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
Showing posts with label Roseland. Show all posts
Showing posts with label Roseland. Show all posts
Tuesday, July 21, 2009
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
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
Thursday, March 19, 2009
The Significance of a Dependent Relative Residing in the Home with Applicant
The Significance of a Dependent Relative
Residing in the Home with Applicant
On many occasions a child will be residing in the home with applicant, and such child might not have any disability or problem of any kind. I have spoken to several Medicaid supervisors and they assumed that the home would be an available resource.
See Program Instruction No. 85-8-9 detailed below which indicates that if the home is occupied by a dependent relative, the home is an exempt resource. The letter ruling lists numerous relatives that can qualify as dependent, and “dependency” is defined broadly. Pursuant to N.J.A.C. 10:49-14.1(g) if a “family member” of a deceased Medicaid beneficiary has, prior to the Medicaid beneficiary’s death, continuously resided in the home which was also beneficiary’s primary residence, the Division will not enforce the lien until the property is sold, or the resident family member either dies or vacates the property. The only issue with such a ruling is that the words “family member” is not defined.
I provided this ruling to a Medicaid supervisor and she re-instituted its significance at a recent meeting with the authorities in Trenton.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #14
Residing in the Home with Applicant
On many occasions a child will be residing in the home with applicant, and such child might not have any disability or problem of any kind. I have spoken to several Medicaid supervisors and they assumed that the home would be an available resource.
See Program Instruction No. 85-8-9 detailed below which indicates that if the home is occupied by a dependent relative, the home is an exempt resource. The letter ruling lists numerous relatives that can qualify as dependent, and “dependency” is defined broadly. Pursuant to N.J.A.C. 10:49-14.1(g) if a “family member” of a deceased Medicaid beneficiary has, prior to the Medicaid beneficiary’s death, continuously resided in the home which was also beneficiary’s primary residence, the Division will not enforce the lien until the property is sold, or the resident family member either dies or vacates the property. The only issue with such a ruling is that the words “family member” is not defined.
However, it would seem, that a dependent member of the immediate family would allow the home to be excludable as a resource for eligibility purposes and would be not be subject to the lien until such time as the property is sold, the family member dies or vacates the property.Program Instruction No. 85-8-9
The Medicaid Only Manual (at N.J.A.C. 10:94-4.4(b)(i) provides for the exclusion of a home as a resource during temporary absences, including trips and hospitalizations. That policy is hereby expanded and appears below.
A home may be excluded as a principal place of residence during temporary absences so long as the individual intends, and may reasonably be expected to return home. With the exception appearing in the paragraph below, an absence of more than six months shall be assumed to indicate that the home no longer serves as the principal place of residence. That period may be extended only with approval from the Division of Public Welfare.
If the absence is not temporary and the home is occupied by a spouse or dependent relative, the home shall be considered to be the principal place of residence so long as the spouse or dependent relative continues to reside there, regardless of the length of the absence. In determining if the exclusion of a home applies, a dependent relative included only the following individuals: son, daughter, grandson, granddaughter, stepson, stepdaughter, mother, father, stepmother, stepfather, half-sister, half-brother, niece, nephew, grandmother, grandfather, aunt, uncle, sister, brother, stepsister, stepbrother, mother-in-law, father-in-law,
sister-in-law, brother-in-law, daughter-in-law, and son-in-law. The nature of the dependency (e.g., financial, medical, custodial or any other type of dependent relationship) of any such relative must be determined on a case-by-case basis and must be documented in the case record.
I provided this ruling to a Medicaid supervisor and she re-instituted its significance at a recent meeting with the authorities in Trenton.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #14
Monday, March 16, 2009
"Bread and Butter" Planning Techniques for Medicaid Eligibility
“Bread and Butter” Planning Techniques for Medicaid Eligibility
Many potential Medicaid eligibility cases do not require sophisticated planning techniques. Relevant administrative regulations are referenced.
I. Hypothetical
Husband is about to permanently enter nursing home. The husband and wife have the following assets:
Residence $($30,000 mortgage) $200,000 (net of mortgage)
Bank accounts (jointly held) 100,000
Life insurance on husband
($100,000 face, $5,000 cash value) 5,000
Investments (jointly held) 25,000
Debts and anticipated debts are $10,000, which includes attorney’s fees, accountant’s fees and needed repairs on the home.
The planning goals are Medicaid eligibility, maximum preservation of assets and avoidance of loss of Medicaid eligibility.
II. Recommendations
A. Transfer all bank accounts and investments into the name of the wife for management purposes.
B. Residence should be transferred into wife’s sole name. Home should not be sold by wife until after husband is eligible for Medicaid (spouse’s cash not counted toward husband’s assets after husband’s eligibility).
C. Life insurance policy should be cashed in after institutionalization (see N.J.A.C. 10:71-4.4(b)4.).
D. After husband enters the nursing home, pay off mortgage ($30,000), debts and expenses ($10,000), cash in life insurance.
Note: The Community Spouse Resource Allowance is $65,000 (one-half total of bank accounts, investments and cash value of insurance). The amount which is not protected need not be used on nursing home costs, and payment accelerates the date of Medicaid eligibility.
E. Balance of funds used to pay nursing home costs and wife’s expenses in the community. Other possibilities are prepayment of taxes, prepaid funeral funds and general debts.
Suggestion: For alternative arrangements, see Additional Post-Eligibility Considerations, Post No. 2.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #12
Many potential Medicaid eligibility cases do not require sophisticated planning techniques. Relevant administrative regulations are referenced.
I. Hypothetical
Husband is about to permanently enter nursing home. The husband and wife have the following assets:
Residence $($30,000 mortgage) $200,000 (net of mortgage)
Bank accounts (jointly held) 100,000
Life insurance on husband
($100,000 face, $5,000 cash value) 5,000
Investments (jointly held) 25,000
Debts and anticipated debts are $10,000, which includes attorney’s fees, accountant’s fees and needed repairs on the home.
The planning goals are Medicaid eligibility, maximum preservation of assets and avoidance of loss of Medicaid eligibility.
II. Recommendations
A. Transfer all bank accounts and investments into the name of the wife for management purposes.
B. Residence should be transferred into wife’s sole name. Home should not be sold by wife until after husband is eligible for Medicaid (spouse’s cash not counted toward husband’s assets after husband’s eligibility).
C. Life insurance policy should be cashed in after institutionalization (see N.J.A.C. 10:71-4.4(b)4.).
D. After husband enters the nursing home, pay off mortgage ($30,000), debts and expenses ($10,000), cash in life insurance.
Note: The Community Spouse Resource Allowance is $65,000 (one-half total of bank accounts, investments and cash value of insurance). The amount which is not protected need not be used on nursing home costs, and payment accelerates the date of Medicaid eligibility.
E. Balance of funds used to pay nursing home costs and wife’s expenses in the community. Other possibilities are prepayment of taxes, prepaid funeral funds and general debts.
Suggestion: For alternative arrangements, see Additional Post-Eligibility Considerations, Post No. 2.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #12
Friday, March 13, 2009
Real Estate Planning Ideas for a Married Couple
Real Estate Planning Ideas for a Married Couple
Protection of the home is the most common and most significant Medicaid planning and eligibility issue. Unfortunately, the planning possibilities are often overlooked. Some of the techniques (e.g. spousal planning) are rendered uncertain due to Medicaid’s position that the failure of a surviving spouse to exercise elective share rights gives rise to a period of ineligibility (see N.J.A.C. 10:71-4.10(b)3., see also Comment 8). Relevant administrative regulations are included for reference.
Planning Ideas for the Married Couple
A. Significant Medicaid rules to consider in the planning process.
1. Transfer rules do not apply to the transfer of the home to designated individuals.
i. spouse
ii. child under 21 or child who is blind or disabled
iii. a sibling who has an equity interest in the home and who was residing in the home for at least one year prior to the date of institutionalization
iv. son or daughter who resided in the home for at least two years prior to institutionalization and provided care which permitted individual to reside at home rather than go to a nursing home.
2. The home constitutes exempt property if resided in by spouse.
3. If home owned by applicant and not resided in by spouse or applicant is unmarried, an absence of more than six months is assumed to indicate that the home is no longer the principal residence - N.J.A.C. 10:71-4.4(b)1.i.
4. After determination of eligibility for Medicaid, no resources of the community spouse are deemed available to the institutionalized spouse.
B. Transfer of home to spouse
1. Typical factual situation: Potential Medicaid recipient and spouse own residence as a tenancy by the entirety. Assume individual qualifies for Medicaid and after qualification, community spouse predeceases and residence passes by operation of law to the Medicaid recipient. In such a case, the residence is no longer exempt and the house would have to be sold and the proceeds applied to payment of nursing home costs before Medicaid eligibility would be reinstated.
2. Planning recommendation: Potential application should transfer interest in the home to the spouse. Spouse should devise residence to someone other than institutionalized individual. Assuming applicant and community spouse had no other assets, such disinheritance would be treated as a transfer by applicant under the new regulations. It is recommended that there be separate counsel for each spouse for this transaction.
Note: If property remained in joint tenancy, there would be no estate recovery upon the death of a Medicaid recipient survived by the community spouse. However, New Jersey Medicaid authorities take the position that if such property remains in the name of the community spouse, upon the death of the community spouse, the estate recovery provisions will apply to said property (with respect to Medicaid costs of the application). Therefore, a transfer of title into the sole name of the community spouse removes the property from the “estate” of a Medicaid recipient, and, therefore, from the estate recovery provisions.
3. Recommendations regarding subsequent sale of residence by community spouse after transfer: Community spouse should not sell residence until after institutionalized spouse qualifies for Medicaid at which time the resources of the community spouse are no longer deemed available to the institutionalized spouse. If the residence is sold by the community spouse before the institutionalized spouse qualifies for Medicaid, the proceeds become an available resource.
Contrast: Residence remains in joint names and is sold after institutionalized spouse qualifies for Medicaid. At such time, one-half the proceeds are allocated to the community spouse and one-half the proceeds are allocated to the Medicaid recipient, who would then lose Medicaid eligibility.
4. It is noted that a re-transfer of the home by the community spouse is not a protected transfer and is subject to transfer penalty. However, a transfer of the home by the community spouse after the institutionalized spouse qualifies for Medicaid should not result in a transfer penalty.
Comment: As indicated above, the regulations provide that the failure to exercise elective share rights is treated as transfer by the applicant and gives rise to a period of ineligibility. Therefore, the will of the community spouse and disinheritance become an issue. Notwithstanding, the above analysis presents several compelling reasons for transferring the residence to the community spouse (sale of residence by community spouse after eligibility, avoidance of lien if Medicaid recipient predeceases community spouse, avoidance of residence passing to Medicaid recipient by “operation of law” if community spouse predeceases, avoidance of loss of eligibility if residence sold while in joint names).
C. Purchase of home by community spouse
1. Typical factual situation: Potential Medicaid recipient and spouse reside in a rented apartment. Couple have $350,000 in liquid resources. Individual enters nursing home.
2. Planning recommendation: Residence should be purchased in name of community spouse. The home constitutes exempt property if resided in by spouse. Community spouse should not sell residence until after applicant qualifies for Medicaid.
3. The above is another example of the purchase of an excludable resource to protect funds.
D. Recent sale of home
1. Factual situation: Couple with minimal resources have recently sold their jointly-owned residence in anticipation of the need for monies to pay husband’s nursing home costs (not being aware of Medicaid rules). Husband enters nursing home several days prior to seeking advice of counsel).
2. Recommendation: Community spouse should immediately purchase another home with the proceeds of sale from the prior home. N.J.A.C. 10:71-4.4(b)8.(ii) indicates that the proceeds of sale constitute an excludable resource to the extent utilized to purchase another home within three months of the date of receipt of the proceeds.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #11
Protection of the home is the most common and most significant Medicaid planning and eligibility issue. Unfortunately, the planning possibilities are often overlooked. Some of the techniques (e.g. spousal planning) are rendered uncertain due to Medicaid’s position that the failure of a surviving spouse to exercise elective share rights gives rise to a period of ineligibility (see N.J.A.C. 10:71-4.10(b)3., see also Comment 8). Relevant administrative regulations are included for reference.
Planning Ideas for the Married Couple
A. Significant Medicaid rules to consider in the planning process.
1. Transfer rules do not apply to the transfer of the home to designated individuals.
i. spouse
ii. child under 21 or child who is blind or disabled
iii. a sibling who has an equity interest in the home and who was residing in the home for at least one year prior to the date of institutionalization
iv. son or daughter who resided in the home for at least two years prior to institutionalization and provided care which permitted individual to reside at home rather than go to a nursing home.
2. The home constitutes exempt property if resided in by spouse.
3. If home owned by applicant and not resided in by spouse or applicant is unmarried, an absence of more than six months is assumed to indicate that the home is no longer the principal residence - N.J.A.C. 10:71-4.4(b)1.i.
4. After determination of eligibility for Medicaid, no resources of the community spouse are deemed available to the institutionalized spouse.
B. Transfer of home to spouse
1. Typical factual situation: Potential Medicaid recipient and spouse own residence as a tenancy by the entirety. Assume individual qualifies for Medicaid and after qualification, community spouse predeceases and residence passes by operation of law to the Medicaid recipient. In such a case, the residence is no longer exempt and the house would have to be sold and the proceeds applied to payment of nursing home costs before Medicaid eligibility would be reinstated.
2. Planning recommendation: Potential application should transfer interest in the home to the spouse. Spouse should devise residence to someone other than institutionalized individual. Assuming applicant and community spouse had no other assets, such disinheritance would be treated as a transfer by applicant under the new regulations. It is recommended that there be separate counsel for each spouse for this transaction.
Note: If property remained in joint tenancy, there would be no estate recovery upon the death of a Medicaid recipient survived by the community spouse. However, New Jersey Medicaid authorities take the position that if such property remains in the name of the community spouse, upon the death of the community spouse, the estate recovery provisions will apply to said property (with respect to Medicaid costs of the application). Therefore, a transfer of title into the sole name of the community spouse removes the property from the “estate” of a Medicaid recipient, and, therefore, from the estate recovery provisions.
3. Recommendations regarding subsequent sale of residence by community spouse after transfer: Community spouse should not sell residence until after institutionalized spouse qualifies for Medicaid at which time the resources of the community spouse are no longer deemed available to the institutionalized spouse. If the residence is sold by the community spouse before the institutionalized spouse qualifies for Medicaid, the proceeds become an available resource.
Contrast: Residence remains in joint names and is sold after institutionalized spouse qualifies for Medicaid. At such time, one-half the proceeds are allocated to the community spouse and one-half the proceeds are allocated to the Medicaid recipient, who would then lose Medicaid eligibility.
4. It is noted that a re-transfer of the home by the community spouse is not a protected transfer and is subject to transfer penalty. However, a transfer of the home by the community spouse after the institutionalized spouse qualifies for Medicaid should not result in a transfer penalty.
Comment: As indicated above, the regulations provide that the failure to exercise elective share rights is treated as transfer by the applicant and gives rise to a period of ineligibility. Therefore, the will of the community spouse and disinheritance become an issue. Notwithstanding, the above analysis presents several compelling reasons for transferring the residence to the community spouse (sale of residence by community spouse after eligibility, avoidance of lien if Medicaid recipient predeceases community spouse, avoidance of residence passing to Medicaid recipient by “operation of law” if community spouse predeceases, avoidance of loss of eligibility if residence sold while in joint names).
C. Purchase of home by community spouse
1. Typical factual situation: Potential Medicaid recipient and spouse reside in a rented apartment. Couple have $350,000 in liquid resources. Individual enters nursing home.
2. Planning recommendation: Residence should be purchased in name of community spouse. The home constitutes exempt property if resided in by spouse. Community spouse should not sell residence until after applicant qualifies for Medicaid.
3. The above is another example of the purchase of an excludable resource to protect funds.
D. Recent sale of home
1. Factual situation: Couple with minimal resources have recently sold their jointly-owned residence in anticipation of the need for monies to pay husband’s nursing home costs (not being aware of Medicaid rules). Husband enters nursing home several days prior to seeking advice of counsel).
2. Recommendation: Community spouse should immediately purchase another home with the proceeds of sale from the prior home. N.J.A.C. 10:71-4.4(b)8.(ii) indicates that the proceeds of sale constitute an excludable resource to the extent utilized to purchase another home within three months of the date of receipt of the proceeds.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #11
Thursday, March 5, 2009
Community Spouse Resource Allowance - Importance of Timing Payment of Expenditures
Community Spouse Resource Allowance
Importance of Timing Payment of Expenditures
A. Expenditure of resources in excess of the Community Spouse Resource Allowance.
Assume husband is the institutionalized spouse. Must resources that are not part of the Community Spouse Resource Allowance be used for nursing home costs? It is a common misconception that resources that are not part of the Community Spouse Resource Allowance must be expended on nursing home costs. There is no such requirement in the statute.
Planning Point: If institutionalization is imminent, try to delay expenditures until after institutionalization in order to maximize asset protection.
B. Assume $100,000 in spousal resources (excluding the home) and home needs repairs and improvements of $20,000. If costs are incurred before institutionalization, the Community Spouse Resource Allowance will be $40,000. However, if costs are incurred after institutionalization, treat such costs as reducing the husband’s share, and the Community Spouse Resource Allowance will be $50,000.
Attorney’s fees would be another expenditure that should be paid after institutionalization.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #8
A. Expenditure of resources in excess of the Community Spouse Resource Allowance.
Assume husband is the institutionalized spouse. Must resources that are not part of the Community Spouse Resource Allowance be used for nursing home costs? It is a common misconception that resources that are not part of the Community Spouse Resource Allowance must be expended on nursing home costs. There is no such requirement in the statute.
Planning Point: If institutionalization is imminent, try to delay expenditures until after institutionalization in order to maximize asset protection.
B. Assume $100,000 in spousal resources (excluding the home) and home needs repairs and improvements of $20,000. If costs are incurred before institutionalization, the Community Spouse Resource Allowance will be $40,000. However, if costs are incurred after institutionalization, treat such costs as reducing the husband’s share, and the Community Spouse Resource Allowance will be $50,000.
Attorney’s fees would be another expenditure that should be paid after institutionalization.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #8
Tuesday, March 3, 2009
Rules for Medicaid Planning
Rules for Medicaid Eligibility
The goal in standard Medicaid planning is for the single individual or the single applicant to have assets reduced to the appropriate number. Similarly, the funds of a married community spouse are to be considered when the applicant is married.
The rules and examples are set forth below:
A. Single individual: $2,000, $4,000 if monthly income is greater than $2,022.
B. Married individual: Asset limitation on community spouse (one-half total resources as of date of institutionalization). 2009 maximum: $109,560, minimum: $21,912.
Example 1: Total Resources: $100,000
Community Spouse Resource Allowance: $ 50,000
Example 2: Total Resources: $300,000
Community Spouse Resource Allowance: $109,560
Example 3: Total Resources: $ 30,000
Community Spouse Resource Allowance: $ 21,912
Subsequent articles will discuss other aspects of the Community Spouse Resource Allowance.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #7
The goal in standard Medicaid planning is for the single individual or the single applicant to have assets reduced to the appropriate number. Similarly, the funds of a married community spouse are to be considered when the applicant is married.
The rules and examples are set forth below:
A. Single individual: $2,000, $4,000 if monthly income is greater than $2,022.
B. Married individual: Asset limitation on community spouse (one-half total resources as of date of institutionalization). 2009 maximum: $109,560, minimum: $21,912.
Example 1: Total Resources: $100,000
Community Spouse Resource Allowance: $ 50,000
Example 2: Total Resources: $300,000
Community Spouse Resource Allowance: $109,560
Example 3: Total Resources: $ 30,000
Community Spouse Resource Allowance: $ 21,912
Subsequent articles will discuss other aspects of the Community Spouse Resource Allowance.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #7
Monday, March 2, 2009
Property Owned by Applicant Residing with Caretaker Child
Property Owned by Applicant Residing with Caretaker Child
The transfer rules do not apply to the transfer of the home to designated individuals. The materials refer to such individuals as “protected transferees.” For the purposes of the following discussion, the “protected transferee” is assumed to be a child of the individual who provided care to the individual at home.
A. The child must have (i) resided in the home for at least two years prior to institutionalization; and (ii) provided care which permitted individual to reside at home rather than go into a nursing home.
Note: The statute is silent as to the permissible time of transfer.
B. The subjective determination of whether a child has provided the requisite care is made by the County Board upon application for Medicaid. An unfavorable determination by the Board results in a denial of eligibility and a substantial period of ineligibility.
Planning Point: The request for protected transferee status should be made in conjunction with the application for Medicaid. This approach avoids the risk of a period of ineligibility. If the applicant is incompetent, seek court approval for the transfer in a guardianship proceeding and incorporate the written approval by the County Board in your papers.
Planning Point Before Medicaid Application Process: Counsel will often be presented with situation in which a child is residing with applicant in applicant’s residence and applicant-client desires Medicaid planning and does not desire to transfer the home (or counsel is of the opinion that home should be transferred as part of the Medicaid application process). Counsel should incorporate language in potential applicant’s power of attorney that allows residence to be transferred to child if appropriate for Medicaid planning purposes.
C. If protected transferee is one of several children who are equal beneficiaries under the applicant’s will, arrangements should be made by the children to avoid litigation. However, the transfer should be made solely to the child with protected status. Written approval to the transfer from the other children should be obtained if transfer is being made pursuant to a guardianship proceeding.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #6
The transfer rules do not apply to the transfer of the home to designated individuals. The materials refer to such individuals as “protected transferees.” For the purposes of the following discussion, the “protected transferee” is assumed to be a child of the individual who provided care to the individual at home.
A. The child must have (i) resided in the home for at least two years prior to institutionalization; and (ii) provided care which permitted individual to reside at home rather than go into a nursing home.
Note: The statute is silent as to the permissible time of transfer.
B. The subjective determination of whether a child has provided the requisite care is made by the County Board upon application for Medicaid. An unfavorable determination by the Board results in a denial of eligibility and a substantial period of ineligibility.
Planning Point: The request for protected transferee status should be made in conjunction with the application for Medicaid. This approach avoids the risk of a period of ineligibility. If the applicant is incompetent, seek court approval for the transfer in a guardianship proceeding and incorporate the written approval by the County Board in your papers.
Planning Point Before Medicaid Application Process: Counsel will often be presented with situation in which a child is residing with applicant in applicant’s residence and applicant-client desires Medicaid planning and does not desire to transfer the home (or counsel is of the opinion that home should be transferred as part of the Medicaid application process). Counsel should incorporate language in potential applicant’s power of attorney that allows residence to be transferred to child if appropriate for Medicaid planning purposes.
C. If protected transferee is one of several children who are equal beneficiaries under the applicant’s will, arrangements should be made by the children to avoid litigation. However, the transfer should be made solely to the child with protected status. Written approval to the transfer from the other children should be obtained if transfer is being made pursuant to a guardianship proceeding.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #6
Tuesday, February 24, 2009
Accelerating the Date of Eligibility
Accelerating the Date of Eligibility
1. While timely payment of debts is an important step in establishing the date of eligibility, it is often possible to accelerate such date by the prepayment of a future debt or by acquiring excludable resources.
2. Frequently in the planning process an income tax liability is generated due to the liquidation of assets. Typical examples are the redemption of E or EE bonds, sales of securities and the withdrawal of funds from an IRA. Payment of income taxes on these transactions on April 15 could delay the date of eligibility. Counsel should confer with applicant’s accountant to discuss maximum payment of estimated taxes.
3. If applicant is married and community spouse is residing in the marital home, monies can be utilized for mortgage payments or for home repairs.
4. Monies can be used to purchase excludable resources such as an irrevocable burial arrangement – N.J.A.C. 10:71-4.4(b)9.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #5
1. While timely payment of debts is an important step in establishing the date of eligibility, it is often possible to accelerate such date by the prepayment of a future debt or by acquiring excludable resources.
2. Frequently in the planning process an income tax liability is generated due to the liquidation of assets. Typical examples are the redemption of E or EE bonds, sales of securities and the withdrawal of funds from an IRA. Payment of income taxes on these transactions on April 15 could delay the date of eligibility. Counsel should confer with applicant’s accountant to discuss maximum payment of estimated taxes.
3. If applicant is married and community spouse is residing in the marital home, monies can be utilized for mortgage payments or for home repairs.
4. Monies can be used to purchase excludable resources such as an irrevocable burial arrangement – N.J.A.C. 10:71-4.4(b)9.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #5
Friday, February 20, 2009
Significance of Payment of Debts and Expenses
Significance of Payment of Debts and Expenses
A. As indicated in the administrative regulations and the examples presented below, there are several key rules in the administrative regulations to be addressed with respect to the payment of debts and expenses and failure to consider these rules could delay the date of eligibility. The most significant administrative consideration is that the resource eligibility requirement of $2,000 (or $4,000 in limited circumstances) must be met on the first day of the month for which eligibility is sought. Relevant administrative regulations and federal statutes are included for reference.
B. Significant administrative regulations.
1. Resource eligibility is determined as of the first moment of the first day of each month - N.J.A.C. 10:71-4.1(e). The resource requirement must be met on the first day of every month for the recipient or eligibility can be lost. Of course, once eligibility is established, resources of the community spouse may exceed the Community Spouse Resource Allowance without loss of benefits by the recipient spouse – 42 U.S.C. 1396r-5(c)(4).
2. If an individual is eligible as of the first moment of the first day of the month, subsequent changes during that month in the amount of countable resources will not affect the original determination of eligibility – N.J.A.C. 10: 71-4.1(e).
3. A check drawn on the account of an applicant reduces the value of the account. However, the value of the account is not reduced by unpaid obligations for which a check has not been drawn – N.J.A.C. 10:71-4.1(e)2.
C. Eligibility can be denied or delayed by lack of compliance with the regulations.
Example 1: Applicant (single individual) has $5,000 in a checking account on September 30. There is an outstanding medical bill of $3,200. On October 1, application is made for Medicaid. Check is drawn in payment of medical bill on October 1. Application for Medicaid will be denied for October.
Note: Resources in excess of $2,000 will result in ineligibility for the month. Therefore, the nursing home is entitled to the private pay rate for that month. That is, missing the resource requirement by even a minimal amount has the same effect as missing the requirement by a larger amount.
Example 2: Same as above, except check is drawn on September 30. Medicaid will be granted.
Note: Check need not be negotiated to reduce available resources.
Example 3: Applicant has $1,500 in a checking account and qualifies for Medicaid on October 1. On October 15, individual receives a medical reimbursement check of $10,000, which is deposited in a checking account. Funds remain in the account. Medicaid recipient will lose eligibility on November 1.
Contrast: Medicaid recipient transfers the $10,000 on October 16 to a disabled child. Eligibility will be maintained.
Caution: Funds paid to the nursing home (which have not been applied against prior monthly charges) are a resource. Therefore, if one month’s deposit remains with the nursing home, the deposit should be applied to payment of nursing home costs in the month prior to eligibility.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #4
Tuesday, February 17, 2009
Life Insurance Issues
Life Insurance Issues
A. One of the most common oversights which can delay eligibility is the failure to inquire about applicant’s (or spouse’s) life insurance policies. References to the relevant New Jersey Administrative Code citations are included.
B. While the cash value of life insurance policies with a total face value of $1,500 or less is an excludable resource (N.J.A.C. 10:71-4. 4(b)4.), the existence of a life insurance policy(s) often presents a trap for the unwary. Often an elderly client will have a small policy with a substantial cash value. If the face value of such policy (or total face value of several policies) exceeds $1,500, the cash value constitutes a countable resource. Therefore, it is necessary to surrender the policy and spend the cash value.
Caution: While a group policy has no cash value, the aggregate face amount of all policies (including group) is considered in the determination of whether the cash value(s) is an excludable resource.
Note: Another solution to the cash value problem is for the owner of the policy (generally the applicant) to borrow against the policy. While this technique would reduce the death proceeds, the cash value would no longer be a resource. Hopefully, the borrowed funds can be used to pay debts or acquire excludable resources.
1. If the face amount of a policy is large and/or the death of an applicant is near, consideration should be given to a transfer of ownership of the policy to the community spouse. Of course, the cash value will then count toward the Community Spouse Resource Allowance.
2. Life insurance on the life of and owned by the community spouse could also present a problem. That is, the cash value on such policy counts toward the Community Spouse Resource Allowance and will result in a denial of eligibility if not considered. There is no express $1,500 exclusion in the regulations for a policy owned by and on the life of the community spouse.
Note: Again, policies need not always be surrendered. As indicated above, it might be advantageous to transfer a policy with a substantial death benefit to the community spouse, particularly if death of the applicant is near.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #3
Friday, February 13, 2009
Additional Post-Eligibility Considerations
Additional Post-Eligibility Considerations
Accounts Closed Out During the Look-back Period
In addition to providing history for all accounts during the relevant look-back period, documentation should be provided for any accounts terminated during such time. Also, tracing the proceeds of such accounts is necessary. Firstly, this process will allow you to detect unknown transfers. Secondly, such information is to be provided since the County Board does a crosscheck with the IRS of Forms 1099 of a Medicaid recipient prior to eligibility. Such crosschecks will reveal all interest bearing accounts held by a Medicaid recipient (and other assets such as stocks) during this time period. If such search reveals an account(s) not disclosed in the Medicaid application papers, the County will make a post-eligibility inquiry. By providing such documentation at the time of application, the family avoids the nuisance of subsequent inquiry by Medicaid with respect to accounts closed out and not mentioned.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #2
Accounts Closed Out During the Look-back Period
In addition to providing history for all accounts during the relevant look-back period, documentation should be provided for any accounts terminated during such time. Also, tracing the proceeds of such accounts is necessary. Firstly, this process will allow you to detect unknown transfers. Secondly, such information is to be provided since the County Board does a crosscheck with the IRS of Forms 1099 of a Medicaid recipient prior to eligibility. Such crosschecks will reveal all interest bearing accounts held by a Medicaid recipient (and other assets such as stocks) during this time period. If such search reveals an account(s) not disclosed in the Medicaid application papers, the County will make a post-eligibility inquiry. By providing such documentation at the time of application, the family avoids the nuisance of subsequent inquiry by Medicaid with respect to accounts closed out and not mentioned.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #2
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