution is one-half the property owned with the other individual. For these purposes, hypothetical deductions such as depreciation are not considered. The contribution to be made by the Medicaid recipient (assuming the house is rented) is one-half the net rental proceeds.
Conclusion: Although ownership of property with another will not preclude Medicaid eligibility, it can result in disqualification from eligibility or be subject to the Medicaid lien. Some, but not all, of those results have been discussed above.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #35
Monday, May 11, 2009
Caretaker Child Revisited
Caretaker Child Revisited
In a prior Post 6, I discussed in some detail the rationale for preparing a power of attorney for a potential applicant that allows the residence to be transferred to the child who provided care (i.e. “protected transferee”) if appropriate for Medicaid planning purposes. However, it is important to discuss the type of evidence to be adduced at the County Board of Social Services to influence the Board to make a decision that the child provided the requisite care so that the transfer can be made at that time either by the applicant (if competent) or under the power of attorney if applicant is then incompetent. I have found that two documents provided to the Board are sufficient for establishing the requisite care for the two-year period and the fact that such care permitted the individual to reside at home rather than go into a nursing home.
Firstly, an affidavit prepared by the child discussing the care provided (with any necessary documentation) is most helpful. In the simplest situation, I had a case in which a nurse of a prominent nursing home retired to take care of her mother at home. Obviously this is not the typical case but is an extreme example. The usual case involves a child living in the parent’s home who is working and provided certain elements of care. To prepare a proper affidavit inquiry should be made with respect to the following areas: whether the child worked near the residence of the applicant, to what extent did the child provide medicine which the applicant could not self-administer, whether the child was available during the day to immediately go home and take care of the potential applicant if necessary, how much time did the child spend with the potential applicant during non-working hours, to what extent the child would go on vacation (going on vacation is not fatal since I believe that intermittent care by another would not ruin the “protected transferee” status), to what extent the child helped the potential applicant with basic physical care needs such as cleaning, etc., the child’s role in providing transportation and coordination of care with the parent’s physicians, did child directly provide any basic medical care on a regular basis such as taking blood pressure. The list of such inquiries is infinite but the key is to show that but for the care of the child, the parent would need to go into a nursing home.
Secondly, it is recommended that a letter from the potential applicant’s physician stating to the best of his/her knowledge the child provided the necessary care to allow the potential applicant to remain at home. This letter should be brief and to the point. In my experience, I have not requested an affidavit from a physician since I feel it would be inappropriate.
Such an approach should get the desired result (transfer of home to child).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #34
In a prior Post 6, I discussed in some detail the rationale for preparing a power of attorney for a potential applicant that allows the residence to be transferred to the child who provided care (i.e. “protected transferee”) if appropriate for Medicaid planning purposes. However, it is important to discuss the type of evidence to be adduced at the County Board of Social Services to influence the Board to make a decision that the child provided the requisite care so that the transfer can be made at that time either by the applicant (if competent) or under the power of attorney if applicant is then incompetent. I have found that two documents provided to the Board are sufficient for establishing the requisite care for the two-year period and the fact that such care permitted the individual to reside at home rather than go into a nursing home.
Firstly, an affidavit prepared by the child discussing the care provided (with any necessary documentation) is most helpful. In the simplest situation, I had a case in which a nurse of a prominent nursing home retired to take care of her mother at home. Obviously this is not the typical case but is an extreme example. The usual case involves a child living in the parent’s home who is working and provided certain elements of care. To prepare a proper affidavit inquiry should be made with respect to the following areas: whether the child worked near the residence of the applicant, to what extent did the child provide medicine which the applicant could not self-administer, whether the child was available during the day to immediately go home and take care of the potential applicant if necessary, how much time did the child spend with the potential applicant during non-working hours, to what extent the child would go on vacation (going on vacation is not fatal since I believe that intermittent care by another would not ruin the “protected transferee” status), to what extent the child helped the potential applicant with basic physical care needs such as cleaning, etc., the child’s role in providing transportation and coordination of care with the parent’s physicians, did child directly provide any basic medical care on a regular basis such as taking blood pressure. The list of such inquiries is infinite but the key is to show that but for the care of the child, the parent would need to go into a nursing home.
Secondly, it is recommended that a letter from the potential applicant’s physician stating to the best of his/her knowledge the child provided the necessary care to allow the potential applicant to remain at home. This letter should be brief and to the point. In my experience, I have not requested an affidavit from a physician since I feel it would be inappropriate.
Such an approach should get the desired result (transfer of home to child).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #34
Thursday, May 7, 2009
The Problem of the Working Spouse
The Problem of the Working Spouse
On many occasions an institutionalized spouse will have a community spouse who is still employed. The earnings of the community spouse when added to pension and social security of both parties prevents Medicaid eligibility. The solution to such a problem is as follows:
1. Keep in mind that the resources of the community spouse after the applicant receives Medicaid are not considered as a factor in continuing eligibility.
2. In the hypothetical, but for the earnings of the community spouse, which were used to fund nursing home costs, the individual would be eligible for Medicaid.
3. Arrangements should be made for the community spouse to cease working for a limited period of time to eliminate the continuing flow of income from her earnings.
4. Medicaid eligibility, particularly giving consideration to the community spouse resource allowance, the current maximum being $109,560, should be an uncomplicated procedure.
5. The spouse should make arrangements that after the applicant receives Medicaid, the community spouse commences work and again her resources are not limited.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #33
On many occasions an institutionalized spouse will have a community spouse who is still employed. The earnings of the community spouse when added to pension and social security of both parties prevents Medicaid eligibility. The solution to such a problem is as follows:
1. Keep in mind that the resources of the community spouse after the applicant receives Medicaid are not considered as a factor in continuing eligibility.
2. In the hypothetical, but for the earnings of the community spouse, which were used to fund nursing home costs, the individual would be eligible for Medicaid.
3. Arrangements should be made for the community spouse to cease working for a limited period of time to eliminate the continuing flow of income from her earnings.
4. Medicaid eligibility, particularly giving consideration to the community spouse resource allowance, the current maximum being $109,560, should be an uncomplicated procedure.
5. The spouse should make arrangements that after the applicant receives Medicaid, the community spouse commences work and again her resources are not limited.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #33
Tuesday, May 5, 2009
The Need for a General Durable Power of Attorney
The Need for a General Durable Power of Attorney
One of the most important aspects of Medicaid planning is that there be access to assets of the applicant. If the applicant is incompetent, the power of attorney should be used to have access to these assets. The word “durable” refers to the fact that the power of attorney must have special language so that even if the applicant is incompetent, the assets can be used or liquidated.
Reference is made to Post 20 which indicates that a typical applicant might have bank accounts, securities, E bonds, IRA’s, life insurance policies and/or a residence. It is my practice to reference any type of asset an applicant may have to make sure the power of attorney can be used to liquidate such asset. However, not all companies will require that the power of attorney have language relating to the specific asset.
If an individual is not competent and there is no power of attorney or the power of attorney is not deemed to have access to the asset, a costly guardianship is required.
The power of attorney should not be pro forma (i.e. standardized). Particularly in the elder law area, the individual’s situation is to be considered in drafting the language for a power of attorney. This will be discussed further in future posts.
Generally, only a copy of a power of attorney is necessary except for real estate transactions. Also, the County Board of Social Services asks for a power of attorney as part of the application process.
It is important that the power of attorney be done as soon as possible, particularly if the individual is failing. A power of attorney can only be done if the individual is competent.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #32
Friday, May 1, 2009
The Problem of Recurrent Disqualification
The Problem of Recurrent Disqualification
A. A Medicaid recipient may be entitled to monies on a recurring basis, which will raise continuing disqualification problems.
1. For example, an individual may be entitled to several payments due to an asbestos class action recovery.
2. Such funds received during a given month not expended by the “first moment of the first day” of the subsequent month will result in disqualification if the resource requirement is exceeded.
B. Planning in advance may avoid disqualification.
1. Possible uses of such funds received on a recurrent basis are funeral expenses, clothing and outstanding medical bills.
2. If the Medicaid recipient has a caretaker agreement (see Post 17), which allows the recipient to reimburse a child or relative for prior services rendered by such individual, payments made under the agreement could solve the problem. Also, exempt transfers such as to a “disabled” child will ameliorate the problem.
3. All bills and expenses should be paid immediately. If receipt of the money causes the Medicaid recipient to exceed the resource requirement on the first of the next month, private payment must be made even if the monies available on the first of the month exceed the resource requirement by even a minimal amount.
4. Prepaid burial costs can be increased.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #31
A. A Medicaid recipient may be entitled to monies on a recurring basis, which will raise continuing disqualification problems.
1. For example, an individual may be entitled to several payments due to an asbestos class action recovery.
2. Such funds received during a given month not expended by the “first moment of the first day” of the subsequent month will result in disqualification if the resource requirement is exceeded.
B. Planning in advance may avoid disqualification.
1. Possible uses of such funds received on a recurrent basis are funeral expenses, clothing and outstanding medical bills.
2. If the Medicaid recipient has a caretaker agreement (see Post 17), which allows the recipient to reimburse a child or relative for prior services rendered by such individual, payments made under the agreement could solve the problem. Also, exempt transfers such as to a “disabled” child will ameliorate the problem.
3. All bills and expenses should be paid immediately. If receipt of the money causes the Medicaid recipient to exceed the resource requirement on the first of the next month, private payment must be made even if the monies available on the first of the month exceed the resource requirement by even a minimal amount.
4. Prepaid burial costs can be increased.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #31
Monday, April 27, 2009
Joint Assets
Joint Assets
In prior Posts, I have indicated that a large portion of New Jersey Medicaid law has not been affected by The Deficit Reduction Act. However, it is important to realize the treatment of certain issues and the current treatment of such issues. This article has been written with that thought in mind.
Under the Medicaid Catastrophic Coverage Act, New Jersey has accorded special treatment to funds withdrawn from a joint bank account – Medicaid Communication 88-15. That is, funds drawn by another other than the applicant from a joint account were not treated as transfer if both parties had complete access to the account and funds were placed into the account by the applicant prior to the look-back period.
OBRA ’93 employs broad language to treat any reduction in individual’s ownership or control of any joint asset as a transfer. New Jersey now follows OBRA ’93 for all joint assets, including bank accounts (i.e. funds withdrawn by another are subject to a transfer penalty). This is now the law in New Jersey.
To the extent that the funds withdrawn were the property of and contributed by the co-owner, the withdrawal of these funds should not result in the imposition of a penalty.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #29
In prior Posts, I have indicated that a large portion of New Jersey Medicaid law has not been affected by The Deficit Reduction Act. However, it is important to realize the treatment of certain issues and the current treatment of such issues. This article has been written with that thought in mind.
Under the Medicaid Catastrophic Coverage Act, New Jersey has accorded special treatment to funds withdrawn from a joint bank account – Medicaid Communication 88-15. That is, funds drawn by another other than the applicant from a joint account were not treated as transfer if both parties had complete access to the account and funds were placed into the account by the applicant prior to the look-back period.
OBRA ’93 employs broad language to treat any reduction in individual’s ownership or control of any joint asset as a transfer. New Jersey now follows OBRA ’93 for all joint assets, including bank accounts (i.e. funds withdrawn by another are subject to a transfer penalty). This is now the law in New Jersey.
To the extent that the funds withdrawn were the property of and contributed by the co-owner, the withdrawal of these funds should not result in the imposition of a penalty.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #29
Friday, April 24, 2009
Effect of Inheritance by Medicaid REcipient on Eligibility
Effect of Inheritance by Medicaid Recipient on Eligibility
A. Medicaid Recipient Becomes Beneficiary of an Estate
1. As previously indicated (see Post 27), property in probate is treated as an inaccessible resource. Therefore, merely acquiring the status of beneficiary would not render a Medicaid recipient ineligible.
2. Distribution of the inheritance would render the individual ineligible until the resource requirement was again met.
3. If the distribution is not made to the individual and the individual dies while receiving Medicaid benefits, the prospective inheritance becomes subject to the Medicaid lien as a probate asset.
4. A disclaimer by the potential Medicaid recipient is treated as a transfer and will result in ineligibility.
B. Inheritance by a Recipient of an Inaccessible Resource
1. One type of excludable resource is an inaccessible resource - N.J.A.C. 10:71-4.4(b) (6). Examples set forth in the regulations include “real property that cannot be sold because of the refusal of a co-owner to liquidate.”
2. Therefore, if upon the death of another, a Medicaid recipient becomes a co-tenant in a joint tenancy with right of survivorship or a tenancy in common, the property interest will not result in disqualification if the co-tenant refuses to liquidate. However, upon the death of the Medicaid recipient, the property will be subject to the lien to the extent of his “interest” at date of death.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #28
A. Medicaid Recipient Becomes Beneficiary of an Estate
1. As previously indicated (see Post 27), property in probate is treated as an inaccessible resource. Therefore, merely acquiring the status of beneficiary would not render a Medicaid recipient ineligible.
2. Distribution of the inheritance would render the individual ineligible until the resource requirement was again met.
3. If the distribution is not made to the individual and the individual dies while receiving Medicaid benefits, the prospective inheritance becomes subject to the Medicaid lien as a probate asset.
4. A disclaimer by the potential Medicaid recipient is treated as a transfer and will result in ineligibility.
B. Inheritance by a Recipient of an Inaccessible Resource
1. One type of excludable resource is an inaccessible resource - N.J.A.C. 10:71-4.4(b) (6). Examples set forth in the regulations include “real property that cannot be sold because of the refusal of a co-owner to liquidate.”
2. Therefore, if upon the death of another, a Medicaid recipient becomes a co-tenant in a joint tenancy with right of survivorship or a tenancy in common, the property interest will not result in disqualification if the co-tenant refuses to liquidate. However, upon the death of the Medicaid recipient, the property will be subject to the lien to the extent of his “interest” at date of death.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #28
Thursday, April 23, 2009
Effect of Inheritance by the Community Spouse on Eligibility
Effect of Inheritance by the Community Spouse on Eligibility
The determination of spousal resources is made at the date of institutionalization (the “snapshot”) while resources at the date of application determine eligibility (see “Marital Issues in the Eligibility Process” herein). Suppose a community spouse is a beneficiary under the will of a parent and the parent has recently died. Under what circumstances is this inheritance part of the spousal pot for Medicaid eligibility purposes?
A. Death of parent of community spouse after eligibility
An inheritance by the community spouse after institutionalized spouse becomes eligible for Medicaid is not an available resource and does not result in disqualification. That is, after the date of determination of eligibility for Medicaid, no resources of the community spouse are deemed available to the institutionalized spouse.
B. Death of parent of community spouse prior to eligibility date
1. Suppose the parent of the community spouse dies two weeks before the anticipated date of eligibility. Does the prospective inheritance of the community spouse delay the eligibility date?
N.J.A.C. 10:71-4.4(b) 6. treats property in probate as an inaccessible resource. Therefore, the parent’s death should have no immediate effect on eligibility.
2. Suppose the parent dies six months before the anticipated eligibility date and distribution has not been made to the community spouse.
Query: To what extent can probate be delayed beyond Medicaid eligibility? That is, should you communicate with the executor of decedent’s estate so that distribution is delayed until the applicant receives Medicaid?
C. Distribution of inheritance to community spouse prior to application
1. Probably, such inheritance would be treated as a resource as of the date of application for Medicaid.
2. If you are presented with this situation, the argument could be made that since the statute is silent with respect to resources acquired by the community spouse between the dates of institutionalization and application that such resources are not part of the “spousal pot.”
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #27
The determination of spousal resources is made at the date of institutionalization (the “snapshot”) while resources at the date of application determine eligibility (see “Marital Issues in the Eligibility Process” herein). Suppose a community spouse is a beneficiary under the will of a parent and the parent has recently died. Under what circumstances is this inheritance part of the spousal pot for Medicaid eligibility purposes?
A. Death of parent of community spouse after eligibility
An inheritance by the community spouse after institutionalized spouse becomes eligible for Medicaid is not an available resource and does not result in disqualification. That is, after the date of determination of eligibility for Medicaid, no resources of the community spouse are deemed available to the institutionalized spouse.
B. Death of parent of community spouse prior to eligibility date
1. Suppose the parent of the community spouse dies two weeks before the anticipated date of eligibility. Does the prospective inheritance of the community spouse delay the eligibility date?
N.J.A.C. 10:71-4.4(b) 6. treats property in probate as an inaccessible resource. Therefore, the parent’s death should have no immediate effect on eligibility.
2. Suppose the parent dies six months before the anticipated eligibility date and distribution has not been made to the community spouse.
Query: To what extent can probate be delayed beyond Medicaid eligibility? That is, should you communicate with the executor of decedent’s estate so that distribution is delayed until the applicant receives Medicaid?
C. Distribution of inheritance to community spouse prior to application
1. Probably, such inheritance would be treated as a resource as of the date of application for Medicaid.
2. If you are presented with this situation, the argument could be made that since the statute is silent with respect to resources acquired by the community spouse between the dates of institutionalization and application that such resources are not part of the “spousal pot.”
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #27
Tuesday, April 21, 2009
Preserving the Community Spouse Resource Allowance
Preserving the Community Spouse Resource Allowance
A. The key to planning asset preservation with respect to the community spouse is to remember that although the community spouse resource allowance is determined as of the date of institutionalization, the date at which the community spouse cannot have resources in excess of this amount (subject to the 90-day rule), is the date of application (see Post 25). Therefore, in order to do appropriate Medicaid planning, consideration must be given to utilization of spousal resources from the commencement of planning to the projected date of Medicaid eligibility.
Factors to be considered in determining the amount retained by the community spouse include the following:
i. anticipated personal expenditures by community spouse prior to application;
ii. expenditures of “ill” spouse prior to institutionalization and, of course, nursing home costs prior to Medicaid eligibility;
iii. interest and earning on assets;
iv. any compensation to be received by the community spouse;
v. social security and pension payments of both spouses;
vi. projected date of Medicaid eligibility.
B. As indicated by the above factors, although the community spouse resource allowance is determined objectively, many factors must be considered as part of the planning process. For example, although the current maximum amount that can be protected is $109,560, generally a substantially greater amount can and should be retained by the community spouse. Living expenses of the community spouse and nursing home costs of the institutionalized spouse prior to Medicaid eligibility are major factors. Possibly the key factor is the projected date of Medicaid eligibility which, of course, cannot be determined with certainty.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #26
A. The key to planning asset preservation with respect to the community spouse is to remember that although the community spouse resource allowance is determined as of the date of institutionalization, the date at which the community spouse cannot have resources in excess of this amount (subject to the 90-day rule), is the date of application (see Post 25). Therefore, in order to do appropriate Medicaid planning, consideration must be given to utilization of spousal resources from the commencement of planning to the projected date of Medicaid eligibility.
Factors to be considered in determining the amount retained by the community spouse include the following:
i. anticipated personal expenditures by community spouse prior to application;
ii. expenditures of “ill” spouse prior to institutionalization and, of course, nursing home costs prior to Medicaid eligibility;
iii. interest and earning on assets;
iv. any compensation to be received by the community spouse;
v. social security and pension payments of both spouses;
vi. projected date of Medicaid eligibility.
B. As indicated by the above factors, although the community spouse resource allowance is determined objectively, many factors must be considered as part of the planning process. For example, although the current maximum amount that can be protected is $109,560, generally a substantially greater amount can and should be retained by the community spouse. Living expenses of the community spouse and nursing home costs of the institutionalized spouse prior to Medicaid eligibility are major factors. Possibly the key factor is the projected date of Medicaid eligibility which, of course, cannot be determined with certainty.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #26
Thursday, April 16, 2009
Date of Application Could Be Fatal
Date of Application Could Be Fatal
Usually, the date of eligibility is easy to project. As indicated above, application should be made several months prior to the anticipated date of eligibility. Therefore, after submission of the required documents and financial information to Medicaid, only subsequent monthly financial data need be submitted until eligibility is granted. That is, in the usual case early application is part of a prudent planning process. However, in terms of the date of eligibility, early application could be fatal when there have been transfers.
A. The look-back period is 60 months prior to the date an individual is institutionalized and has applied for Medicaid.
B. If an individual delays applying for Medicaid until 60 months after a transfer, eligibility will be granted.
C. Suppose individual applies for Medicaid 56 months after transferring $200,000 to brother. Applicant is ineligible for Medicaid. Suppose individual applies five months later, which is 61 months after the transfer. Will the original application be fatal or will it be cured by the later application? The original application is fatal and is not cured by the later application. Medicaid will be denied.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #25
Usually, the date of eligibility is easy to project. As indicated above, application should be made several months prior to the anticipated date of eligibility. Therefore, after submission of the required documents and financial information to Medicaid, only subsequent monthly financial data need be submitted until eligibility is granted. That is, in the usual case early application is part of a prudent planning process. However, in terms of the date of eligibility, early application could be fatal when there have been transfers.
A. The look-back period is 60 months prior to the date an individual is institutionalized and has applied for Medicaid.
B. If an individual delays applying for Medicaid until 60 months after a transfer, eligibility will be granted.
C. Suppose individual applies for Medicaid 56 months after transferring $200,000 to brother. Applicant is ineligible for Medicaid. Suppose individual applies five months later, which is 61 months after the transfer. Will the original application be fatal or will it be cured by the later application? The original application is fatal and is not cured by the later application. Medicaid will be denied.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #25
Monday, April 13, 2009
Analysis of Timing - Community Spouse Resource Allowance
Analysis of Timing – Community Spouse Resource Allowance
The key to spousal planning is to recognize the significance of and distinguish between two key points in time: the assessment date and the date of eligibility.
A. The community spouse resource allowance is determined “as of” the date of institutionalization. A “snapshot” is taken at this time solely for purposes of determining the spouse’s protected amount. Actually, the amount is determined as of the first day of the first month of institutionalization.
B. However, for purposes of eligibility, the key point in time is the date of application for benefits. That is, in determining the resources of an institutionalized spouse at the time of application for benefits, all resources held by either the community spouse or the institutionalized spouse (or jointly) are considered available to the institutionalized spouse except for the community spouse resource allowance . Therefore, subject to the 90-day rule (see Post 10), the amount of resources that can be retained by the community spouse without endangering eligibility of the institutionalized spouse is determined as of the date of institutionalization and such determination is utilized at the date of application to determine eligibility.
C. The community spouse resource allowance is not affected by appreciation of spousal resources after institutionalization.
D. Since the assessment date is made “as of” the date of institutionalization, but generally determined at a later date, it is extremely important to maintain financial records.
E. There is a practical reason for using the date of institutionalization for computation of the protected amount. The community spouse requires certainty after institutionalization in order to protect the community spouse resource allowance. If such a determination were not made as of the date of institutionalization, at any point in time the community spouse would not be aware of the amount of resources that could be protected and may have expended more funds than necessary. Therefore, the computation of the allowance is made prospectively.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #24
The key to spousal planning is to recognize the significance of and distinguish between two key points in time: the assessment date and the date of eligibility.
A. The community spouse resource allowance is determined “as of” the date of institutionalization. A “snapshot” is taken at this time solely for purposes of determining the spouse’s protected amount. Actually, the amount is determined as of the first day of the first month of institutionalization.
B. However, for purposes of eligibility, the key point in time is the date of application for benefits. That is, in determining the resources of an institutionalized spouse at the time of application for benefits, all resources held by either the community spouse or the institutionalized spouse (or jointly) are considered available to the institutionalized spouse except for the community spouse resource allowance . Therefore, subject to the 90-day rule (see Post 10), the amount of resources that can be retained by the community spouse without endangering eligibility of the institutionalized spouse is determined as of the date of institutionalization and such determination is utilized at the date of application to determine eligibility.
C. The community spouse resource allowance is not affected by appreciation of spousal resources after institutionalization.
D. Since the assessment date is made “as of” the date of institutionalization, but generally determined at a later date, it is extremely important to maintain financial records.
E. There is a practical reason for using the date of institutionalization for computation of the protected amount. The community spouse requires certainty after institutionalization in order to protect the community spouse resource allowance. If such a determination were not made as of the date of institutionalization, at any point in time the community spouse would not be aware of the amount of resources that could be protected and may have expended more funds than necessary. Therefore, the computation of the allowance is made prospectively.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #24
Thursday, April 9, 2009
Additional Benefits for a Single Individual Owning Home Jointly with a Protected Transferee
Additional Benefits for a Single Individual Owning Home
Jointly with a Protected Transferee
Medicaid planning must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of a recipient of benefits. The discussion in Post 6 relating to a child who “resided” in the home for at least two years prior to institutionalization and provided care which permitted the individual to reside at home rather than go in a nursing home addresses mainly the issue of Medicaid eligibility. The prior post involved related to the transfer of the home to a “protected transferee” and that addressed mainly the issue of Medicaid eligibility. However, the planning issues involved when there is joint ownership by the parent and the child relate to the disqualification of Medicaid after eligibility and avoiding the Medicaid lien. For purposes of this discussion, joint ownership shall refer to a joint tenancy with right of survivorship (i.e., property passes to the survivor upon the death of the first of parent or child).
A. Assuming the requirements of eligibility are met, joint ownership of applicant’s residence with a child who is a protected transferee (or even a child who is not a protected transferee) will not preclude eligibility. N.J.A.C. 10:71-4.4(b)6. treats real property which cannot be sold because of the refusal of a co-owner to liquidate as an inaccessible resource.
B. However, disqualification from eligibility and the Medicaid lien are avoided by a transfer of applicant’s joint interest to a “protected transferee” child.
1. The Medicaid lien is avoided by terminating ownership, and, thereby removing the property from a Medicaid recipient’s “estate.” That is, assets that are part of one’s estate after the individual dies and receives Medicaid are subject to the Medicaid lien. It is noted that the lien statute expressly applies to joint tenancies.
2. Assuming the child disinherits the transferor parent, the problem of inadvertent disqualification is eliminated (joint ownership, child dies first and property passes to parent by operation of law).
3. If both individuals are alive and joint ownership were not terminated and the parent had qualified for Medicaid, a sale of the property would result in one-half the net proceeds being allocated to the parent with subsequent loss of eligibility.
Note: Another category of protected transferee is a (i) sibling who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstances of joint ownership with a child.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #23
Jointly with a Protected Transferee
Medicaid planning must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of a recipient of benefits. The discussion in Post 6 relating to a child who “resided” in the home for at least two years prior to institutionalization and provided care which permitted the individual to reside at home rather than go in a nursing home addresses mainly the issue of Medicaid eligibility. The prior post involved related to the transfer of the home to a “protected transferee” and that addressed mainly the issue of Medicaid eligibility. However, the planning issues involved when there is joint ownership by the parent and the child relate to the disqualification of Medicaid after eligibility and avoiding the Medicaid lien. For purposes of this discussion, joint ownership shall refer to a joint tenancy with right of survivorship (i.e., property passes to the survivor upon the death of the first of parent or child).
A. Assuming the requirements of eligibility are met, joint ownership of applicant’s residence with a child who is a protected transferee (or even a child who is not a protected transferee) will not preclude eligibility. N.J.A.C. 10:71-4.4(b)6. treats real property which cannot be sold because of the refusal of a co-owner to liquidate as an inaccessible resource.
B. However, disqualification from eligibility and the Medicaid lien are avoided by a transfer of applicant’s joint interest to a “protected transferee” child.
1. The Medicaid lien is avoided by terminating ownership, and, thereby removing the property from a Medicaid recipient’s “estate.” That is, assets that are part of one’s estate after the individual dies and receives Medicaid are subject to the Medicaid lien. It is noted that the lien statute expressly applies to joint tenancies.
2. Assuming the child disinherits the transferor parent, the problem of inadvertent disqualification is eliminated (joint ownership, child dies first and property passes to parent by operation of law).
3. If both individuals are alive and joint ownership were not terminated and the parent had qualified for Medicaid, a sale of the property would result in one-half the net proceeds being allocated to the parent with subsequent loss of eligibility.
Note: Another category of protected transferee is a (i) sibling who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstances of joint ownership with a child.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #23
Wednesday, April 8, 2009
In Determining Eligibility, All Rules Must Be Considered
In Determining Eligibility, All Rules Must Be Considered
I recently had a fact situation which required an understanding of several similar rules, only one of which applied.
Facts: Medicaid applicant lived with his disabled sister through the time of application. Applicant had discussed Medicaid eligibility with several attorneys and was advised that the house had to be sold. The sections reviewed by the attorneys and determined to be non-applicable include:
1. The exemption for transfers to a disabled child (Post 42). Child clearly relates to a child of the applicant and would not apply to his sister.
2. Post 6 refers to property owned by applicant residing with caretaker child. Such a caretaker child for purposes of these articles has been referred to a “protected transferee.” Another category of protected transferee is a sibling who has an equity interest in the home and who is residing in the home for at least one year prior to institutionalization. This alternative was also reviewed, but is not applicable since the sibling did not have an interest in the home. Creating an interest in the home for purposes of compliance with the statute would not work since this would result in a transfer. Generally, a sibling has an interest in a home with an applicant either through inheritance or purchase rather than a transfer by the applicant to the sibling of a partial interest.
The client and family discussed the above with me and were of the opinion that within a reasonable time after institutionalization, the house would have to be sold and the individual would have to use the proceeds on nursing home costs. I discussed with them Post 14 which is designated “The Significance of Dependent Relative Residing in the Home with Applicant.” That is, the person in the home was neither a disabled child nor a sister with an equity interest, but the home was still exempt based upon Program Instruction No. 85-8-9, an old Medicaid communication, which requires dependents of a relative rather than the issues perused.
The importance of this situation is that all possibilities must be considered in advising a client regarding eligibility and that many occasions require authority not normally needed in the Medicaid eligibility process. Creativity is especially necessary when dealing with the home. With respect to the home and real property, see Posts 6, 11, 14, 32, 34, 35, 36, 37, 38, 41, 42, and 52.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #22
I recently had a fact situation which required an understanding of several similar rules, only one of which applied.
Facts: Medicaid applicant lived with his disabled sister through the time of application. Applicant had discussed Medicaid eligibility with several attorneys and was advised that the house had to be sold. The sections reviewed by the attorneys and determined to be non-applicable include:
1. The exemption for transfers to a disabled child (Post 42). Child clearly relates to a child of the applicant and would not apply to his sister.
2. Post 6 refers to property owned by applicant residing with caretaker child. Such a caretaker child for purposes of these articles has been referred to a “protected transferee.” Another category of protected transferee is a sibling who has an equity interest in the home and who is residing in the home for at least one year prior to institutionalization. This alternative was also reviewed, but is not applicable since the sibling did not have an interest in the home. Creating an interest in the home for purposes of compliance with the statute would not work since this would result in a transfer. Generally, a sibling has an interest in a home with an applicant either through inheritance or purchase rather than a transfer by the applicant to the sibling of a partial interest.
The client and family discussed the above with me and were of the opinion that within a reasonable time after institutionalization, the house would have to be sold and the individual would have to use the proceeds on nursing home costs. I discussed with them Post 14 which is designated “The Significance of Dependent Relative Residing in the Home with Applicant.” That is, the person in the home was neither a disabled child nor a sister with an equity interest, but the home was still exempt based upon Program Instruction No. 85-8-9, an old Medicaid communication, which requires dependents of a relative rather than the issues perused.
The importance of this situation is that all possibilities must be considered in advising a client regarding eligibility and that many occasions require authority not normally needed in the Medicaid eligibility process. Creativity is especially necessary when dealing with the home. With respect to the home and real property, see Posts 6, 11, 14, 32, 34, 35, 36, 37, 38, 41, 42, and 52.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #22
Monday, April 6, 2009
Inadvertent Disqualification of Individual Due to Death of Another
Inadvertent Disqualification of Individual Due to Death of Another
As indicated in Post No. 4, a Medicaid recipient’s resources on the first of any month after Medicaid must not exceed the resource limitation of $2,000 or $4,000.
The prior death of a relative of a Medicaid recipient could result in the loss of eligibility. The estate plans of individuals of a Medicaid recipient are often a neglected consideration. Such concerns can even arise when an individual has been part of the Medicaid planning process, such as a “protected transferee,” a disabled child or a donee of gifts.
For example, if the home is transferred to an exempt individual, major concern is that the will of the transferee not devise the home to the potential Medicaid recipient or that the potential Medicaid recipient not receive a share of the estate of the transferee by intestacy.
It is important that a Medicaid recipient not be a beneficiary under any will. Therefore, the wills of other relatives, whether or not a participant in the Medicaid planning process, should be reviewed. Generally, ethical considerations will dictate that such individuals retain separate counsel.
Inheritance by intestacy could also result in disqualification, see N.J.S.A. 3B:5-3, 4.
The receipt of nonprobate assets such as insurance proceeds or retirement benefits could also cause disqualification.
With respect to life insurance, if an owner designates a primary beneficiary without contingent beneficiaries, the policy could provide that the insurance would go to the Medicaid recipient. Therefore, beneficiary designations should be carefully reviewed.
The topic of the will of the “healthy spouse” is complicated and has been purposely neglected. Reference is made to my article Practical Medicaid Planning – Part II, 1999 “Estate Planning Issues,” by Levin, Mark.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #21
As indicated in Post No. 4, a Medicaid recipient’s resources on the first of any month after Medicaid must not exceed the resource limitation of $2,000 or $4,000.
The prior death of a relative of a Medicaid recipient could result in the loss of eligibility. The estate plans of individuals of a Medicaid recipient are often a neglected consideration. Such concerns can even arise when an individual has been part of the Medicaid planning process, such as a “protected transferee,” a disabled child or a donee of gifts.
For example, if the home is transferred to an exempt individual, major concern is that the will of the transferee not devise the home to the potential Medicaid recipient or that the potential Medicaid recipient not receive a share of the estate of the transferee by intestacy.
It is important that a Medicaid recipient not be a beneficiary under any will. Therefore, the wills of other relatives, whether or not a participant in the Medicaid planning process, should be reviewed. Generally, ethical considerations will dictate that such individuals retain separate counsel.
Inheritance by intestacy could also result in disqualification, see N.J.S.A. 3B:5-3, 4.
The receipt of nonprobate assets such as insurance proceeds or retirement benefits could also cause disqualification.
With respect to life insurance, if an owner designates a primary beneficiary without contingent beneficiaries, the policy could provide that the insurance would go to the Medicaid recipient. Therefore, beneficiary designations should be carefully reviewed.
The topic of the will of the “healthy spouse” is complicated and has been purposely neglected. Reference is made to my article Practical Medicaid Planning – Part II, 1999 “Estate Planning Issues,” by Levin, Mark.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #21
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