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
Monday, September 14, 2009
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
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