Long-Term Care Insurance Considerations
All of my posts up to this point in time have been written by me based upon my research of law or actual cases. This post deals with questions posed to a long-term care insurance expert, Geoffrey S. Close, a Wealth Advisor with Morgan Stanley of Morristown, New Jersey. I have worked closely with Mr. Close on several matters and I am sure you will find this information valuable in both your Medicaid and long-term care activities.
1. Are there different types of long-term care insurance?
There are two types of long-term care insurance – pay-as-you-go and a single premium with refund.
2. Does long-term care insurance cost less than double for a married couple?
Yes, the married could pay less than double a single person.
3. What are the options under long-term care insurance?
Options relate to home care, institutional care, elimination time periods (deferral of coverage), inflation riders, etc.
4. Does the new law make long-term care insurance more significant?
Yes, mainly because of the 60 month look-back.
5. Explain the need for home care to be covered under long-term care insurance.
Many people will elect to remain in their homes with custodial care. Medicaid does not pay for long-term care at home.
6. Why should somebody pay for increased coverage due to the C.P.I.?
The increasing costs of nursing homes render a C.P.I. adjustment advisable.
7. Explain what “rated” long-term care insurance means.
Rated means increased costs due to a condition such as dementia or reduced mobility.
8. Explain the need for long-term care insurance for someone with little money and someone with significant money.
A person with little money may not need it because he will qualify for Medicaid. A person with significant money may want to preserve his estate if they go in a nursing home.
9. Is there a best age for purchasing long-term care insurance?
The earlier the start, the total overall out-of-pocket costs are less.
10. Do you recommend coordinating your long-term care insurance proposal with an elder law attorney if the family has one?
Absolutely, a family should coordinate their long-term care plans with an elder law attorney.
11. If a family’s income increases, is there a procedure for increasing their long-term care insurance?
You can always increase your long-term care insurance, but the age and medical status at the time of increase will be considered.
12. If one spouse is either uninsurable or highly rated and a second spouse is in excellent health, how is this situation resolved for cost purposes?
The rated costs for the unhealthy spouse can be ameliorated if there is a healthy spouse with a simultaneous application.
13. Is there a situation in which a person is not a long-term care insurance candidate?
If a person has limited means where his/her assets would be exhausted within a year and, thus, qualify for governmental assistance and the cost of the premium would be a burden, then long-term care insurance is really not an option.
14. Do you recommend long-term care insurance for the look-back period or a person’s lifetime?
As with question 10, it is recommended that the family coordinate their long-term planning with an elder law attorney to look at the cost benefit analysis of many courses of action. Having long-term care insurance gives the opportunity to pursue multiple planning options.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© September 2009, Post 104
Showing posts with label Elder Law Attorney. Show all posts
Showing posts with label Elder Law Attorney. Show all posts
Tuesday, September 1, 2009
Tuesday, July 21, 2009
The Necessity for Other Professionals
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
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
Thursday, July 9, 2009
Transfers to Spouse
Transfers to Spouse
An individual shall not be ineligible for Medicaid under the transfer rules to the extent that assets are transferred to a spouse. The theory is that since all spousal resources are deemed available to the Medicaid applicant, such a transfer should not be penalized.
Transfers to the community spouse certainly make sense in terms of management of assets, particularly in light of the fact that the institutionalized spouse could become incompetent. Further, if the income generated by spousal assets could pay for nursing home costs and support of the community spouse with no or minimal invasion of principal, outright transfers to the community spouse could be a viable alternative without any additional planning. Of course, one would have to have substantial assets to generate such income.
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 #45
An individual shall not be ineligible for Medicaid under the transfer rules to the extent that assets are transferred to a spouse. The theory is that since all spousal resources are deemed available to the Medicaid applicant, such a transfer should not be penalized.
Transfers to the community spouse certainly make sense in terms of management of assets, particularly in light of the fact that the institutionalized spouse could become incompetent. Further, if the income generated by spousal assets could pay for nursing home costs and support of the community spouse with no or minimal invasion of principal, outright transfers to the community spouse could be a viable alternative without any additional planning. Of course, one would have to have substantial assets to generate such income.
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 #45
Monday, June 29, 2009
Medicaid Reimbursement Rate
Medicaid Reimbursement Rate
In a prior post, there was an extensive discussion regarding such issues as when it is appropriate to make the nursing home representative payee, such decision and its relationship to Medigap insurance and the legend to be put on bank accounts for the community spouse and the applicant. This article ignores the Medigap issues and assumes that the nursing home should be designated representative payee (see Post 1).
A. Once eligibility is established, the nursing home receives the Medicaid reimbursement rate as payment. The actual amount paid to the nursing home by Medicaid is reduced by any recurring monies received by the individual such as social security and pension payments, which are to be remitted to the nursing home on a monthly basis.
B. Such payments received during any given month constitute resources on the “first moment of the first day” of the subsequent month.
C. The $2,000 threshold could be exceeded due to the lack of attention to automatic deposits of social security and pension payments to a Medicaid recipient’s checking account. As indicated in Post 1, pension payments cannot be assigned.
Planning Point: Once the date of eligibility is near, counsel should advise and assist the responsible family member to designate the nursing home as representative payee for social security benefits of the Medicaid recipient. Social security payments will then be made directly to the nursing home. The danger of disqualification due to inadvertent accumulation of social security monies will be eliminated.
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 #44
In a prior post, there was an extensive discussion regarding such issues as when it is appropriate to make the nursing home representative payee, such decision and its relationship to Medigap insurance and the legend to be put on bank accounts for the community spouse and the applicant. This article ignores the Medigap issues and assumes that the nursing home should be designated representative payee (see Post 1).
A. Once eligibility is established, the nursing home receives the Medicaid reimbursement rate as payment. The actual amount paid to the nursing home by Medicaid is reduced by any recurring monies received by the individual such as social security and pension payments, which are to be remitted to the nursing home on a monthly basis.
B. Such payments received during any given month constitute resources on the “first moment of the first day” of the subsequent month.
C. The $2,000 threshold could be exceeded due to the lack of attention to automatic deposits of social security and pension payments to a Medicaid recipient’s checking account. As indicated in Post 1, pension payments cannot be assigned.
Planning Point: Once the date of eligibility is near, counsel should advise and assist the responsible family member to designate the nursing home as representative payee for social security benefits of the Medicaid recipient. Social security payments will then be made directly to the nursing home. The danger of disqualification due to inadvertent accumulation of social security monies will be eliminated.
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 #44
Tuesday, June 2, 2009
Medicaid Eligibility before a Favorable Determination
Medicaid Eligibility Before a Favorable Determination
Ideally, an application should be submitted several months before eligibility and updated each month until qualification. Under such a fact situation, the issuance of an eligibility letter is predictable. However, the statements may not reflect the amount actually in an account as a check written before the first of the month that has not cleared (see Post 4). Medicaid will issue an eligibility letter retroactive to the application date in such a case.
A more problematic situation is eligibility is met on the first of the month, but Medicaid does not process the application for several months. In such case, the date of eligibility is retroactive to the date that an individual is actually eligible rather than the date that Medicaid reviews the papers and has been dilatory in coming to this conclusion.
Once an applicant has been advised by counsel that he or she is eligible for Medicaid, no further payments are to be made to the nursing home regardless of whether the actual eligibility letter has been issued.
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 #39
Ideally, an application should be submitted several months before eligibility and updated each month until qualification. Under such a fact situation, the issuance of an eligibility letter is predictable. However, the statements may not reflect the amount actually in an account as a check written before the first of the month that has not cleared (see Post 4). Medicaid will issue an eligibility letter retroactive to the application date in such a case.
A more problematic situation is eligibility is met on the first of the month, but Medicaid does not process the application for several months. In such case, the date of eligibility is retroactive to the date that an individual is actually eligible rather than the date that Medicaid reviews the papers and has been dilatory in coming to this conclusion.
Once an applicant has been advised by counsel that he or she is eligible for Medicaid, no further payments are to be made to the nursing home regardless of whether the actual eligibility letter has been issued.
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 #39
Tuesday, May 26, 2009
Transfer of Home to Caretaker Child - Revisited
Transfer of Home to Caretaker Child - Revisited
Post 6 stresses that property owned by applicant residing with a caretaker child is to be transferred at time of application for Medicaid. The article suggests that a current power of attorney be drafted so that if the applicant is incompetent at the time of application, a power of attorney can be used to transfer the residence to the caretaker child.
This is an example of tailoring the power of attorney for a client in an elder law situation.
That is, the power of attorney should be provide that in the event an applicant is in a nursing home and an application for Medicaid is submitted, approval by the Medicaid authorities that the child has provided the requisite care for two years is necessary before the property is transferred.
If the applicant is incompetent at the time, the power of attorney can accomplish this result.
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 #37
Post 6 stresses that property owned by applicant residing with a caretaker child is to be transferred at time of application for Medicaid. The article suggests that a current power of attorney be drafted so that if the applicant is incompetent at the time of application, a power of attorney can be used to transfer the residence to the caretaker child.
This is an example of tailoring the power of attorney for a client in an elder law situation.
That is, the power of attorney should be provide that in the event an applicant is in a nursing home and an application for Medicaid is submitted, approval by the Medicaid authorities that the child has provided the requisite care for two years is necessary before the property is transferred.
If the applicant is incompetent at the time, the power of attorney can accomplish this result.
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 #37
Monday, May 18, 2009
Property Owned Jointly With Other Than Spouse
Property Owned Jointly With Other Than Spouse
Applicant may own property jointly with a person other than a spouse. Typical events that give rise to joint ownership would be inheritance or acquisition of such joint property.
Joint property with right of survivorship with a caretaker child has been discussed in Post 23.
Generally, the two types of joint tenancy are joint ownership with right of survivorship (interest passes to survivor by operation of law upon death of co-owner) and tenancy in common (interest passes under person’s will). The administrative regulations provide that co-ownership will not preclude eligibility if the property cannot be sold because of the refusal of the co-owner to liquidate and is deemed to be an inaccessible resource. (N.J.A.C. 10:71-4.4(b)6.)
Therefore, any type of joint ownership will not preclude eligibility. However, as discussed in Post 23, the three inter-related goals of Medicaid planning are to establish Medicaid eligibility, avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient of benefits.
Although a joint tenancy or a tenancy in common will not affect eligibility, the other goals of avoiding disqualification after eligibility and avoidance of the lien after the death of the recipient of benefits are not accomplished by co-ownership. With respect to disqualification after eligibility, if the owner of a survivor interest predeceases a Medicaid recipient, the decedent’s interest will pass by operation of law to the recipient and will then constitute an “available resource.” Therefore, eligibility would be lost. If the recipient predeceased, recipient’s one-half interest would be subject to the Medicaid lien.
With respect to tenancy in common, the death of the co-tenant would sever the ownership of the property so that it would no longer be held jointly and the applicant’s interest would disqualify the applicant from Medicaid. If the applicant predeceased, the applicant’s one-half interest in the tenancy in common would be subject to the Medicaid lien.
A sale of either type of tenancy would result in one-half the cash proceeds passing to a Medicaid recipient, which would then disqualify the individual from Medicaid.
As in prior posts (for example Post 6), I have used the word “protected transferee” to mean an individual who can be gifted an applicant’s home without transfer penalty. Another category of protected transferee is a sibling (i) who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstance of joint ownership with a child.
An interesting point regarding any form of joint ownership discussed in this article is the concept that a Medicaid recipient must use recurring monies to defray Medicaid’s outlay (i.e. the Medicaid reimbursement rate). Included in this contribution is one-half the property owned with the other individual. For these purposes, hypothetical deductions such as depreciation are not considered. The contribution to be made by the Medicaid recipient (assuming the house is rented) is one-half the net rental proceeds.
Conclusion: Although ownership of property with another will not preclude Medicaid eligibility, it can result in disqualification from eligibility or be subject to the Medicaid lien. Some, but not all, of those results have been discussed above.
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 #35
Applicant may own property jointly with a person other than a spouse. Typical events that give rise to joint ownership would be inheritance or acquisition of such joint property.
Joint property with right of survivorship with a caretaker child has been discussed in Post 23.
Generally, the two types of joint tenancy are joint ownership with right of survivorship (interest passes to survivor by operation of law upon death of co-owner) and tenancy in common (interest passes under person’s will). The administrative regulations provide that co-ownership will not preclude eligibility if the property cannot be sold because of the refusal of the co-owner to liquidate and is deemed to be an inaccessible resource. (N.J.A.C. 10:71-4.4(b)6.)
Therefore, any type of joint ownership will not preclude eligibility. However, as discussed in Post 23, the three inter-related goals of Medicaid planning are to establish Medicaid eligibility, avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient of benefits.
Although a joint tenancy or a tenancy in common will not affect eligibility, the other goals of avoiding disqualification after eligibility and avoidance of the lien after the death of the recipient of benefits are not accomplished by co-ownership. With respect to disqualification after eligibility, if the owner of a survivor interest predeceases a Medicaid recipient, the decedent’s interest will pass by operation of law to the recipient and will then constitute an “available resource.” Therefore, eligibility would be lost. If the recipient predeceased, recipient’s one-half interest would be subject to the Medicaid lien.
With respect to tenancy in common, the death of the co-tenant would sever the ownership of the property so that it would no longer be held jointly and the applicant’s interest would disqualify the applicant from Medicaid. If the applicant predeceased, the applicant’s one-half interest in the tenancy in common would be subject to the Medicaid lien.
A sale of either type of tenancy would result in one-half the cash proceeds passing to a Medicaid recipient, which would then disqualify the individual from Medicaid.
As in prior posts (for example Post 6), I have used the word “protected transferee” to mean an individual who can be gifted an applicant’s home without transfer penalty. Another category of protected transferee is a sibling (i) who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstance of joint ownership with a child.
An interesting point regarding any form of joint ownership discussed in this article is the concept that a Medicaid recipient must use recurring monies to defray Medicaid’s outlay (i.e. the Medicaid reimbursement rate). Included in this contribution is one-half the property owned with the other individual. For these purposes, hypothetical deductions such as depreciation are not considered. The contribution to be made by the Medicaid recipient (assuming the house is rented) is one-half the net rental proceeds.
Conclusion: Although ownership of property with another will not preclude Medicaid eligibility, it can result in disqualification from eligibility or be subject to the Medicaid lien. Some, but not all, of those results have been discussed above.
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 #35
Monday, May 11, 2009
Caretaker Child Revisited
Caretaker Child Revisited
In a prior Post 6, I discussed in some detail the rationale for preparing a power of attorney for a potential applicant that allows the residence to be transferred to the child who provided care (i.e. “protected transferee”) if appropriate for Medicaid planning purposes. However, it is important to discuss the type of evidence to be adduced at the County Board of Social Services to influence the Board to make a decision that the child provided the requisite care so that the transfer can be made at that time either by the applicant (if competent) or under the power of attorney if applicant is then incompetent. I have found that two documents provided to the Board are sufficient for establishing the requisite care for the two-year period and the fact that such care permitted the individual to reside at home rather than go into a nursing home.
Firstly, an affidavit prepared by the child discussing the care provided (with any necessary documentation) is most helpful. In the simplest situation, I had a case in which a nurse of a prominent nursing home retired to take care of her mother at home. Obviously this is not the typical case but is an extreme example. The usual case involves a child living in the parent’s home who is working and provided certain elements of care. To prepare a proper affidavit inquiry should be made with respect to the following areas: whether the child worked near the residence of the applicant, to what extent did the child provide medicine which the applicant could not self-administer, whether the child was available during the day to immediately go home and take care of the potential applicant if necessary, how much time did the child spend with the potential applicant during non-working hours, to what extent the child would go on vacation (going on vacation is not fatal since I believe that intermittent care by another would not ruin the “protected transferee” status), to what extent the child helped the potential applicant with basic physical care needs such as cleaning, etc., the child’s role in providing transportation and coordination of care with the parent’s physicians, did child directly provide any basic medical care on a regular basis such as taking blood pressure. The list of such inquiries is infinite but the key is to show that but for the care of the child, the parent would need to go into a nursing home.
Secondly, it is recommended that a letter from the potential applicant’s physician stating to the best of his/her knowledge the child provided the necessary care to allow the potential applicant to remain at home. This letter should be brief and to the point. In my experience, I have not requested an affidavit from a physician since I feel it would be inappropriate.
Such an approach should get the desired result (transfer of home to child).
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 #34
In a prior Post 6, I discussed in some detail the rationale for preparing a power of attorney for a potential applicant that allows the residence to be transferred to the child who provided care (i.e. “protected transferee”) if appropriate for Medicaid planning purposes. However, it is important to discuss the type of evidence to be adduced at the County Board of Social Services to influence the Board to make a decision that the child provided the requisite care so that the transfer can be made at that time either by the applicant (if competent) or under the power of attorney if applicant is then incompetent. I have found that two documents provided to the Board are sufficient for establishing the requisite care for the two-year period and the fact that such care permitted the individual to reside at home rather than go into a nursing home.
Firstly, an affidavit prepared by the child discussing the care provided (with any necessary documentation) is most helpful. In the simplest situation, I had a case in which a nurse of a prominent nursing home retired to take care of her mother at home. Obviously this is not the typical case but is an extreme example. The usual case involves a child living in the parent’s home who is working and provided certain elements of care. To prepare a proper affidavit inquiry should be made with respect to the following areas: whether the child worked near the residence of the applicant, to what extent did the child provide medicine which the applicant could not self-administer, whether the child was available during the day to immediately go home and take care of the potential applicant if necessary, how much time did the child spend with the potential applicant during non-working hours, to what extent the child would go on vacation (going on vacation is not fatal since I believe that intermittent care by another would not ruin the “protected transferee” status), to what extent the child helped the potential applicant with basic physical care needs such as cleaning, etc., the child’s role in providing transportation and coordination of care with the parent’s physicians, did child directly provide any basic medical care on a regular basis such as taking blood pressure. The list of such inquiries is infinite but the key is to show that but for the care of the child, the parent would need to go into a nursing home.
Secondly, it is recommended that a letter from the potential applicant’s physician stating to the best of his/her knowledge the child provided the necessary care to allow the potential applicant to remain at home. This letter should be brief and to the point. In my experience, I have not requested an affidavit from a physician since I feel it would be inappropriate.
Such an approach should get the desired result (transfer of home to child).
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 #34
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
Monday, March 23, 2009
New Transfer Rules and Their Effect
New Transfer Rules and Their Effect
When I commenced writing articles for my blog, I promised I would not immediately discuss the new transfer rules as it is my opinion that the basics should be understood first. This article compares the prior transfer rules to the new transfer rules in a general sense as I feel the time is appropriate to have such discussion.
However, before discussing the current rules, I will review the prior transfer rules as a comparison.
I. Transfers – Prior Law
A. Transfers within 36 months of application are scrutinized by Medicaid; may or may not give rise to a period of ineligibility.
B. Transfer Penalty = amount transferred divided by penalty rate (assume $6,525). Example: individual transfer $30,000 to daughter upon entering nursing home. Penalty is $30,000/6,525 = 4.59 months (rounded down to 4 months).
C. New Jersey Medicaid has adopted the favorable rule that penalty periods are “rounded down”. For example, if a transfer gives rise to a period of ineligibility of 4.9 months, treat it as a penalty of 4.0 months. This favorable rule has been changed by the new law as will be discussed.
D. Numerous Exemptions to the Transfer Rules – Typical exemptions are transfers to spouse, real estate to designated individuals, transfer for sole purpose other than Medicaid eligibility, transfers to disabled child or trust for disabled child, transfers to a trust for a disabled individual under age 65 (the applicant), assets transferred that are returned to the individual.
II. The New Law (Transfers)
A. Transfers – deemed to have been made on date individual would otherwise be eligible for Medicaid but for the new law. Example considers only single applicant.
1. five-year lookback.
2. individual in nursing home.
3. assets down to $2,000 (except if income exceeds the income cap of $2,022 in which case the number is $4,000).
B. Basically, transfers within 60 months treated as made when assets reduced to $2,000. That is, the penalty commences when an individual is out of funds, and has no money to pay the nursing home. Statute makes no sense in that the period of ineligibility commences when individual has no funds to pay for nursing home.
C. Major Effects of New Transfer Law
1. Individual has no funds but has obligation to pay nursing home until end of penalty period.
2. Nursing home does not receive Medicaid nor payments from individual who has exhausted his or her assets. New law creates burden on nursing home to review resident’s records prior to admission to determine any transfers within 60 months. Nursing home might face financial problems as fewer people might apply to nursing homes in light of the onerous transfer rules.
3. Families will be seeking alternative living arrangements such as day care and home care.
4. Children might have to pay for nursing home costs till end of penalty period.
5. Long-term care insurance will increase in popularity, and the typical period of coverage will increase from 36 to 60 months. In addition, individuals will be more likely to purchase long-term care insurance options such as cost of living adjustment.
6. People will be transferring assets to children at younger ages (possibly when in good health to beat the 60-month rule).
7. Hardship waivers will be sought by applicant or by nursing home on behalf of applicant. Individual could qualify for hardship waiver for Medicaid when application of transfer rules would deprive individual of medical care such that individual’s health or life would be endangered or is deprived of food, clothing or necessities of life. Nursing home could apply for waiver on behalf of individual. States have the option to pay nursing home costs for 30-day period while application is pending.
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 #15
When I commenced writing articles for my blog, I promised I would not immediately discuss the new transfer rules as it is my opinion that the basics should be understood first. This article compares the prior transfer rules to the new transfer rules in a general sense as I feel the time is appropriate to have such discussion.
However, before discussing the current rules, I will review the prior transfer rules as a comparison.
I. Transfers – Prior Law
A. Transfers within 36 months of application are scrutinized by Medicaid; may or may not give rise to a period of ineligibility.
B. Transfer Penalty = amount transferred divided by penalty rate (assume $6,525). Example: individual transfer $30,000 to daughter upon entering nursing home. Penalty is $30,000/6,525 = 4.59 months (rounded down to 4 months).
C. New Jersey Medicaid has adopted the favorable rule that penalty periods are “rounded down”. For example, if a transfer gives rise to a period of ineligibility of 4.9 months, treat it as a penalty of 4.0 months. This favorable rule has been changed by the new law as will be discussed.
D. Numerous Exemptions to the Transfer Rules – Typical exemptions are transfers to spouse, real estate to designated individuals, transfer for sole purpose other than Medicaid eligibility, transfers to disabled child or trust for disabled child, transfers to a trust for a disabled individual under age 65 (the applicant), assets transferred that are returned to the individual.
II. The New Law (Transfers)
A. Transfers – deemed to have been made on date individual would otherwise be eligible for Medicaid but for the new law. Example considers only single applicant.
1. five-year lookback.
2. individual in nursing home.
3. assets down to $2,000 (except if income exceeds the income cap of $2,022 in which case the number is $4,000).
B. Basically, transfers within 60 months treated as made when assets reduced to $2,000. That is, the penalty commences when an individual is out of funds, and has no money to pay the nursing home. Statute makes no sense in that the period of ineligibility commences when individual has no funds to pay for nursing home.
C. Major Effects of New Transfer Law
1. Individual has no funds but has obligation to pay nursing home until end of penalty period.
2. Nursing home does not receive Medicaid nor payments from individual who has exhausted his or her assets. New law creates burden on nursing home to review resident’s records prior to admission to determine any transfers within 60 months. Nursing home might face financial problems as fewer people might apply to nursing homes in light of the onerous transfer rules.
3. Families will be seeking alternative living arrangements such as day care and home care.
4. Children might have to pay for nursing home costs till end of penalty period.
5. Long-term care insurance will increase in popularity, and the typical period of coverage will increase from 36 to 60 months. In addition, individuals will be more likely to purchase long-term care insurance options such as cost of living adjustment.
6. People will be transferring assets to children at younger ages (possibly when in good health to beat the 60-month rule).
7. Hardship waivers will be sought by applicant or by nursing home on behalf of applicant. Individual could qualify for hardship waiver for Medicaid when application of transfer rules would deprive individual of medical care such that individual’s health or life would be endangered or is deprived of food, clothing or necessities of life. Nursing home could apply for waiver on behalf of individual. States have the option to pay nursing home costs for 30-day period while application is pending.
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 #15
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
Wednesday, March 18, 2009
Community Spouse Not Limited to Community Spouse Resource Allowance After Date of Eligibility of Applicant
Community Spouse Not Limited to Community Spouse Resource Allowance
After Date of Eligibility of Applicant
Previously, it has been discussed (see Post 11) that after the applicant’s receives Medicaid, the community spouse is not limited by the Community Spouse Resource Allowance. Relevant administrative regulations are included for reference.
For example: (see Post 11, one of the reasons for transferring the house to the community spouse is that a sale by the community spouse of the primary residence after the applicant receives eligibility, would result in proceeds not subject to the Medicaid computations. Proceeds of a sale before the date of eligibility would be treated as part of the “pot” and, therefore, preclude current Medicaid eligibility.
Another common situation is an inheritance by the community spouse. N.J.A.C. 10:71-4.4(b)6. indicates that property in probate is an inaccessible resource. Therefore, if the community spouse is a beneficiary of the estate, his or her share of assets of the estate does not enter into the “pot” until distributed. If distribution occurs after the applicant receives Medicaid, the resources received are free without encumbrance. However, if distribution is made prior to eligibility, the resources become part of the “pot.”
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 #13
After Date of Eligibility of Applicant
Previously, it has been discussed (see Post 11) that after the applicant’s receives Medicaid, the community spouse is not limited by the Community Spouse Resource Allowance. Relevant administrative regulations are included for reference.
For example: (see Post 11, one of the reasons for transferring the house to the community spouse is that a sale by the community spouse of the primary residence after the applicant receives eligibility, would result in proceeds not subject to the Medicaid computations. Proceeds of a sale before the date of eligibility would be treated as part of the “pot” and, therefore, preclude current Medicaid eligibility.
Another common situation is an inheritance by the community spouse. N.J.A.C. 10:71-4.4(b)6. indicates that property in probate is an inaccessible resource. Therefore, if the community spouse is a beneficiary of the estate, his or her share of assets of the estate does not enter into the “pot” until distributed. If distribution occurs after the applicant receives Medicaid, the resources received are free without encumbrance. However, if distribution is made prior to eligibility, the resources become part of the “pot.”
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 #13
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
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