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 Medicaid eligibility. Show all posts
Showing posts with label Medicaid eligibility. 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
Wednesday, August 5, 2009
Community Spouse Resource Allowance Changes Annually
Community Spouse Resource Allowance Changes Annually
In Medicaid Communication No. 09-2, the community spouse resource allowance maximum is increased from $104,400 to $109,560. The community spouse resource allowance increases annually on January 1st of each year. The letter ruling indicates that the increased amount applies to “any case which has not yet been determined eligible, regardless of the date of application.”
The following example is set forth in the letter ruling:
Mr. Smith entered a long term facility on October 15, 2008. He and his wife had combined resources of $300,000. The community spouse’s share of the resources would have been established at $104,400.00 at the time of the resource assessment. Because the Smiths’ resources still exceeded $106,400.00 (the community spouse’s share plus the $2,000.00 resource limit), Mr. Smith had not yet attained Medicaid eligibility. Beginning January 1, 2009, the community spouse’s share in this case increased to $109,560.00. Resource eligibility will exist once the Smiths’ countable resources are equal to or less than $111,560.00.
In other words, although the figure used as a community spouse resource allowance is generally determined the first day of the first month of institutionalization, this is subject to change (if a determination of eligibility has not yet been made). Also, note in the example that eligibility is based upon total countable resources of $111,560.00 due to the 90-day rule (see Post 10).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 50
In Medicaid Communication No. 09-2, the community spouse resource allowance maximum is increased from $104,400 to $109,560. The community spouse resource allowance increases annually on January 1st of each year. The letter ruling indicates that the increased amount applies to “any case which has not yet been determined eligible, regardless of the date of application.”
The following example is set forth in the letter ruling:
Mr. Smith entered a long term facility on October 15, 2008. He and his wife had combined resources of $300,000. The community spouse’s share of the resources would have been established at $104,400.00 at the time of the resource assessment. Because the Smiths’ resources still exceeded $106,400.00 (the community spouse’s share plus the $2,000.00 resource limit), Mr. Smith had not yet attained Medicaid eligibility. Beginning January 1, 2009, the community spouse’s share in this case increased to $109,560.00. Resource eligibility will exist once the Smiths’ countable resources are equal to or less than $111,560.00.
In other words, although the figure used as a community spouse resource allowance is generally determined the first day of the first month of institutionalization, this is subject to change (if a determination of eligibility has not yet been made). Also, note in the example that eligibility is based upon total countable resources of $111,560.00 due to the 90-day rule (see Post 10).
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© August 2009, Post 50
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
Thursday, May 28, 2009
Significant Language in Power of Attorney Regarding Primary Residence
Significant Language in Power of Attorney Regarding Primary Residence
Prior Post 11 discussed the advantages of a jointly-held residence being transferred to the community spouse for Medicaid purposes. The general idea presented was that after the applicant receives Medicaid, the community spouse would be free to sell the residence and the funds received would not be part of the Medicaid “pot.”
Therefore, a power of attorney must currently include language that indicates that if an individual enters a nursing home, the residence should be transferred to the community spouse. Such language should be in the power of attorney currently.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #38
Prior Post 11 discussed the advantages of a jointly-held residence being transferred to the community spouse for Medicaid purposes. The general idea presented was that after the applicant receives Medicaid, the community spouse would be free to sell the residence and the funds received would not be part of the Medicaid “pot.”
Therefore, a power of attorney must currently include language that indicates that if an individual enters a nursing home, the residence should be transferred to the community spouse. Such language should be in the power of attorney currently.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© May 2009, Post #38
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
Friday, May 22, 2009
Sale of Remainder Interest
Sale of Remainder Interest
The technique discussed in this article is another planning idea for a single individual owning a home and living with a child. However, the child has no special status such as having provided care or being dependent. The potential applicant has been advised to have private funds approximating one year’s nursing home costs to provide flexibility in choice of facility. Protection of the home is desired.
Recommendation: Remainder interest should be sold to child. The tables for determining the remainder interest can be obtained from your Medicaid office.
The transaction results in the parent having retained a life interest in the property and the child having purchased the remainder for an assumed amount of $60,000. Consequences are as follows:
A. there will be no transfer penalty;
B. applicant will be eligible when resource requirement is met;
C. eligibility can be accelerated by the payment of debts and the acquisition of excludable resources;
D. the retained interest of the parent (i.e. life estate) has special administrative treatment by the State of New Jersey (no value assigned to retained interest, retained interest not subject to Medicaid lien).
Note: If remainder interest were deeded to a “protected transferee,” there would be no period of ineligibility with respect to the transfer (see Post 6).
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 #36
The technique discussed in this article is another planning idea for a single individual owning a home and living with a child. However, the child has no special status such as having provided care or being dependent. The potential applicant has been advised to have private funds approximating one year’s nursing home costs to provide flexibility in choice of facility. Protection of the home is desired.
Recommendation: Remainder interest should be sold to child. The tables for determining the remainder interest can be obtained from your Medicaid office.
The transaction results in the parent having retained a life interest in the property and the child having purchased the remainder for an assumed amount of $60,000. Consequences are as follows:
A. there will be no transfer penalty;
B. applicant will be eligible when resource requirement is met;
C. eligibility can be accelerated by the payment of debts and the acquisition of excludable resources;
D. the retained interest of the parent (i.e. life estate) has special administrative treatment by the State of New Jersey (no value assigned to retained interest, retained interest not subject to Medicaid lien).
Note: If remainder interest were deeded to a “protected transferee,” there would be no period of ineligibility with respect to the transfer (see Post 6).
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 #36
Thursday, April 9, 2009
Additional Benefits for a Single Individual Owning Home Jointly with a Protected Transferee
Additional Benefits for a Single Individual Owning Home
Jointly with a Protected Transferee
Medicaid planning must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of a recipient of benefits. The discussion in Post 6 relating to a child who “resided” in the home for at least two years prior to institutionalization and provided care which permitted the individual to reside at home rather than go in a nursing home addresses mainly the issue of Medicaid eligibility. The prior post involved related to the transfer of the home to a “protected transferee” and that addressed mainly the issue of Medicaid eligibility. However, the planning issues involved when there is joint ownership by the parent and the child relate to the disqualification of Medicaid after eligibility and avoiding the Medicaid lien. For purposes of this discussion, joint ownership shall refer to a joint tenancy with right of survivorship (i.e., property passes to the survivor upon the death of the first of parent or child).
A. Assuming the requirements of eligibility are met, joint ownership of applicant’s residence with a child who is a protected transferee (or even a child who is not a protected transferee) will not preclude eligibility. N.J.A.C. 10:71-4.4(b)6. treats real property which cannot be sold because of the refusal of a co-owner to liquidate as an inaccessible resource.
B. However, disqualification from eligibility and the Medicaid lien are avoided by a transfer of applicant’s joint interest to a “protected transferee” child.
1. The Medicaid lien is avoided by terminating ownership, and, thereby removing the property from a Medicaid recipient’s “estate.” That is, assets that are part of one’s estate after the individual dies and receives Medicaid are subject to the Medicaid lien. It is noted that the lien statute expressly applies to joint tenancies.
2. Assuming the child disinherits the transferor parent, the problem of inadvertent disqualification is eliminated (joint ownership, child dies first and property passes to parent by operation of law).
3. If both individuals are alive and joint ownership were not terminated and the parent had qualified for Medicaid, a sale of the property would result in one-half the net proceeds being allocated to the parent with subsequent loss of eligibility.
Note: Another category of protected transferee is a (i) sibling 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 circumstances of joint ownership with a child.
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 #23
Jointly with a Protected Transferee
Medicaid planning must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of a recipient of benefits. The discussion in Post 6 relating to a child who “resided” in the home for at least two years prior to institutionalization and provided care which permitted the individual to reside at home rather than go in a nursing home addresses mainly the issue of Medicaid eligibility. The prior post involved related to the transfer of the home to a “protected transferee” and that addressed mainly the issue of Medicaid eligibility. However, the planning issues involved when there is joint ownership by the parent and the child relate to the disqualification of Medicaid after eligibility and avoiding the Medicaid lien. For purposes of this discussion, joint ownership shall refer to a joint tenancy with right of survivorship (i.e., property passes to the survivor upon the death of the first of parent or child).
A. Assuming the requirements of eligibility are met, joint ownership of applicant’s residence with a child who is a protected transferee (or even a child who is not a protected transferee) will not preclude eligibility. N.J.A.C. 10:71-4.4(b)6. treats real property which cannot be sold because of the refusal of a co-owner to liquidate as an inaccessible resource.
B. However, disqualification from eligibility and the Medicaid lien are avoided by a transfer of applicant’s joint interest to a “protected transferee” child.
1. The Medicaid lien is avoided by terminating ownership, and, thereby removing the property from a Medicaid recipient’s “estate.” That is, assets that are part of one’s estate after the individual dies and receives Medicaid are subject to the Medicaid lien. It is noted that the lien statute expressly applies to joint tenancies.
2. Assuming the child disinherits the transferor parent, the problem of inadvertent disqualification is eliminated (joint ownership, child dies first and property passes to parent by operation of law).
3. If both individuals are alive and joint ownership were not terminated and the parent had qualified for Medicaid, a sale of the property would result in one-half the net proceeds being allocated to the parent with subsequent loss of eligibility.
Note: Another category of protected transferee is a (i) sibling 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 circumstances of joint ownership with a child.
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 #23
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, February 20, 2009
Significance of Payment of Debts and Expenses
Significance of Payment of Debts and Expenses
A. As indicated in the administrative regulations and the examples presented below, there are several key rules in the administrative regulations to be addressed with respect to the payment of debts and expenses and failure to consider these rules could delay the date of eligibility. The most significant administrative consideration is that the resource eligibility requirement of $2,000 (or $4,000 in limited circumstances) must be met on the first day of the month for which eligibility is sought. Relevant administrative regulations and federal statutes are included for reference.
B. Significant administrative regulations.
1. Resource eligibility is determined as of the first moment of the first day of each month - N.J.A.C. 10:71-4.1(e). The resource requirement must be met on the first day of every month for the recipient or eligibility can be lost. Of course, once eligibility is established, resources of the community spouse may exceed the Community Spouse Resource Allowance without loss of benefits by the recipient spouse – 42 U.S.C. 1396r-5(c)(4).
2. If an individual is eligible as of the first moment of the first day of the month, subsequent changes during that month in the amount of countable resources will not affect the original determination of eligibility – N.J.A.C. 10: 71-4.1(e).
3. A check drawn on the account of an applicant reduces the value of the account. However, the value of the account is not reduced by unpaid obligations for which a check has not been drawn – N.J.A.C. 10:71-4.1(e)2.
C. Eligibility can be denied or delayed by lack of compliance with the regulations.
Example 1: Applicant (single individual) has $5,000 in a checking account on September 30. There is an outstanding medical bill of $3,200. On October 1, application is made for Medicaid. Check is drawn in payment of medical bill on October 1. Application for Medicaid will be denied for October.
Note: Resources in excess of $2,000 will result in ineligibility for the month. Therefore, the nursing home is entitled to the private pay rate for that month. That is, missing the resource requirement by even a minimal amount has the same effect as missing the requirement by a larger amount.
Example 2: Same as above, except check is drawn on September 30. Medicaid will be granted.
Note: Check need not be negotiated to reduce available resources.
Example 3: Applicant has $1,500 in a checking account and qualifies for Medicaid on October 1. On October 15, individual receives a medical reimbursement check of $10,000, which is deposited in a checking account. Funds remain in the account. Medicaid recipient will lose eligibility on November 1.
Contrast: Medicaid recipient transfers the $10,000 on October 16 to a disabled child. Eligibility will be maintained.
Caution: Funds paid to the nursing home (which have not been applied against prior monthly charges) are a resource. Therefore, if one month’s deposit remains with the nursing home, the deposit should be applied to payment of nursing home costs in the month prior to eligibility.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2009, Post #4
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