Minimum Monthly Needs Allowance (m.m.n.a.)
Old and new laws allow post-eligibility income (pension, social security) to be shifted to community spouse. This is based upon theory that a spouse living in family residence should receive a certain minimum amount of income to pay for housing or "shelter" costs. Argument has been made on behalf of community spouse that principal generating the income needed (reasonable rate of return) should be shifted from applicant to spouse (in essence, increasing the community spouse resource allowance). The new law provides for the "income first" rule which requires that applicant's income be shifted first to make up the m.m.n.a., and if more income is needed (unlikely), then assets can be shifted.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
Copyright October 2009, Post 56
Showing posts with label Essex County Medicaid Attorney. Show all posts
Showing posts with label Essex County Medicaid Attorney. Show all posts
Friday, October 16, 2009
Tuesday, October 6, 2009
The Medicaid Lien
The Medicaid Lien
As discussed in prior posts, Medicaid planning by counsel must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient. The Medicaid lien is discussed in N.J.A.C. 49:14.1. The lien is applicable to an individual’s “estate,” which is basically defined as real or personal property and other assets in which the Medicaid beneficiary had any legal title or interest at the time of death to the extent of that interest, including assets conveyed to a survivor, heir or assign of the beneficiary through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement . . . The regulation goes on to discuss certain types of trusts which are also subject to the lien.
There are many issues that could be discussed with regard to the coverage and the language of the lien statute, which are beyond the scope of this article.
Basically, the initial inquiry should be the factors that give rise to the existence of the lien. Firstly, in order for there to be a lien, a deceased individual must have an asset that did not preclude Medicaid eligibility. Secondly, such asset must come within the lien statute.
Typical examples of such assets have been discussed in prior postings, which would include both a discussion of the lien and, in certain circumstances, how to avoid the applicability of the lien:
1. Of course, the most obvious example of assets in one’s “estate” for lien purposes is joint assets particularly joint tenancies with right of survivorship and tenancies in common. For Medicaid purposes, such assets are treated as “inaccessible resources.” See Post 35 for a more detailed discussion of joint assets.
2. Property Owned By Applicant Residing With Caretaker Child (Post 6).
3. Although not discussed in great detail, the transfer of the home by a married couple to another would temporarily take the property out of the lien statute. Basically, the lien would not apply upon the death of the first spouse since property passing to a spouse is not subject to the lien. Medicaid would apply to the lien to such property upon the death of the second spouse.
4. The lien does not apply to the estate of deceased beneficiary if a family member of the deceased beneficiary had continuously resided in the home of the beneficiary (see Post 14 relating to Dependent Relative).
5. Post 23 discusses the transfer of a home owned jointly by an individual to a Protected Transferee (i.e. caretaker child) as removing the home from the lien as one of the benefits.
6. Post 42, which discusses assets transferred to a disabled child, which is an exempt transfer.
7. The most significant exemption from the lien statute, which previously had been allowed as administrative decision is incorporated in the regulations which state “a life estate in which the beneficiary held an interest during his or her lifetime.”
There are an infinite number of issues relating to the lien and the applicability of the lien which could be discussed. Of particular significance is the applicability of the lien to certain types of testamentary trusts. The above discussion is intended to familiarize the reader with the significance of the lien and some of the salient issues.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© October 2009, Post 55
As discussed in prior posts, Medicaid planning by counsel must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient. The Medicaid lien is discussed in N.J.A.C. 49:14.1. The lien is applicable to an individual’s “estate,” which is basically defined as real or personal property and other assets in which the Medicaid beneficiary had any legal title or interest at the time of death to the extent of that interest, including assets conveyed to a survivor, heir or assign of the beneficiary through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement . . . The regulation goes on to discuss certain types of trusts which are also subject to the lien.
There are many issues that could be discussed with regard to the coverage and the language of the lien statute, which are beyond the scope of this article.
Basically, the initial inquiry should be the factors that give rise to the existence of the lien. Firstly, in order for there to be a lien, a deceased individual must have an asset that did not preclude Medicaid eligibility. Secondly, such asset must come within the lien statute.
Typical examples of such assets have been discussed in prior postings, which would include both a discussion of the lien and, in certain circumstances, how to avoid the applicability of the lien:
1. Of course, the most obvious example of assets in one’s “estate” for lien purposes is joint assets particularly joint tenancies with right of survivorship and tenancies in common. For Medicaid purposes, such assets are treated as “inaccessible resources.” See Post 35 for a more detailed discussion of joint assets.
2. Property Owned By Applicant Residing With Caretaker Child (Post 6).
3. Although not discussed in great detail, the transfer of the home by a married couple to another would temporarily take the property out of the lien statute. Basically, the lien would not apply upon the death of the first spouse since property passing to a spouse is not subject to the lien. Medicaid would apply to the lien to such property upon the death of the second spouse.
4. The lien does not apply to the estate of deceased beneficiary if a family member of the deceased beneficiary had continuously resided in the home of the beneficiary (see Post 14 relating to Dependent Relative).
5. Post 23 discusses the transfer of a home owned jointly by an individual to a Protected Transferee (i.e. caretaker child) as removing the home from the lien as one of the benefits.
6. Post 42, which discusses assets transferred to a disabled child, which is an exempt transfer.
7. The most significant exemption from the lien statute, which previously had been allowed as administrative decision is incorporated in the regulations which state “a life estate in which the beneficiary held an interest during his or her lifetime.”
There are an infinite number of issues relating to the lien and the applicability of the lien which could be discussed. Of particular significance is the applicability of the lien to certain types of testamentary trusts. The above discussion is intended to familiarize the reader with the significance of the lien and some of the salient issues.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© October 2009, Post 55
Monday, September 14, 2009
Steps To Be Taken When Planning Is Uncertain
Steps To Be Taken When Planning Is Uncertain
A common situation for a lawyer is to confer with a spouse who explains that her husband’s physical and mental condition are unclear at this point. The husband is in the hospital with a serious and potentially life-threatening condition. If the problems can be cured, the husband will then go to rehab. If that is successful, a nursing home is a possibility.
The joint assets (basically bank accounts) are approximately $200,000, and the assets in the wife (also basically bank accounts) are approximately $100,000. Due to the husband’s tenuous situation, any Medicaid planning would appear to be inappropriate particularly in light of the fact that the husband might pass away.
However, there are basic steps that should be taken even in a situation such as the above:
1. Assets should be transferred into the name of the wife for management purposes as there is an appropriate power of attorney.
2. With respect to a will for the wife, see Post 21 and reference to my article Practical Medicaid Planning – Part II, 1999 “Estate Planning Issues,” by Levin, Mark. Home should be transferred into wife’s sole name (see Post 11).
3. Family should verify accessibility of all assets. That is, make sure that the power of attorney for the husband will be acceptable by all banks or financial institutions. If not, revise the power of attorney.
4. Leave one account for husband as a receptacle for social security and/or pension.
5. Prepare a list of any transfers after February, 2006, which will remain an issue until after February, 2011.
6. Do not acquire annuities with substantial penalty amounts in the event the annuity monies are needed for costs. If healthy spouse is working, that spouse should review company policy about taking a leave in case Medicaid becomes an issue in the future and the additional earnings become an impediment to eventually seeking Medicaid (see Post 33).
7. Confer with counsel as to the possibility of a foolproof plan without taking any steps at the present time. See Post 42 which discusses the transfer of assets to a “disabled child.”
8. Review pension and social security of applicant and spouse. In the above-referenced case, the total pension and social security equaled approximately $6,500. Therefore, if Medicaid did become an issue, these payments should cover the Medicaid reimbursement rate without the need for planning.
As in many of my prior postings, this list is not exhaustive, but rather is illustrative of issues to be addressed.
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 54
A common situation for a lawyer is to confer with a spouse who explains that her husband’s physical and mental condition are unclear at this point. The husband is in the hospital with a serious and potentially life-threatening condition. If the problems can be cured, the husband will then go to rehab. If that is successful, a nursing home is a possibility.
The joint assets (basically bank accounts) are approximately $200,000, and the assets in the wife (also basically bank accounts) are approximately $100,000. Due to the husband’s tenuous situation, any Medicaid planning would appear to be inappropriate particularly in light of the fact that the husband might pass away.
However, there are basic steps that should be taken even in a situation such as the above:
1. Assets should be transferred into the name of the wife for management purposes as there is an appropriate power of attorney.
2. With respect to a will for the wife, see Post 21 and reference to my article Practical Medicaid Planning – Part II, 1999 “Estate Planning Issues,” by Levin, Mark. Home should be transferred into wife’s sole name (see Post 11).
3. Family should verify accessibility of all assets. That is, make sure that the power of attorney for the husband will be acceptable by all banks or financial institutions. If not, revise the power of attorney.
4. Leave one account for husband as a receptacle for social security and/or pension.
5. Prepare a list of any transfers after February, 2006, which will remain an issue until after February, 2011.
6. Do not acquire annuities with substantial penalty amounts in the event the annuity monies are needed for costs. If healthy spouse is working, that spouse should review company policy about taking a leave in case Medicaid becomes an issue in the future and the additional earnings become an impediment to eventually seeking Medicaid (see Post 33).
7. Confer with counsel as to the possibility of a foolproof plan without taking any steps at the present time. See Post 42 which discusses the transfer of assets to a “disabled child.”
8. Review pension and social security of applicant and spouse. In the above-referenced case, the total pension and social security equaled approximately $6,500. Therefore, if Medicaid did become an issue, these payments should cover the Medicaid reimbursement rate without the need for planning.
As in many of my prior postings, this list is not exhaustive, but rather is illustrative of issues to be addressed.
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 54
Wednesday, September 9, 2009
Allowable Expenditures Limited by Concept of Reasonableness
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
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
Tuesday, September 1, 2009
Long-Term Care Insurance Considerations
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
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
Tuesday, August 25, 2009
State Takes Restrictive Position on Caretaker Agreements
State Takes Restrictive Position on Caretaker Agreements
Post 6 and Post 34 have discussed caretaker agreements extensively. Basically, we are talking about an agreement pursuant to which a child agrees, prior to rendering services, to care for a parent in consideration for the parent’s compensation to the child for such care.
The prior posts have indicated that in addition to the agreement, there should be a schedule of activities performed by the child and an independent valuation of services by a geriatric care manager or agency.
Properly structured, the payment by the applicant to the child for such services would not result in Medicaid transfers.
In early March, 2009, Medicaid, at a meeting of supervisors, set forth the following restrictions:
1. The amount that the child should be reimbursed for care is the amount of monies that an aide would receive for the relevant time period and not the amount of monies that the aide’s agency receives. For example, if the agency receives $20.00 per hour and the aide receives $10.00 per hour, the proper reimbursement for the child is $10.00 per hour. As the prior posts indicate, compensation in excess of that considered reasonable by the respective Board of Social Services is deemed a transfer.
2. Child must report any monies received from parent on income tax return.
3. There shall be no payments for future care. That is, some agreements have allowed the parent to make substantial payments “up front” rather than on a recurrent basis. This would not be acceptable to Medicaid.
Comment: Such an approach seems unduly restrictive. I have had clients who have provided virtually round-the-clock care for a parent and rendered services such as daily testing, taking the parent to the doctor, providing and administering medicines, coordinating care of the parent with the various physicians, taking the parent on a short vacation or stay (if possible), etc. The compensation for such services should not be limited to that received by an aide, but should be based upon an appropriate valuation by a geriatric care manager. Another example of additional compensation would be a situation in which the child actually builds a wing on his or her home or hires an architect to make the home accessible to a disabled parent. Restricting the compensation to the child as proposed by Medicaid appears to be unfair. Hopefully, the structure allowed for a caretaker agreement will be loosened.
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 52
Post 6 and Post 34 have discussed caretaker agreements extensively. Basically, we are talking about an agreement pursuant to which a child agrees, prior to rendering services, to care for a parent in consideration for the parent’s compensation to the child for such care.
The prior posts have indicated that in addition to the agreement, there should be a schedule of activities performed by the child and an independent valuation of services by a geriatric care manager or agency.
Properly structured, the payment by the applicant to the child for such services would not result in Medicaid transfers.
In early March, 2009, Medicaid, at a meeting of supervisors, set forth the following restrictions:
1. The amount that the child should be reimbursed for care is the amount of monies that an aide would receive for the relevant time period and not the amount of monies that the aide’s agency receives. For example, if the agency receives $20.00 per hour and the aide receives $10.00 per hour, the proper reimbursement for the child is $10.00 per hour. As the prior posts indicate, compensation in excess of that considered reasonable by the respective Board of Social Services is deemed a transfer.
2. Child must report any monies received from parent on income tax return.
3. There shall be no payments for future care. That is, some agreements have allowed the parent to make substantial payments “up front” rather than on a recurrent basis. This would not be acceptable to Medicaid.
Comment: Such an approach seems unduly restrictive. I have had clients who have provided virtually round-the-clock care for a parent and rendered services such as daily testing, taking the parent to the doctor, providing and administering medicines, coordinating care of the parent with the various physicians, taking the parent on a short vacation or stay (if possible), etc. The compensation for such services should not be limited to that received by an aide, but should be based upon an appropriate valuation by a geriatric care manager. Another example of additional compensation would be a situation in which the child actually builds a wing on his or her home or hires an architect to make the home accessible to a disabled parent. Restricting the compensation to the child as proposed by Medicaid appears to be unfair. Hopefully, the structure allowed for a caretaker agreement will be loosened.
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 52
Wednesday, August 12, 2009
Change in Penalty Rate
Change in Penalty Rate
Under both OBRA ’93 and the Deficit Reduction Act, the penalty period is determined by dividing the amount of the transfer by the applicable average nursing home costs. In addition, in January of each year, the penalty is increased retroactively to November 1 of the prior year. Therefore, the penalty rate through October 31, 2008 was $6,942. Subsequently in January 2009 the penalty rate was adjusted to $7,282 per month retroactive to November 1, 2008. Assume a transfer on November 15, 2008, of $100,000. If all the requirements of Medicaid have been met but for the transfer, the penalty due to the transfer would appear to be 100,000 ÷ 6,942 = 14.4 months.
See Post 15 for the starting date of the transfer penalty under the Deficit Reduction Act.
However, the newly instituted rate, which is retroactive to November 1, 2008, requires a divisor of 7,282. The actual period of ineligibility giving consideration to the retroactivity is 13.73 months.
Key point: If a transfer occurs on or after November 1 of a given year and an application is made for Medicaid, anticipate a lesser penalty due to the above retroactivity rule.
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 51
Under both OBRA ’93 and the Deficit Reduction Act, the penalty period is determined by dividing the amount of the transfer by the applicable average nursing home costs. In addition, in January of each year, the penalty is increased retroactively to November 1 of the prior year. Therefore, the penalty rate through October 31, 2008 was $6,942. Subsequently in January 2009 the penalty rate was adjusted to $7,282 per month retroactive to November 1, 2008. Assume a transfer on November 15, 2008, of $100,000. If all the requirements of Medicaid have been met but for the transfer, the penalty due to the transfer would appear to be 100,000 ÷ 6,942 = 14.4 months.
See Post 15 for the starting date of the transfer penalty under the Deficit Reduction Act.
However, the newly instituted rate, which is retroactive to November 1, 2008, requires a divisor of 7,282. The actual period of ineligibility giving consideration to the retroactivity is 13.73 months.
Key point: If a transfer occurs on or after November 1 of a given year and an application is made for Medicaid, anticipate a lesser penalty due to the above retroactivity rule.
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 51
Thursday, July 30, 2009
Policy Decisions Affect Medicaid Rules
Policy Decisions Affect Medicaid Rules
Clients often feel that the Medicaid rules or certain rules are unfair. The purpose of this article is to discuss what I believe are the policy decisions behind certain rules.
1. Life Insurance Issues – As discussed in Post 3, the cash value of a life insurance policy or policies in excess of $1,500 constitutes a resource. The rationale behind such rule is that if such value were not counted, an applicant or a spouse could use substantial funds to obtain life insurance policies with large cash values that would not be considered for Medicaid purposes.
2. Spousal IRA’s – In Mistrick v. Division of Medical Assistance and Health Services 154 NJ 158 (1998), the Court held that the IRA’s of a spouse are a countable resource. This was a change from the prior law in which a spousal IRA was exempt.
The basis of this decision again was policy so that a spouse would not establish an IRA or would not rollover a retirement distribution to an IRA without limit. Under prior law, an individual could have an unlimited amount in an IRA and this would not preclude Medicaid eligibility.
3. 90-Day Rule – Post 10 discusses the significance of the 90-day rule. As an administrative decision, New Jersey has allowed eligibility if the total amount of resources held by the applicant and the community spouse equal the computed amounts whether they are held by the applicant, community spouse or jointly at the date of eligibility. However, within 90 days, the applicant must meet his or her requirement ($2,000 or $4,000) and the community spouse resource allowance amount must be in the sole name of the community spouse. The policy behind this decision is that if a couple inadvertently have not severed a joint account at the date eligibility is sought, they are not to be penalized. This makes sense in that most adults keep accounts with a spouse held jointly and should not be penalized.
4. Checks Written and Not Cashed – Post 4 discusses the significance of payment of debts and expenses. Examples in this post indicate that if a check is written before the date sought for eligibility, it is irrelevant whether or not such check has been negotiated. The policy reason for such a rule is that an applicant should not be penalized for the inaction of a payee (i.e. negotiating a check).
5. Real Property Owned Jointly With Other Than Spouse – In Post 35, the relevant regulation indicates that real estate owned jointly with a person other than a spouse is an “inaccessible” resource. Therefore, it is not a countable resource for Medicaid purposes unless the other person consents. The rationale behind this rule is that, if the property were treated as a countable resource, such decision would affect an interest in property held by someone not involved in the Medicaid proceeding (i.e. the co-owner).
The above constitutes a very brief summary of some policy positions taken by Medicaid in administering its eligibility decisions. Obviously, the number of examples is infinite.
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 49
Clients often feel that the Medicaid rules or certain rules are unfair. The purpose of this article is to discuss what I believe are the policy decisions behind certain rules.
1. Life Insurance Issues – As discussed in Post 3, the cash value of a life insurance policy or policies in excess of $1,500 constitutes a resource. The rationale behind such rule is that if such value were not counted, an applicant or a spouse could use substantial funds to obtain life insurance policies with large cash values that would not be considered for Medicaid purposes.
2. Spousal IRA’s – In Mistrick v. Division of Medical Assistance and Health Services 154 NJ 158 (1998), the Court held that the IRA’s of a spouse are a countable resource. This was a change from the prior law in which a spousal IRA was exempt.
The basis of this decision again was policy so that a spouse would not establish an IRA or would not rollover a retirement distribution to an IRA without limit. Under prior law, an individual could have an unlimited amount in an IRA and this would not preclude Medicaid eligibility.
3. 90-Day Rule – Post 10 discusses the significance of the 90-day rule. As an administrative decision, New Jersey has allowed eligibility if the total amount of resources held by the applicant and the community spouse equal the computed amounts whether they are held by the applicant, community spouse or jointly at the date of eligibility. However, within 90 days, the applicant must meet his or her requirement ($2,000 or $4,000) and the community spouse resource allowance amount must be in the sole name of the community spouse. The policy behind this decision is that if a couple inadvertently have not severed a joint account at the date eligibility is sought, they are not to be penalized. This makes sense in that most adults keep accounts with a spouse held jointly and should not be penalized.
4. Checks Written and Not Cashed – Post 4 discusses the significance of payment of debts and expenses. Examples in this post indicate that if a check is written before the date sought for eligibility, it is irrelevant whether or not such check has been negotiated. The policy reason for such a rule is that an applicant should not be penalized for the inaction of a payee (i.e. negotiating a check).
5. Real Property Owned Jointly With Other Than Spouse – In Post 35, the relevant regulation indicates that real estate owned jointly with a person other than a spouse is an “inaccessible” resource. Therefore, it is not a countable resource for Medicaid purposes unless the other person consents. The rationale behind this rule is that, if the property were treated as a countable resource, such decision would affect an interest in property held by someone not involved in the Medicaid proceeding (i.e. the co-owner).
The above constitutes a very brief summary of some policy positions taken by Medicaid in administering its eligibility decisions. Obviously, the number of examples is infinite.
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 49
Monday, July 27, 2009
Inaccessible Resources
Inaccessible Resources
Inaccessible resources (see Post 35) are treated as excludable resources for Medicaid eligibility purposes (N.J.A.C. 10:71-4.4(b)6).
The theory is that a countable resource is only such that can be converted to monies to pay nursing home costs.
Post 35 discusses in detail that a co-owner of real estate renders the real estate inaccessible if the co-owner (not the applicant) refuses to liquidate.
Similarly, the same regulation treats property in probate as an inaccessible resource. The effect of inheritance by the community spouse (Post 27) and the effect of inheritance by a Medicaid recipient (Post 28) discuss this topic in detail. Basically, the theory is that if an estate has not been administered and, therefore, not distributed, the inheritance only becomes a resource upon distribution. If distribution is delayed, the Internal Revenue Service for estate income tax purposes treats the estate as “closed.” I have not seen Medicaid take this position although it would make sense that an estate cannot be held “in probate” for an inordinate amount of time.
The relevant regulation (N.J.A.C. 10:71-4.4(b)6) treats as inaccessible “the value of resources which are not accessible to the individual through no fault of his/her own.” Therefore, the above are merely examples and the possibilities for inaccessible resources are infinite.
For example, small pieces of real estate, which have no value due to location and zoning are treated as inaccessible in my experience. Similarly, assets that are to be received in the future, such as royalties, would have a similar status.
Monies owed to a community spouse, but not paid because the employer of the spouse is having financial problems, in today’s environment would be a poignant example of an inaccessible resource for purposes of the community spouse resource allowance.
On the other hand, resources available only if a penalty is incurred, are treated as available resources. An example of such a resource would be an annuity subject to penalty if distributed.
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 48
Inaccessible resources (see Post 35) are treated as excludable resources for Medicaid eligibility purposes (N.J.A.C. 10:71-4.4(b)6).
The theory is that a countable resource is only such that can be converted to monies to pay nursing home costs.
Post 35 discusses in detail that a co-owner of real estate renders the real estate inaccessible if the co-owner (not the applicant) refuses to liquidate.
Similarly, the same regulation treats property in probate as an inaccessible resource. The effect of inheritance by the community spouse (Post 27) and the effect of inheritance by a Medicaid recipient (Post 28) discuss this topic in detail. Basically, the theory is that if an estate has not been administered and, therefore, not distributed, the inheritance only becomes a resource upon distribution. If distribution is delayed, the Internal Revenue Service for estate income tax purposes treats the estate as “closed.” I have not seen Medicaid take this position although it would make sense that an estate cannot be held “in probate” for an inordinate amount of time.
The relevant regulation (N.J.A.C. 10:71-4.4(b)6) treats as inaccessible “the value of resources which are not accessible to the individual through no fault of his/her own.” Therefore, the above are merely examples and the possibilities for inaccessible resources are infinite.
For example, small pieces of real estate, which have no value due to location and zoning are treated as inaccessible in my experience. Similarly, assets that are to be received in the future, such as royalties, would have a similar status.
Monies owed to a community spouse, but not paid because the employer of the spouse is having financial problems, in today’s environment would be a poignant example of an inaccessible resource for purposes of the community spouse resource allowance.
On the other hand, resources available only if a penalty is incurred, are treated as available resources. An example of such a resource would be an annuity subject to penalty if distributed.
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 48
Friday, July 24, 2009
General Discussion of the Medicaid Application Process
General Discussion of the Medicaid Application Process
In applying for institutional Medicaid, there are two basic documents that I present to my clients at the initial meeting. One document is a list of information required by the respective County Board of Social Services. For purposes of simplicity, this article shall relate to a single individual.
I. Typical information requested by a county board might include:
1. proof of age.
2. proof of citizenship.
3. proof of identity (such as driver’s license).
4. proof of marital status.
5. proof of residence.
6. proof of current gross income, which would include pension, social security, veterans benefits, earnings.
7. income tax returns for three years.
8. closed out accounts for the past period of time. The amount of time currently being reviewed by Medicaid increases each month with the initial month being February, 2006, so that for March, 2009, 37 months are reviewed and for April, 2009, 38 months would be reviewed.
9. life insurance policies.
10. prepaid funeral contract (if applicable).
11. health insurance ID information.
12. deed to house (if one is owned).
13. copies of nursing home bills.
14. social security and Medicare cards.
15. power of attorney (if applicable).
II. The second document that I present to the client is the application.
1. The application asks for clarity on much of the information discussed above, but includes questions such as transfers made during the aforementioned respective time periods.
2. Personal information relating to name, veteran status, history of residence, specific asset information, whether you are the beneficiary of someone’s insurance policy, pending lawsuits, medical coverage. Posts that discuss the information in detail are life insurance issues (Post 3), qualifying for Medicaid (Post 16).
III. At the initial meeting I discuss the facts to see if there are any obvious planning possibilities such as surrendering life insurance (Post 3), applicant residing with a caretaker child (Post 6), rules of Medicaid eligibility are reviewed (Post 7), resource limitations for community spouse not limited after applicant receives Medicaid (Post 13), whether a dependent relative resides in the house (Post 14), new transfer rules effective February, 2006 (Post 15), possibility of payment by applicant for care or services provided by child (Post 17), inadvertent disqualification of applicant (Post 21), methods of accelerating Medicaid eligibility (Post 4, 5, 7, 10, 12, and 20).
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 47
In applying for institutional Medicaid, there are two basic documents that I present to my clients at the initial meeting. One document is a list of information required by the respective County Board of Social Services. For purposes of simplicity, this article shall relate to a single individual.
I. Typical information requested by a county board might include:
1. proof of age.
2. proof of citizenship.
3. proof of identity (such as driver’s license).
4. proof of marital status.
5. proof of residence.
6. proof of current gross income, which would include pension, social security, veterans benefits, earnings.
7. income tax returns for three years.
8. closed out accounts for the past period of time. The amount of time currently being reviewed by Medicaid increases each month with the initial month being February, 2006, so that for March, 2009, 37 months are reviewed and for April, 2009, 38 months would be reviewed.
9. life insurance policies.
10. prepaid funeral contract (if applicable).
11. health insurance ID information.
12. deed to house (if one is owned).
13. copies of nursing home bills.
14. social security and Medicare cards.
15. power of attorney (if applicable).
II. The second document that I present to the client is the application.
1. The application asks for clarity on much of the information discussed above, but includes questions such as transfers made during the aforementioned respective time periods.
2. Personal information relating to name, veteran status, history of residence, specific asset information, whether you are the beneficiary of someone’s insurance policy, pending lawsuits, medical coverage. Posts that discuss the information in detail are life insurance issues (Post 3), qualifying for Medicaid (Post 16).
III. At the initial meeting I discuss the facts to see if there are any obvious planning possibilities such as surrendering life insurance (Post 3), applicant residing with a caretaker child (Post 6), rules of Medicaid eligibility are reviewed (Post 7), resource limitations for community spouse not limited after applicant receives Medicaid (Post 13), whether a dependent relative resides in the house (Post 14), new transfer rules effective February, 2006 (Post 15), possibility of payment by applicant for care or services provided by child (Post 17), inadvertent disqualification of applicant (Post 21), methods of accelerating Medicaid eligibility (Post 4, 5, 7, 10, 12, and 20).
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 47
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
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