Effect of Change in Penalty Rate

Planning may have been undertaken last year with the anticipation of a penalty rate of $7,282. Counsel should be cognizant of the effect of a change in the penalty rate on the date of eligibility.

(A) The period of ineligibility is determined with respect to the average nursing home cost as at the time of application: 42 U.S.C. 1396(c) (1) (E).
(B) An increase in the penalty rate shortens the penalty period. Therefore, such increase between the date of transfer and the anticipated date of eligibility results in an earlier date of eligibility.

Med. Com. 12-10 changes the penalty rate from $7,282 to $7,757 as of May 29, 2012, retroactive to November 1, 2011. An increase between the date of transfer and the anticipated date of eligibility results in an earlier date of eligibility.

Example: An individual transfers $60,000 on December 1, 2011. The anticipated penalty period would be $60,000 divided by $7,282 which equals 8.23 months. However, Med. Com. 12-10 changed the penalty rate to $7,757. Therefore, the period of ineligibility is $60,000 divided by $7,757 which equals 7.7 months and results in an earlier date of eligibility.

Planning point: Counsel should review all transfers during the look-back period. The increased penalty rate may warrant an earlier date of eligibility.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© July 2012, Post 207

Review of Inaccessible Resources

Inaccessible resources 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. For example, real estate owned with a sibling is an inaccessible resource if the sibling refuses to sell the property. It is not as wonderful as it seems, since one half the net income of the property (not considering paper deductions such as depreciation) is income and must be used to defray Medicaid's costs.

Therefore, although the property is excludable, Medicaid recipient does not inure to the benefit of the income.

Moreover, if the property is a joint tenancy, it will not be subject to the lien until the sibling dies and moves out. However, if the property is a tenancy in common, on the death of the Medicaid recipient, one half of the property allocable to the Medicaid recipient passes to a family member who resided in the home with the Medicaid recipient, according to the will. In such case, the lien will apply when the family member moves out or dies. The difference between a tenancy in common and a joint tenancy is that if the property does not pass to a family member, it will be subject to the lien upon the Medicaid recipient's death.


Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© July 2012, Post 206

Matters to Consider When Putting an Ill Spouse in a Nursing Home

Families are often conflicted as to when to put an ill spouse in a nursing home when the person is in the care of the community spouse.

Although it is important that an individual live in the "least restrictive" environment, there is a point in time when nursing home admission is required.

If the individual becomes a burden to the community spouse, consideration of nursing home placement should be made. Otherwise, if the ill spouse becomes injured when nursing home placement was appropriate, there could be liability of the community spouse or the child who holds the power of attorney.

In one of my prior blogs, I pointed out that on occasion a lawyer must think as a psychologist, not to determine whether the individual should remain at home, but as least be sensitive to the fact that a geriatric care manager should be retained and make an assessment so that the ill person is in the environment most appropriate.

We are all faced with a community spouse who refuses to send the spouse into a nursing home out of guilt. At that point I think it is the attorney's obligation to recommend a geriatric care manager to make an assessment.

Also, the attorney should point out the function of Adult Protection Services. This organization and the public guardian have the obligation to make sure that an individual is not in an improper environment or abused.

So I think the main consideration as to whether an individual goes into a nursing home, does not depend as much on the individual as it does on the effect on the community spouse.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© July 2012, Post 205

Major Differences Between New York and New Jersey Medicaid

On August 9th, 2012, I and three other attorneys will be presenting a program to ICLE entitled: "A Comparison of New York and New Jersey Topics in Medicaid Planning & Interstate Guardianship".

It was surprising to me how different the Medicaid rules are in New York than they are in New Jersey. The program will be presenting approximately 20 areas of difference but the key areas that are dissimilar are as follows:

1. New York computes the community spouse resource in a different manner. In New Jersey, in order to receive the maximum CSRA, you must have twice that amount, or $227,280. In New York, the CSRA is applied to the first assets so that if you have between two spouses $113,640 plus two, the CSRA is $113,640 and the applicant has the appropriate amount with Medicaid being granted initially.

2. In New Jersey, Medicaid only covers home care under waiver programs, which limit the time that home care is available. In New York, home care is actually part of Medicaid coverage so that a person can remain home forever and not go into a nursing home.

3. Finally, although there are many other points, the exemptions for "transfers exclusively for another purpose" are treated differently. For example, in New Jersey, I once had a client who made a pattern of transfers for twenty years starting at age 70. The Medicaid authority said that since it was an elder person, they didn't care that there was a pattern and transfers for the five years prior to application were penalized. In New York, the word "exclusively" is treated differently. That is, if you can show a pattern of gifts, they will treat them exclusively for another purpose and Medicaid would be granted. The New York approach is very similar to the old Internal Revenue Service Rule regarding "transfers in contemplation of death." In that area of law, the federal government looks to the primary or dominant motive and a pattern of gifts was the key to exclusion.

In New Jersey, in order to show that a transfer was "exclusively for another purpose," you have to show an example such as the following: a thirty-five year old person gives $100,000 to his brother, has a stroke at age 36 and goes into a nursing home. It takes a unique example like this for a transfer to be treated "exclusively for another purpose". Therefore, it is important to realize that there are differences between jurisdictions regarding basic Medicaid rules.

At the program, we will be discussing other topics such as spousal refusal, payment of debts and expenses, disinheritance of the Medicaid applicant and the effect of inter vivos trusts. Although many other topics will be discussed, these are some of the other key examples of the difference between New Jersey and New York Medicaid.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© July 2012, Post 204

An Elder Lawyer Must Have a Sense of Humor

We are often presented with situations that are humorous. The attorney must decide whether humor is appropriate for the particular client.

I once had a client with whom I was discussing contingent beneficiaries. The client asked me what if you, the attorney, died before the last beneficiary. I answered that it doesn't matter since I am not a beneficiary under the will. The client seemed surprised and acknowledged the fact and then asked the following question: "What if you die before the last beneficiary?" I answered my executor or my secretary as co-holder on the box that held the wills, had a right to enter the box and get the will for them.

The client then asked, "What if you and your secretary died together?" I answered that if my secretary and I died together, my wife would kill me.

Although this story seems silly, it lightened up the conference and the meeting went much better than if I had remained serious.

The point of this story is that you must evaluate the client and determine what is appropriate and not appropriate for the particular situation.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.

© July 2012, Post 203