Post 18 discusses some of the steps to take when presented with a situation for which transfers have already occurred. The purpose of this post is to expand some of the concepts presented and provide some new curative ideas. I am very often presented with a situation which indicates that a potential applicant has made numerous transfers prior to retaining me. All transfers during the look-back period are aggregated and are deemed to have been made at the time of application (the time a person would be otherwise eligible for Medicaid but for the transfers). The transfer period commences at that time and the various issues presented by such rule are set forth in Post 15. Perhaps the most onerous rule is that the nursing home does not receive Medicaid nor payments from the individual who has exhausted his or her assets.
1. Perhaps, the first ameliorative approach should be to review the exemptions from the transfer rules. The major exemptions are the transfer of home to designated individuals, transfer to a disabled child, transfer for purpose other than Medicaid and assets transferred used for the benefit of the Medicaid applicant.
2. Another approach would be to wait and hope that the potential applicant does not need nursing home care for 60 months.
3. Another approach would be to evaluate the penalty (divide aggregated transfers by applicable penalty rate at the time of application).
4. The monies could be given back to the potential applicant if the situation is propitious. The ideal situation would be if the applicant had excludable resources for which the funds could be used. That is, if the potential applicant were married and the home needed extensive repairs, the monies could be protected. Similarly, monies could be expended on prepaid funeral funds.
This article should be read in conjunction with Post 18 to give a complete picture of the problem and the issues.
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 72
Thursday, April 1, 2010
Wednesday, March 24, 2010
Caretaker Agreement Not Technically Required
Caretaker agreements have been discussed in Posts 17 and 52. Basically, the regulations provide that if an applicant transfers funds to a child or relative if such transfer is pursuant to a pre-existing agreement, the presumption of a transfer is rebutted. However, careful examination of the language indicates that such agreement may not be necessary. The regulations state that a transfer of assets by the applicant to a friend or relative “may be rebutted by the presentation of credible documentary evidence preexisting the delivery of the care or services.”
The word “may” is to be stressed. My feeling is that if the fact situation clearly indicates that a transfer of monies compensating a friend or relative for past services is obvious, a pre-existing agreement should not be provided.
For example, if the applicant during the look-back period has no funds and needs medicine to keep alive, monies expended by a friend on such medicine with the check indicating that it is a loan should not require a caretaker agreement. Similarly, if a dependent relative (see Post 14) resides in the future applicant’s home, a portion of any expenditures by the dependent relative should be treated as reimbursable.
Although a caretaker agreement should be drafted, the necessity for such may be lessened, particularly if the parties are aware that the applicant will be receiving an inheritance. That is, the child or friend made expenditures on behalf of the applicant with the anticipation of a reimbursement from the applicant.
The above ideas are merely suggestions as to arguments that can be made if a caretaker agreement has been neglected. Obviously, the preparation of such agreement should be a standard course of conduct.
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 71
The word “may” is to be stressed. My feeling is that if the fact situation clearly indicates that a transfer of monies compensating a friend or relative for past services is obvious, a pre-existing agreement should not be provided.
For example, if the applicant during the look-back period has no funds and needs medicine to keep alive, monies expended by a friend on such medicine with the check indicating that it is a loan should not require a caretaker agreement. Similarly, if a dependent relative (see Post 14) resides in the future applicant’s home, a portion of any expenditures by the dependent relative should be treated as reimbursable.
Although a caretaker agreement should be drafted, the necessity for such may be lessened, particularly if the parties are aware that the applicant will be receiving an inheritance. That is, the child or friend made expenditures on behalf of the applicant with the anticipation of a reimbursement from the applicant.
The above ideas are merely suggestions as to arguments that can be made if a caretaker agreement has been neglected. Obviously, the preparation of such agreement should be a standard course of conduct.
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 71
Wednesday, March 17, 2010
The Loss of Medicaid Eligibility
The rules of Medicaid eligibility have been discussed in Post 7 and throughout the various postings provided. That is, the individual must have less than $2,000 (or $4,000 if assets are over the income cap of $2,022).
However, after eligibility, the Medicaid recipient (or family) must carefully monitor the individual’s resources to ensure continuing eligibility. That is, for the recipient, the first day of each month must show resources less than $2,000. Situations to be considered include, but are not limited to, the following:
1. The cash value of insurance with a face value in excess of $1,500 is a resource. I recently submitted an application for which the individual had such a policy, but still qualified for Medicaid since the cash value was so minimal and the bank account did not put total resources over $2,000. However, any remaining cash value not surrendered is to be considered in total resources. Therefore, surrendering the policy make sense even if the cash value doesn’t immediately disqualify you from Medicaid if other resources are considered.
2. Medicaid allocates $35.00 a month to a Medicaid recipient. This number can build up over time and has to be reviewed periodically.
3. Presumably, the recipient maintains a bank account and that is also a resource. Avoiding any problems with pension and/or social security is discussed in Post 1.
4. Monies inherited will eventually cause disqualification. The effect of inheritance by the Medicaid recipient is discussed in Post 28.
These types of issues should not be factors with respect to the community spouse resource allowance. As indicated by Post 13, the community spouse is not limited to $109,560 (for the year 2009) after the applicant receives Medicaid. This is to be distinguished from the requirement for the applicant where the resource allowance must be kept at $2,000 or less on the first day of each month throughout eligibility. Two typical examples of the community spouse rule have been presented in the materials. For example, in the real estate planning ideas presented in Post 11, if the primary residence is in the name of the community spouse, the closing on the sale of property in the sole name of the community spouse should be after the date of the applicant’s eligibility. Similarly, if the community spouse is the beneficiary of an estate, the mere fact of being a beneficiary does not cause the inheritance to be a resource as such is treated as an “inaccessible resource.” However, if the monies are distributed before the date of applicant’s eligibility, the inheritance will be treated as part of the “spousal pot,” and, therefore, the applicant will not qualify.
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 70
However, after eligibility, the Medicaid recipient (or family) must carefully monitor the individual’s resources to ensure continuing eligibility. That is, for the recipient, the first day of each month must show resources less than $2,000. Situations to be considered include, but are not limited to, the following:
1. The cash value of insurance with a face value in excess of $1,500 is a resource. I recently submitted an application for which the individual had such a policy, but still qualified for Medicaid since the cash value was so minimal and the bank account did not put total resources over $2,000. However, any remaining cash value not surrendered is to be considered in total resources. Therefore, surrendering the policy make sense even if the cash value doesn’t immediately disqualify you from Medicaid if other resources are considered.
2. Medicaid allocates $35.00 a month to a Medicaid recipient. This number can build up over time and has to be reviewed periodically.
3. Presumably, the recipient maintains a bank account and that is also a resource. Avoiding any problems with pension and/or social security is discussed in Post 1.
4. Monies inherited will eventually cause disqualification. The effect of inheritance by the Medicaid recipient is discussed in Post 28.
These types of issues should not be factors with respect to the community spouse resource allowance. As indicated by Post 13, the community spouse is not limited to $109,560 (for the year 2009) after the applicant receives Medicaid. This is to be distinguished from the requirement for the applicant where the resource allowance must be kept at $2,000 or less on the first day of each month throughout eligibility. Two typical examples of the community spouse rule have been presented in the materials. For example, in the real estate planning ideas presented in Post 11, if the primary residence is in the name of the community spouse, the closing on the sale of property in the sole name of the community spouse should be after the date of the applicant’s eligibility. Similarly, if the community spouse is the beneficiary of an estate, the mere fact of being a beneficiary does not cause the inheritance to be a resource as such is treated as an “inaccessible resource.” However, if the monies are distributed before the date of applicant’s eligibility, the inheritance will be treated as part of the “spousal pot,” and, therefore, the applicant will not qualify.
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 70
Friday, March 12, 2010
Additional Real Estate Planning Idea for Married Couple
In Post 11, it was discussed that if a couple are renting, the purchase of a home by the community spouse would be a protected asset and expedite Medicaid eligibility. I believe this is a significant planning technique and this post discusses the approach in greater detail. The key rule to remember is that the home constitutes exempt property if resided in by the applicant, the community spouse or both. This article addresses ownership of home by the community spouse. Generally, if a couple is renting , the new home should be purchased solely in the name of the community spouse and resided in at least until after the husband qualifies for Medicaid. That is, after determination of eligibility for Medicaid, the resources of the community spouse are no longer deemed available to the nursing home resident. However, if the home were sold prior to Medicaid, the monies would be part of the spousal “pot” and Medicaid eligibility would be denied or lost.
The key to this planning technique is also to protect the community spouse resource allowance.
The community spouse resource allowance is determined “as of” the date of institutionalization which is the date of continuous placement in a hospital or nursing home. The key to maximizing resources is that, if institutionalization is imminent, purchase the home after institutionalization so as to maximize asset protection. That is, prior to institutionalization we are dealing with cash.
For example, if there is $300,000 in resources at the date of the “snapshot," the community spouse resource allowance would be $109,560. The balance of the monies could be used by the community spouse to purchase a home. That is, the monies not allocated to community spouse resource allowance need not be allocated to nursing home costs. It is a common misconception that resources that are not part of the protected amount must be expended on nursing home costs. There is no such requirement.
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 69
The key to this planning technique is also to protect the community spouse resource allowance.
The community spouse resource allowance is determined “as of” the date of institutionalization which is the date of continuous placement in a hospital or nursing home. The key to maximizing resources is that, if institutionalization is imminent, purchase the home after institutionalization so as to maximize asset protection. That is, prior to institutionalization we are dealing with cash.
For example, if there is $300,000 in resources at the date of the “snapshot," the community spouse resource allowance would be $109,560. The balance of the monies could be used by the community spouse to purchase a home. That is, the monies not allocated to community spouse resource allowance need not be allocated to nursing home costs. It is a common misconception that resources that are not part of the protected amount must be expended on nursing home costs. There is no such requirement.
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 69
Methods of Payment of Nursing Home Costs
There are several methods by which a nursing home can be reimbursed for the stay of an individual, some of which are temporary and some of which are permanent. However, it is necessary to keep all of these in mind in projecting the date of eligibility.
Firstly, other than the various financial issues in obtaining a Medicaid eligibility letter, a necessary element of Medicaid eligibility is to obtain a PAS for the applicant. This is an examination by the county nurse which will be given almost immediately if a potential applicant is in a hospital. Otherwise, the family is at the mercy of the schedule of the nurses who often cover several counties. Financial eligibility without a PAS will result in eligibility being delayed until the PAS is obtained.
The methods of payment of a nursing home include Medicare (for a limited period of time), long-term care insurance and private pay.
There is a misconception that Medicare will pay for a long-term institutionalization. This is not the case. Medicare will pay for a limited stay at the nursing home if the following requirements have been met:
1. The individual has resided at a hospital for at least three days.
2. Medicare will make full payment for 20 days if an individual requires skilled nursing or rehabilitation and payment is made so long as sufficient progress is made by the applicant. Medicare will also pay for some or all of the next 80 days with a co-pay that is often covered by the individual’s Medigap insurance. The family must carefully monitor the progress of the potential applicant and the thinking of the nursing home. The nursing home often gives limited notice as to the time Medicare payment ceases. At this time, the family must make the decision as to whether the individual remains in the nursing home or returns home.
If an individual remains in a nursing home, the rules of Medicaid discussed in the various Medicaid postings become applicable.
Many nursing homes require private pay for a guaranteed period of time. Although this requirement is illegal, it is part of the Medicaid game and the family should make initial inquiry as to the policy of any given nursing home.
Also, upon the expiration of Medicare coverage, the family will be presented with a nursing home application, including the key document which is the agreement. Consulting an attorney regarding the terms of the agreement is advisable.
If an individual anticipates purchasing long-term care insurance, an expert should be consulted. The permutations of the type of policy are virtually infinite. Some of the areas that are to be addressed include care at home, increase with the C.P.I., time period for coverage (that is, set number of years or lifetime), waiting period (period before payments commence), etc. I intend to have an expert write an article for this blog discussing long-term insurance in detail.
There are basically two reasons why an individual would purchase long-term care insurance. Usually, the insurance is purchased because the individual or individuals are aware of the intricacies of Medicaid and desire to have monies to avoid such process. However, such insurance can be purchased for estate planning purposes. That is, a wealthy individual might not want a diminution of assets caused by nursing home costs and the insurance would avoid or at least ameliorate that possibility.
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 68
Firstly, other than the various financial issues in obtaining a Medicaid eligibility letter, a necessary element of Medicaid eligibility is to obtain a PAS for the applicant. This is an examination by the county nurse which will be given almost immediately if a potential applicant is in a hospital. Otherwise, the family is at the mercy of the schedule of the nurses who often cover several counties. Financial eligibility without a PAS will result in eligibility being delayed until the PAS is obtained.
The methods of payment of a nursing home include Medicare (for a limited period of time), long-term care insurance and private pay.
There is a misconception that Medicare will pay for a long-term institutionalization. This is not the case. Medicare will pay for a limited stay at the nursing home if the following requirements have been met:
1. The individual has resided at a hospital for at least three days.
2. Medicare will make full payment for 20 days if an individual requires skilled nursing or rehabilitation and payment is made so long as sufficient progress is made by the applicant. Medicare will also pay for some or all of the next 80 days with a co-pay that is often covered by the individual’s Medigap insurance. The family must carefully monitor the progress of the potential applicant and the thinking of the nursing home. The nursing home often gives limited notice as to the time Medicare payment ceases. At this time, the family must make the decision as to whether the individual remains in the nursing home or returns home.
If an individual remains in a nursing home, the rules of Medicaid discussed in the various Medicaid postings become applicable.
Many nursing homes require private pay for a guaranteed period of time. Although this requirement is illegal, it is part of the Medicaid game and the family should make initial inquiry as to the policy of any given nursing home.
Also, upon the expiration of Medicare coverage, the family will be presented with a nursing home application, including the key document which is the agreement. Consulting an attorney regarding the terms of the agreement is advisable.
If an individual anticipates purchasing long-term care insurance, an expert should be consulted. The permutations of the type of policy are virtually infinite. Some of the areas that are to be addressed include care at home, increase with the C.P.I., time period for coverage (that is, set number of years or lifetime), waiting period (period before payments commence), etc. I intend to have an expert write an article for this blog discussing long-term insurance in detail.
There are basically two reasons why an individual would purchase long-term care insurance. Usually, the insurance is purchased because the individual or individuals are aware of the intricacies of Medicaid and desire to have monies to avoid such process. However, such insurance can be purchased for estate planning purposes. That is, a wealthy individual might not want a diminution of assets caused by nursing home costs and the insurance would avoid or at least ameliorate that possibility.
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 68
Monday, January 25, 2010
The Importance of a Carefully Prepared Transmittal Letter
Accompanying any Medicaid application should be a transmittal letter which serves as a map to the County Board of eligibility. The purpose of the transmittal letter is to avoid delay in time and confusion regarding eligibility, purposes of transfers and matters such as accounts closed out within the relevant look-back period.
In my transmittal letter, I initially set forth the documents listed by the respective County Boards. I also enclose any information or documentation you need for the case such as Caretaker Agreement (agreement pursuant to which applicant compensates child for previous services, see Post 17).
The second portion of my transmittal letter sets forth the monthly statements of any current accounts for the applicable time period. Currently, County Boards are looking at statements from the date of eligibility back to February 2006, which is the month of adoption of the Deficit Reduction Act. Of course, documentation must eventually be supplied for the anticipated eligibility date. Generally, an application is submitted prior to the eligibility date. However, if an individual is eligible prior to the submission of the application, eligibility can be retroactive for three months.
I then set forth in a separate folder the current assets of the applicant.
It is particularly important to show closed out accounts back to February 2006. Although I title such portion of my transmittal letter “closed out accounts,” the meaning is broader. Firstly, any closed out account should trace the proceeds of such account (i.e. another account of the applicant, an expenditure or a gift). Other closed out assets and the disposition of such assets during the look-back period would include, but not be limited to, IRA’s, sales of stock, payments pursuant to a caretaker agreement, sale of a residence, surrender of life insurance, monies expended on an excludable resource such as a home, etc.
Of course, if there is a community spouse, I enclose a separate folder showing the computation of the community spouse resource allowance. This separate folder would include all includable resources as of the first day of the first month of institutionalization. The period of institutionalization would include both the nursing home and a prior stay in a hospital if relevant. With respect to the community spouse resource allowance, see Post 8.
The initial transmittal letter should include sufficient information so that all that is necessary to provide at the date of eligibility, are subsequent statements of the applicant and/or spouse through the time of eligibility.
There are several posts which are relevant to the final time period between submission and the eligibility date. If submitting a transmittal letter, it is suggested that these posts be reviewed:
1. Post 4 – Significance of Payment of Debts and Expenses.
2. Post 5 – Accelerating the Date of Eligibility.
3. Post 7 - Rules of Medicaid Eligibility.
4. Post 8 - Community Spouse Resource Allowance.
5. Post 10 - Significance of the 90-Day Rule.
6. Post 16 - Qualifying for Medicaid.
7. Post 20 - Importance of Liquidating Assets in the Medicaid Planning Process.
8. Post 25 - Date of Application Could Be Fatal.
9. Post 31 - The Problem of Recurrent Disqualification.
10. Post 33 - The Problem of the Working Spouse.
In addition to supplementing the initial transmittal letter, projections should continually be made of the anticipated date of eligibility. With respect to this issue, pension and social security of a spouse or both spouses should be reviewed as should nursing home bills which delineate not only the cost of the nursing home (invoice generally covers subsequent month), but also expenditures such as medicines which a nursing home generally invoices for the prior month.
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 67
In my transmittal letter, I initially set forth the documents listed by the respective County Boards. I also enclose any information or documentation you need for the case such as Caretaker Agreement (agreement pursuant to which applicant compensates child for previous services, see Post 17).
The second portion of my transmittal letter sets forth the monthly statements of any current accounts for the applicable time period. Currently, County Boards are looking at statements from the date of eligibility back to February 2006, which is the month of adoption of the Deficit Reduction Act. Of course, documentation must eventually be supplied for the anticipated eligibility date. Generally, an application is submitted prior to the eligibility date. However, if an individual is eligible prior to the submission of the application, eligibility can be retroactive for three months.
I then set forth in a separate folder the current assets of the applicant.
It is particularly important to show closed out accounts back to February 2006. Although I title such portion of my transmittal letter “closed out accounts,” the meaning is broader. Firstly, any closed out account should trace the proceeds of such account (i.e. another account of the applicant, an expenditure or a gift). Other closed out assets and the disposition of such assets during the look-back period would include, but not be limited to, IRA’s, sales of stock, payments pursuant to a caretaker agreement, sale of a residence, surrender of life insurance, monies expended on an excludable resource such as a home, etc.
Of course, if there is a community spouse, I enclose a separate folder showing the computation of the community spouse resource allowance. This separate folder would include all includable resources as of the first day of the first month of institutionalization. The period of institutionalization would include both the nursing home and a prior stay in a hospital if relevant. With respect to the community spouse resource allowance, see Post 8.
The initial transmittal letter should include sufficient information so that all that is necessary to provide at the date of eligibility, are subsequent statements of the applicant and/or spouse through the time of eligibility.
There are several posts which are relevant to the final time period between submission and the eligibility date. If submitting a transmittal letter, it is suggested that these posts be reviewed:
1. Post 4 – Significance of Payment of Debts and Expenses.
2. Post 5 – Accelerating the Date of Eligibility.
3. Post 7 - Rules of Medicaid Eligibility.
4. Post 8 - Community Spouse Resource Allowance.
5. Post 10 - Significance of the 90-Day Rule.
6. Post 16 - Qualifying for Medicaid.
7. Post 20 - Importance of Liquidating Assets in the Medicaid Planning Process.
8. Post 25 - Date of Application Could Be Fatal.
9. Post 31 - The Problem of Recurrent Disqualification.
10. Post 33 - The Problem of the Working Spouse.
In addition to supplementing the initial transmittal letter, projections should continually be made of the anticipated date of eligibility. With respect to this issue, pension and social security of a spouse or both spouses should be reviewed as should nursing home bills which delineate not only the cost of the nursing home (invoice generally covers subsequent month), but also expenditures such as medicines which a nursing home generally invoices for the prior month.
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 67
Monday, January 11, 2010
Rules Often Overlooked in the Medicaid Application Process
Very often an apparently complete application is submitted to Medicaid with the appropriate documentation described in the transmittal letter. However, there are some simple rules that are not always followed that can delay Medicaid eligibility. These rules are discussed briefly below:
1. The prepaid funeral arrangements must be irrevocable. Very often applicant has purchased burial insurance years ago which is in revocable form. This is not acceptable to Medicaid. The solution is to convert the policy to irrevocable. It is extremely important to work with an experienced funeral director.
2. The exemption for the home for an applicant and a community spouse relates to the Primary Residence. A secondary home is an available resource. Similarly, if the primary residence of the parties is an apartment and they have a separate house, this house does not constitute the primary residence.
3. The individual resource requirements of $2,000 for an individual of modest income and $4,000 for an individual meeting the income cap of $2,022 must be met exactly on the first day of the first month for which Medicaid is sought. Resources of $2,001 does not mean that the individual misses by a day, but rather does not qualify for Medicaid until the resource limit is met. Therefore, carefully monitoring all checks during the last several months is a necessity.
4. Nursing homes often ask for a deposit upon entry. The typical deposit is two months nursing home costs. Therefore, if an individual and/or an individual and a spouse meet the applicable resource requirements (see Post 7), a deposit of two months will delay the letter of eligibility until the deposit is utilized. One reason for this approach is that the deposit until used constitutes a resource. Another reason is that the nursing home cannot receive private pay from the family and also receive the Medicaid reimbursement rate. Keep in mind in analyzing the effective date of Medicaid eligibility that pension and social security should be considered.
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 66
1. The prepaid funeral arrangements must be irrevocable. Very often applicant has purchased burial insurance years ago which is in revocable form. This is not acceptable to Medicaid. The solution is to convert the policy to irrevocable. It is extremely important to work with an experienced funeral director.
2. The exemption for the home for an applicant and a community spouse relates to the Primary Residence. A secondary home is an available resource. Similarly, if the primary residence of the parties is an apartment and they have a separate house, this house does not constitute the primary residence.
3. The individual resource requirements of $2,000 for an individual of modest income and $4,000 for an individual meeting the income cap of $2,022 must be met exactly on the first day of the first month for which Medicaid is sought. Resources of $2,001 does not mean that the individual misses by a day, but rather does not qualify for Medicaid until the resource limit is met. Therefore, carefully monitoring all checks during the last several months is a necessity.
4. Nursing homes often ask for a deposit upon entry. The typical deposit is two months nursing home costs. Therefore, if an individual and/or an individual and a spouse meet the applicable resource requirements (see Post 7), a deposit of two months will delay the letter of eligibility until the deposit is utilized. One reason for this approach is that the deposit until used constitutes a resource. Another reason is that the nursing home cannot receive private pay from the family and also receive the Medicaid reimbursement rate. Keep in mind in analyzing the effective date of Medicaid eligibility that pension and social security should be considered.
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 66
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