The Necessity to Use a Daily Money Manager

On occasion Medicaid attorneys will need the assistance of an expert in handling the paperwork for their clients both on a daily basis and for Medicaid purposes. Attached is a description of Liberty Paperwork Solutions describing their services.

My name is Emily Lutz, and my company is Liberty Paperwork Solutions LLC. We are part of a relatively new and growing professional field known as Daily Money Management. Daily Money Managers help individuals and families with their personal paperwork. This may include bill paying, checkbook balancing, filing, organizing and budgeting, as well as submitting and tracking medical insurance claims.

Older adults as well as busy professionals are likely to engage the services of a Daily Money Manager. DMM services can help older adults maintain independence while providing their adult children with peace of mind, knowing their parents’ needs are being met.

We work closely with our clients’ other network of professionals, including attorneys and accountants, so that all information is shared in a timely and accurate manner. If and when the time comes to apply for Medicaid, we can move the application process along by helping to retrieve statements that satisfy the Medicaid “look back” period. We also monitor the accounts on an ongoing basis to make sure the Medicaid recipient does not exceed the specified resources in order to remain eligible.

Liberty Paperwork Solutions LLC has been helping people take care of their personal business and paperwork tasks for over 4 years. With an extensive background in banking and working with seniors, we have many satisfied clients. We are a member of the American Association of Daily Money Managers, and are fully insured. For further questions, or to schedule a complimentary consultation, I can be reached at Emily@LibertyPaperworkSolutions.com, or 973-462-5733.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© January 2011, Post 131

The Dilemma of Caretaker Agreements

Agreements pursuant to which a Medicaid applicant can reimburse a child (i.e. Caretaker Agreements) have been discussed in Posts 6, 17, and 34. That is, a child can now be reimbursed if the payments to the child are deemed by the state to be "reasonable". This creates a dilemma as the state will not make an a priori decision regarding the validity of a caretaker agreement. The applicant runs a risk that the amount by which the child is compensated is not deemed by the state to be reasonable. In such event the excess payment to the child by the parent is deemed to be a penalizing transfer.

Therefore, it is important that counsel indicate in his letter that the validity of a Caretaker Agreement is not guaranteed as the state will only honor payments by the parent that are deemed to be "reasonable", and that the parties are at the mercy of the state.

I particularly call your attention to Post 52 in which I suggest the documents to be submitted to support a Caretaker Agreement.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© January 2011, Post 129

Ethical Issues Relating to Joining Network Groups

As many attorneys and other professionals have been joining network groups to promote business, the issue arises as to an attorney's ethical obligations. That is, a network group is formed so that the members provide referrals to each of the members of the group.

There is certainly no ethical problem joining a network group unless you are financially penalized for not recommending members of the group.

However, counsel's obligation is always to his client. Therefore, while the joining of a network group is not an ethical problem, making recommendations to individuals in the group rather than to the best professional that counsel knows, violates the obligation attorneys have to provide their clients with the best advice available. This creates a dilemma for an attorney joining a network group who wants to generate work and decides only to refer matters to members of the group. If he or she does so with knowledge of a more competent professional in a particular area, counsel is violating his or her obligation to provide an individual with the best recommendation available.

Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© January 2011, Post 130

The Necessity to Use a Qualified Home Care Agency

It is necessary on many occasions to use a qualified home care agency. Below is a description of one of the outstanding home care agencies (Freedom Eldercare) located in Hackensack, New Jersey. The telephone number of Freedom Eldercare is (201) 883-1200 and the fax number is (201) 833-1283.

When choosing home care for a loved one, you should be aware of the risks associated with using a non licensed agency or independent provider.

Liabilities and abuses

Payroll Taxes
Consumers and the families of those receiving care are confronted by a confusing array of federal and state laws. The simplest and most direct requirement is that anyone who gets a paycheck must pay the government any taxes due. This includes social security, Medicare, federal and state unemployment, and state and federal payroll taxes.

When the consumer is the employer and responsible for compliance, and none of these taxes are being paid, the government may sue the consumer or their estate for back taxes, interest and penalties. In a situation where many days of care or many hours each week of care over a long period of time have been delivered, this tax responsibility can be a substantial amount. Other remedies that authorities may seek can include civil fines and criminal penalties.

There are also many problems for workers. No payment into social security leaves them vulnerable in their old age, and no protection is afforded for their periods of unemployment. Also, workers may not be receiving the minimum wage and overtime protection to which they may be entitled.

Worker Related Injuries
This is the most potentially financially devastating result for consumers and workers who are unaware of the employer-employee relationship. If no workers’ compensation protection is provided (as mandated by law for employees for nearly every state), and the worker sustains an on-the-job accident, the liabilities can be substantial. Medical costs, and disability payments for workers could cause financial hardship for even a very wealthy client. For clients who could not afford to pay, the worker could be left with no help for a devastating injury. Many consumers incorrectly assume that homeowner’s insurance will cover this type of loss, when, in fact, homeowner’s insurance usually specifically excludes employees in the home.

Abuse and Exploitation
Most workers who enter the home care industry are caring, giving people. Unfortunately, there are also those who know that it is very easy to take advantage of frail, functionally limited, often cognitively impaired clients. Registries or independent contractor agencies, because they have little ongoing liability and want to avoid being considered as the employer of the worker, may provide inadequate or no background investigations on their caregivers. This could subject clients to physical, psychological or financial abuse. Families of the consumer can help, but time constraints and geographical distances often don’t allow for this.



Supervision of the Worker
Because of Internal Revenue Service regulations, registries and independent contractor agencies cannot provide any substantive work supervision, scheduling, or training to workers in home care without becoming employers. If they do, the company, by law, becomes the employer of the worker. Supervision, scheduling and worker training are important benefits to consumers and workers and are provided only by agencies that hire their workers.

For consumers and their families, hiring a licensed home care agency provides assurance that someone with experience and responsibility is reviewing the changing care needs of the client. The licensed home care agency provides ongoing assessments of the limits of care that individual workers are allowed to provide. They also provide appropriate supervision that can potentially head off, or at least deal with, the sometimes difficult relationship issues that can occur between clients and their care workers.


Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© January 2011, Post 128

The Date of Determining the Community Spouse Resource Allowance

The date of determining the Community Spouse Resource Allowance is defined as being determined the first day of the first month of institutionalization.

However, institutionalization is not limited to nursing home placement. In actuality, it would commence the first day of the first month that a person went into a hospital. If the person were receiving home care, the determination would be the first day of the first month of home care.

Any combination of the above would apply, the determination being made at the earliest date. However, if the continuous period can be broken by a thirty-day time period then the above does not apply. For example, if a married individual enters a nursing home for rehabilitation and returns home without home care for a period of in excess of thirty days, the Community Spouse Resource Allowance would have to be re-determined at the appropriate date. As mentioned in Post 50, if the Community Spouse Resource Allowance increases after institutionalization, but before the date of determination of Medicaid eligibility, the individual gets the benefit of the increased 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.
© December 2010, Post 126

Planning for Transfers Post May 26, 2010

As indicated by Medicaid Communication No. 10-02 and No. 10-06 (see Post 113), the state has denied reverse half-a-loaf planning. My argument in favor of reverse half-a-loaf planning is set forth in post 113.

Suppose an individual after May 26, 2010, (Med Com 10-06) has made a transfer in contemplation of reverse half-a-loaf planning. Since transfers after May 26, 2010, Med Com 10-06 has rejected the planning.

The question then becomes what steps to take now that the gift has been made and the give-back will not work. My recommendation is that the transferee use the funds for the care of the applicant. In an ideal world, reverse half-a-loaf can be reinstated and a give-back effectuated at that time. In reality, this is unlikely. Therefore, the gifted funds should be used for the care of the applicant. If the funds are exhausted prior to the five-year look-back period, no funds will be saved, but the individual will qualify for Medicaid. If the monies (considering pension and social security), sustain the applicant for the five-year period, any monies gifted in excess of the funds used cover the look-back period are preserved.


Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© December 2010, Post 127

Basic Rules and Planning Techniques of Medicaid

I would like to summarize in a succinct form some of the basic ideas presented in prior blogs.

It is necessary to understand the general distinction between Medicare and Medicaid. Medicare is a federal benefit that an individual receives if he or she attains the age of 65 years. Medicare generally pays for an individual's doctor bills and health care costs. Medicaid is also a governmental benefit. The first type of Medicaid, known as Community Medicaid, has strict income and asset requirements and pays for health care needs. The second type of Medicaid, which is the major topic of this blog, pays for nursing home costs once the requirements for Medicaid are met.

There is an intertwining relationship between estate planning and Medicaid planning. One of my cardinal rules for Medicaid planning is that once undertaken other considerations are irrelevant. For example, it is necessary that all assets be liquidated so that they can be used for planning or as part of the spenddown process. Estate planning then becomes irrelevant.

Often a client will say to me that he or she desires to preserve a certain stock or not to liquidate an IRA since these resources are a value to them. I point out the necessity for liquidating assets so that the date of eligibility can be projected and Medicaid planning be undertaken.

The major issue relating to the decision to undertake estate planning versus Medicaid planning relates to the size of the individual's estate. That is, if an individual has sufficient assets (including pension and social security), nursing home costs may be insignificant. In such case, the individual's will and estate planning are the major concerns. The average stay in a nursing home is slightly more than two years; therefore, a prudent approach to an individual with substantial assets would lean toward estate planning rather than Medicaid planning.

Institutional Medicaid is the governmental benefit that pays for long-term care. Community Medicaid is another form of Medicaid that is equivalent to welfare.

One form of Medicare pays for medical coverage for doctors, hospitals, etc. Another form of Medicare will partially pay for nursing home costs. However, it is institutional Medicaid and not Medicare that pays for long-term stay in a nursing home. Institutional Medicaid has rules of eligibility. Institutional Medicare pays for rehabilitation or skilled nursing in a facility for 20 days in full and for the following 80 days in part, the gap being known as the co-pay. The co-pay is often paid by Medigap insurance, such as AARP or Blue Cross Blue Shield. However, Medicare pays for a nursing home stay only during such time that an individual is making improvement as deemed by a committee at the facility. After Medicare has expired, payment must be made to the nursing home.

Other than the various financial issues in obtaining a Medicaid eligibility letter, a necessary element of Medicaid eligibility is to obtain a PAS for the applicant. This is an examination by the county nurse which will be given almost immediately if a potential applicant is in a hospital. Otherwise, the family is at the mercy of the schedule of the nurses who often cover several counties. Financial eligibility without a PAS will result in eligibility being delayed until the PAS is obtained.

There are several methods by which a nursing home can be reimbursed for the stay of an individual, some of which are temporary and some of which are permanent. However, it is necessary to keep all of these in mind in projecting the date of eligibility. The methods of payment of a nursing home include Medicare (for a limited period of time), Medicaid, long-term care insurance and private pay.

There is a misconception that Medicare will pay for a long-term institutionalization. As can be seen this is not the case. That is , Medicare will pay for a limited stay at the nursing home if the requirements discussed above are met. Although many nursing homes require private pay for a guaranteed period of time, this requirement is illegal. Also, the family will be presented with a nursing home application, including the key document which is the agreement.

If an individual anticipates purchasing long-term care insurance, an expert should be consulted. The permutations of the type of policy are virtually infinite and will be discussed.

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

The Medicaid recipient must not exceed resources of $2,000 (or $4,000) on the first of any month. However, after the applicant receives Medicaid, the community spouse is not limited by the Community Spouse Resource Allowance.

Protection of the home is the most common and most significant Medicaid planning and eligibility issue. Unfortunately, the planning possibilities are often overlooked. For example, as has been discussed above, the Community Spouse Resource Allowance (amount spouse can have for an individual to get Medicaid), is not limited after an individual receives Medicaid. Therefore, application of this rule has particular significance in the real estate area. For example, transfer of the home to a healthy spouse is a common planning technique. The community spouse should delay sale of the residence until the applicant receives Medicaid. That is, after the institutionalized spouse qualifies for Medicaid, the resources of the community spouse are no longer deemed available to the institutionalized spouse. The proceeds of sale can be received by the community spouse free of the Medicaid rules. If the residence is sold by the community spouse before the institutionalized spouse qualifies for Medicaid, the proceeds become an available resource.

There are numerous other planning techniques to protect the home. For example, if a disabled child resides in the home, the home is exempt from the Medicaid rules. A little known rule is that even if such child is not disabled, if the child resides in the home and is "dependent", the home is also protected. Dependency is broadly defined in terms as any family member and the nature of the dependency is also broad (e.g. financial, medical, custodial or other type of dependent relationship). There are numerous other methods for protecting the home that can be discussed with your attorney.

Certain transfers raise eligibility problems. The rules regarding such transfers are rather complicated. Transfers of property that are exempt include transfers to a disabled child, transfers to a spouse or transfer for a purpose other than to qualify for Medicaid.

Another unique asset regarding Medicaid eligibility is life insurance. Often an elderly client will have a small policy with a substantial cash value. 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. That is, if the face value of a policy or policies (including group insurance) exceeds $1,500, the cash value is counted as a resource for Medicaid eligibility purposes.

The Medicaid application process is tedious. There are two basic documents I present to my clients at the meeting. One document is the list of information required by the respective County Boards of Social Services. The second document is the application for Medicaid. Therefore, in addition to meeting the aforementioned requirements by Medicaid, it is necessary to provide the information requested (such as marital status, pension and social security, and life insurance policies). There are planning techniques for protecting other assets which are the subject of much controversy with the Trenton Medicaid authorities.

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.

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.

Of course, if long-term care insurance is available, and I not only recommend such insurance, but have purchased it, this will cut down on the cost of the nursing home.

The Medicaid eligibility process is complicated. The process generally starts with a stay in the hospital and a request for a PAS. Then the individual enters a nursing home for rehabilitation (discussed above). The family must make a decision as to whether the individual remains in the nursing home and seeks institutional Medicaid.

Sometimes, this involves merely spending assets down to the required amounts. On other occasions, planning techniques, such as discussed above, are employed. Documents such as the nursing home application and the Medicaid application process require careful scrutiny.

As discussed above, there is an inter-relationship between Medicaid planning and estate planning.

"Doing nothing" can be a solution to Medicaid planning. For example, for a single individual, I review a client's resources, income from resources, pension, social security, benefits, etc. If the annual income from such resources and income from other sources (i.e. social security,) exceeds the approximate nursing home costs, my recommendation is that planning not be undertaken and that such income be used for the nursing home.

Finally, as discussed above, it is important that there be "access" to assets, generally pursuant to a power of attorney. In this way, monies can be used for the benefit of the individual, particularly with respect to nursing home costs.

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

© December 2010, Post 125