Allowable Expenditures Limited by Concept of Reasonableness
Although many expenditures are allowable and are part of the normal spenddown, expenditures which are disproportionate or unreasonable will be denied. This concept is based upon my discussions with Medicaid supervisors rather than personal experience or regulation.
For example, if a single individual has a house and a $100,000 in cash, reasonable expenses on the house in preparation for sale are an acceptable spenddown. However, unjustifiable and unneeded expenses would be denied.
Post 8 indicates that family resources that are not part of the community spouse resource allowance, need not be spent on the nursing home. However, the expenditures that are not part of the protected amount are subject to reasonableness. Assuming $400,000 in resources and a community spouse resource allowance of $109,560, if the community spouse uses the balance to go on a trip around the world, this will be suspect.
Funds set aside for a family funeral plot are traditionally excludable under 10:71-4.4. However, expenditures for a plot during the Medicaid application process which are extraordinary will be carefully reviewed.
Prepaid funeral expenses (i.e. prepaid irrevocable funeral trust) must relate to actual expenses incurred. At one time, funds were paid in excess of the actual costs, and after the applicant received Medicaid, the balance of the monies paid were returned to the family. This is no longer allowable.
As indicated by Post 11, real estate owned by an applicant, spouse of an applicant, or jointly, is not counted as a resource. A spenddown technique which I have used has been to use funds to improve the property. My general approach has been to have the contractor verify the costs and have pictures of the property prior to the expenditure. Merely listing the expenditures on the home without verification could be denied as a spenddown.
Obviously, the list of such excess expenditures is infinite. Other thoughts that come to mind are the purchase of an inordinate amount of health insurance (see Post 1), payments by an applicant to a child in excess of what is reasonable in the community under a caretaker agreement (see Post 52), delay of inheritance to be received by the community spouse or applicant (not really excess funds, but in that category, see Posts 27 and 28), etc.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© September 2009, Post 53
Showing posts with label Community Spouse Resource Allowance. Show all posts
Showing posts with label Community Spouse Resource Allowance. Show all posts
Wednesday, September 9, 2009
Wednesday, August 5, 2009
Community Spouse Resource Allowance Changes Annually
Community Spouse Resource Allowance Changes Annually
In Medicaid Communication No. 09-2, the community spouse resource allowance maximum is increased from $104,400 to $109,560. The community spouse resource allowance increases annually on January 1st of each year. The letter ruling indicates that the increased amount applies to “any case which has not yet been determined eligible, regardless of the date of application.”
The following example is set forth in the letter ruling:
Mr. Smith entered a long term facility on October 15, 2008. He and his wife had combined resources of $300,000. The community spouse’s share of the resources would have been established at $104,400.00 at the time of the resource assessment. Because the Smiths’ resources still exceeded $106,400.00 (the community spouse’s share plus the $2,000.00 resource limit), Mr. Smith had not yet attained Medicaid eligibility. Beginning January 1, 2009, the community spouse’s share in this case increased to $109,560.00. Resource eligibility will exist once the Smiths’ countable resources are equal to or less than $111,560.00.
In other words, although the figure used as a community spouse resource allowance is generally determined the first day of the first month of institutionalization, this is subject to change (if a determination of eligibility has not yet been made). Also, note in the example that eligibility is based upon total countable resources of $111,560.00 due to the 90-day rule (see Post 10).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 50
In Medicaid Communication No. 09-2, the community spouse resource allowance maximum is increased from $104,400 to $109,560. The community spouse resource allowance increases annually on January 1st of each year. The letter ruling indicates that the increased amount applies to “any case which has not yet been determined eligible, regardless of the date of application.”
The following example is set forth in the letter ruling:
Mr. Smith entered a long term facility on October 15, 2008. He and his wife had combined resources of $300,000. The community spouse’s share of the resources would have been established at $104,400.00 at the time of the resource assessment. Because the Smiths’ resources still exceeded $106,400.00 (the community spouse’s share plus the $2,000.00 resource limit), Mr. Smith had not yet attained Medicaid eligibility. Beginning January 1, 2009, the community spouse’s share in this case increased to $109,560.00. Resource eligibility will exist once the Smiths’ countable resources are equal to or less than $111,560.00.
In other words, although the figure used as a community spouse resource allowance is generally determined the first day of the first month of institutionalization, this is subject to change (if a determination of eligibility has not yet been made). Also, note in the example that eligibility is based upon total countable resources of $111,560.00 due to the 90-day rule (see Post 10).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 50
Thursday, May 28, 2009
Significant Language in Power of Attorney Regarding Primary Residence
Significant Language in Power of Attorney Regarding Primary Residence
Prior Post 11 discussed the advantages of a jointly-held residence being transferred to the community spouse for Medicaid purposes. The general idea presented was that after the applicant receives Medicaid, the community spouse would be free to sell the residence and the funds received would not be part of the Medicaid “pot.”
Therefore, a power of attorney must currently include language that indicates that if an individual enters a nursing home, the residence should be transferred to the community spouse. Such language should be in the power of attorney currently.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #38
Prior Post 11 discussed the advantages of a jointly-held residence being transferred to the community spouse for Medicaid purposes. The general idea presented was that after the applicant receives Medicaid, the community spouse would be free to sell the residence and the funds received would not be part of the Medicaid “pot.”
Therefore, a power of attorney must currently include language that indicates that if an individual enters a nursing home, the residence should be transferred to the community spouse. Such language should be in the power of attorney currently.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #38
Thursday, May 7, 2009
The Problem of the Working Spouse
The Problem of the Working Spouse
On many occasions an institutionalized spouse will have a community spouse who is still employed. The earnings of the community spouse when added to pension and social security of both parties prevents Medicaid eligibility. The solution to such a problem is as follows:
1. Keep in mind that the resources of the community spouse after the applicant receives Medicaid are not considered as a factor in continuing eligibility.
2. In the hypothetical, but for the earnings of the community spouse, which were used to fund nursing home costs, the individual would be eligible for Medicaid.
3. Arrangements should be made for the community spouse to cease working for a limited period of time to eliminate the continuing flow of income from her earnings.
4. Medicaid eligibility, particularly giving consideration to the community spouse resource allowance, the current maximum being $109,560, should be an uncomplicated procedure.
5. The spouse should make arrangements that after the applicant receives Medicaid, the community spouse commences work and again her resources are not limited.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #33
On many occasions an institutionalized spouse will have a community spouse who is still employed. The earnings of the community spouse when added to pension and social security of both parties prevents Medicaid eligibility. The solution to such a problem is as follows:
1. Keep in mind that the resources of the community spouse after the applicant receives Medicaid are not considered as a factor in continuing eligibility.
2. In the hypothetical, but for the earnings of the community spouse, which were used to fund nursing home costs, the individual would be eligible for Medicaid.
3. Arrangements should be made for the community spouse to cease working for a limited period of time to eliminate the continuing flow of income from her earnings.
4. Medicaid eligibility, particularly giving consideration to the community spouse resource allowance, the current maximum being $109,560, should be an uncomplicated procedure.
5. The spouse should make arrangements that after the applicant receives Medicaid, the community spouse commences work and again her resources are not limited.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #33
Tuesday, 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
Monday, April 13, 2009
Analysis of Timing - Community Spouse Resource Allowance
Analysis of Timing – Community Spouse Resource Allowance
The key to spousal planning is to recognize the significance of and distinguish between two key points in time: the assessment date and the date of eligibility.
A. The community spouse resource allowance is determined “as of” the date of institutionalization. A “snapshot” is taken at this time solely for purposes of determining the spouse’s protected amount. Actually, the amount is determined as of the first day of the first month of institutionalization.
B. However, for purposes of eligibility, the key point in time is the date of application for benefits. That is, in determining the resources of an institutionalized spouse at the time of application for benefits, all resources held by either the community spouse or the institutionalized spouse (or jointly) are considered available to the institutionalized spouse except for the community spouse resource allowance . Therefore, subject to the 90-day rule (see Post 10), the amount of resources that can be retained by the community spouse without endangering eligibility of the institutionalized spouse is determined as of the date of institutionalization and such determination is utilized at the date of application to determine eligibility.
C. The community spouse resource allowance is not affected by appreciation of spousal resources after institutionalization.
D. Since the assessment date is made “as of” the date of institutionalization, but generally determined at a later date, it is extremely important to maintain financial records.
E. There is a practical reason for using the date of institutionalization for computation of the protected amount. The community spouse requires certainty after institutionalization in order to protect the community spouse resource allowance. If such a determination were not made as of the date of institutionalization, at any point in time the community spouse would not be aware of the amount of resources that could be protected and may have expended more funds than necessary. Therefore, the computation of the allowance is made prospectively.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #24
The key to spousal planning is to recognize the significance of and distinguish between two key points in time: the assessment date and the date of eligibility.
A. The community spouse resource allowance is determined “as of” the date of institutionalization. A “snapshot” is taken at this time solely for purposes of determining the spouse’s protected amount. Actually, the amount is determined as of the first day of the first month of institutionalization.
B. However, for purposes of eligibility, the key point in time is the date of application for benefits. That is, in determining the resources of an institutionalized spouse at the time of application for benefits, all resources held by either the community spouse or the institutionalized spouse (or jointly) are considered available to the institutionalized spouse except for the community spouse resource allowance . Therefore, subject to the 90-day rule (see Post 10), the amount of resources that can be retained by the community spouse without endangering eligibility of the institutionalized spouse is determined as of the date of institutionalization and such determination is utilized at the date of application to determine eligibility.
C. The community spouse resource allowance is not affected by appreciation of spousal resources after institutionalization.
D. Since the assessment date is made “as of” the date of institutionalization, but generally determined at a later date, it is extremely important to maintain financial records.
E. There is a practical reason for using the date of institutionalization for computation of the protected amount. The community spouse requires certainty after institutionalization in order to protect the community spouse resource allowance. If such a determination were not made as of the date of institutionalization, at any point in time the community spouse would not be aware of the amount of resources that could be protected and may have expended more funds than necessary. Therefore, the computation of the allowance is made prospectively.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #24
Wednesday, April 1, 2009
Allocation of Transfer Penalty - When Community Spouse Makes Transfer and Then Enters Nursing Home
Allocation of Transfer Penalty – When Community Spouse Makes
Transfer and Then Enters Nursing Home
Transfers by the spouse of an applicant are considered in determining the Medicaid eligibility of such individual. Under prior law, such transfers would also be considered again in determining eligibility for a community spouse who subsequently was institutionalized. That is, transfers by a community spouse who was subsequently institutionalized resulted in a double penalty. OBRA ’93 (which hasn’t been changed by the current law) requires that a “reasonable methodology” be employed to apportion the period of ineligibility between the applicant and a transferor – spouse who is subsequently institutionalized.
Example: Individual is in nursing home. Transfer of assets by spouse results in a 20-month penalty period for individual. Eight months after the transfer, spouse is institutionalized. The remaining penalty period of 12 months is to be apportioned. Presumably, six months will be allocated to each so that individual’s period of ineligibility due to the transfer will total 14 months.
Keep in mind, that under current law the penalty commences as outlined in Post #15.
Note: If one spouse dies or leaves the institution, the remaining portion of the penalty is allocated to the other spouse.
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 #19
Transfer and Then Enters Nursing Home
Transfers by the spouse of an applicant are considered in determining the Medicaid eligibility of such individual. Under prior law, such transfers would also be considered again in determining eligibility for a community spouse who subsequently was institutionalized. That is, transfers by a community spouse who was subsequently institutionalized resulted in a double penalty. OBRA ’93 (which hasn’t been changed by the current law) requires that a “reasonable methodology” be employed to apportion the period of ineligibility between the applicant and a transferor – spouse who is subsequently institutionalized.
Example: Individual is in nursing home. Transfer of assets by spouse results in a 20-month penalty period for individual. Eight months after the transfer, spouse is institutionalized. The remaining penalty period of 12 months is to be apportioned. Presumably, six months will be allocated to each so that individual’s period of ineligibility due to the transfer will total 14 months.
Keep in mind, that under current law the penalty commences as outlined in Post #15.
Note: If one spouse dies or leaves the institution, the remaining portion of the penalty is allocated to the other spouse.
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 #19
Tuesday, March 10, 2009
Significance of the 90-Day Rule
Significance of the 90-Day Rule
Pursuant to N.J.A.C. 10:71-4.8(a)2., an applicant will be eligible for Medicaid when couple’s total resources reduced by community spouse’s share, are equal or less than $2,000 subject to exclusions. Also see N.J.A.C. 10:71-4.8(a)3., which requires that ownership of the community spouse’s share be transferred to the community spouse within 90 days of Medicaid eligibility. Therefore, eligibility will be determined on the basis of total resources of applicant and spouse (i.e. joint accounts), but if applicant has more than $2,000 at the time of eligibility, the County Board will check ownership 90 days after eligibility.
Example: Total resources of institutionalized individual and spouse at date of institutionalization are $300,000. The community spouse resource allowance is $109,560.
Assuming all other requirements are met, institutionalized individual will be eligible for Medicaid when total resources are equal to or less than $111,560.
Therefore, if total resources at the time of application considering those of the applicant and those of the community spouse are equal or less than the appropriate amounts, Medicaid eligibility will be granted. However, within 90 days the Community Spouse Resource Allowance must be in the name of the community spouse and the applicant cannot have more than his or her 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 #10
Pursuant to N.J.A.C. 10:71-4.8(a)2., an applicant will be eligible for Medicaid when couple’s total resources reduced by community spouse’s share, are equal or less than $2,000 subject to exclusions. Also see N.J.A.C. 10:71-4.8(a)3., which requires that ownership of the community spouse’s share be transferred to the community spouse within 90 days of Medicaid eligibility. Therefore, eligibility will be determined on the basis of total resources of applicant and spouse (i.e. joint accounts), but if applicant has more than $2,000 at the time of eligibility, the County Board will check ownership 90 days after eligibility.
Example: Total resources of institutionalized individual and spouse at date of institutionalization are $300,000. The community spouse resource allowance is $109,560.
Assuming all other requirements are met, institutionalized individual will be eligible for Medicaid when total resources are equal to or less than $111,560.
Therefore, if total resources at the time of application considering those of the applicant and those of the community spouse are equal or less than the appropriate amounts, Medicaid eligibility will be granted. However, within 90 days the Community Spouse Resource Allowance must be in the name of the community spouse and the applicant cannot have more than his or her 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 #10
Monday, March 9, 2009
Theory for Using Date of Institutionalization for Computation of Protected Amount
Theory for Using Date of Institutionalization for Computation of Protected Amount
Community spouse requires certainty after institutionalization in order to protect the Community Spouse Resource Allowance. If such a determination were not made as of the date of institutionalization, at any point in time the community spouse would not be aware of the amount of resources that could be protected and may have expended more funds than necessary. Therefore, the computation of the allowance is made prospectively.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #9
Community spouse requires certainty after institutionalization in order to protect the Community Spouse Resource Allowance. If such a determination were not made as of the date of institutionalization, at any point in time the community spouse would not be aware of the amount of resources that could be protected and may have expended more funds than necessary. Therefore, the computation of the allowance is made prospectively.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2009, Post #9
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
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