Generally, admission to a nursing home is preceded by a hospital stay. A family member should immediately request a PAS at the hospital (examination by county nurse) which is a prerequisite to Medicaid eligibility in addition to the financial requirements.
If the potential applicant is in the hospital for more than three days, the person may qualify for Medicare to pay the nursing home stay for a limited period of time. If the individual requires physical rehab or skilled nursing home care, Medicare will pay for the first 20 days in full and for the following 80 days except for a co-pay, which should be covered by the Medigap insurance. Keep in mind that Medicare will pay only if there is the required progress for the individual at the nursing home.
One of the issues for long-term admission to a nursing home is that many nursing homes require a private pay guarantee for a certain number of months. This is illegal for both state and federal purposes, but these rules are not enforced.
After Medicaid coverage ceases, if the individual seeks admission to the nursing home a method of payment must be shown. Therefore, if the person has minimal funds, the Medicaid process should have already commenced.
At such time as long-term care is sought, the family will be presented with an application and other documents. It is recommended that these be reviewed by an attorney.
If the nursing home is of the opinion that there may not be a method of payment (i.e. Medicaid hasn’t been granted or insufficient resources), admission to the nursing home may not be granted.
Of course, family members may be willing to private pay until such time as Medicaid is granted.
If an attorney is assisting the family in the application process, the attorney should feel confident that the family is willing to cooperate and has the sufficient documents required by the County Board.
The application is made at the county where the nursing home is located. However, if application is made from the individual’s residence, the application is to be submitted to the county of residence.
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 75
Wednesday, April 21, 2010
Friday, April 16, 2010
Key Points to Remember in the Computation of the Community Spouse Resource Allowance
The community spouse resource allowance has been discussed in Posts 8, 13, 26, 30, 50 and 60.
Experience has borne the fact that actual computation of the community spouse resource allowance often involves issues that raise some thought.
The following are some points to remember in computing the protected amount:
1. The community spouse resource allowance is only to consider resources that are countable for Medicaid purposes. For example, the primary residence is an excludable resource and is not to be treated as part of the computations.
2. Bank accounts generally provide the balance in the middle of the month. Request the client to get a letter from the bank as of the appropriate date, the first moment of the first day of the month of institutionalization, in reality, is the close of business on the prior day.
3. A certificate of deposit that is due in several weeks arguably is hard to value. That is, it has been my experience that if a family requests the funds without any penalty, that the bank will comply.
4. If there are assets subject to a penalty for withdrawal such as an IRA or an annuity, the withdrawal penalty is not to be considered. With respect to an IRA, it is suggested that the stocks be sold within the IRA (no tax at that point) so that after distribution and income tax, there is not an additional tax due to the necessity to liquidate appreciating assets.
5. Joint property (such as real estate) is to be valued at one-half the fair market value of the real estate. This is different than the treatment for death tax purposes since a fractional interest in real estate is often discounted for fractional interests.
As the above indicates, numerous technical issues arise throughout the Medicaid process, but for purposes of computing the community spouse resource allowance they must be addressed immediately so that eligibility can be projected.
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 74
Experience has borne the fact that actual computation of the community spouse resource allowance often involves issues that raise some thought.
The following are some points to remember in computing the protected amount:
1. The community spouse resource allowance is only to consider resources that are countable for Medicaid purposes. For example, the primary residence is an excludable resource and is not to be treated as part of the computations.
2. Bank accounts generally provide the balance in the middle of the month. Request the client to get a letter from the bank as of the appropriate date, the first moment of the first day of the month of institutionalization, in reality, is the close of business on the prior day.
3. A certificate of deposit that is due in several weeks arguably is hard to value. That is, it has been my experience that if a family requests the funds without any penalty, that the bank will comply.
4. If there are assets subject to a penalty for withdrawal such as an IRA or an annuity, the withdrawal penalty is not to be considered. With respect to an IRA, it is suggested that the stocks be sold within the IRA (no tax at that point) so that after distribution and income tax, there is not an additional tax due to the necessity to liquidate appreciating assets.
5. Joint property (such as real estate) is to be valued at one-half the fair market value of the real estate. This is different than the treatment for death tax purposes since a fractional interest in real estate is often discounted for fractional interests.
As the above indicates, numerous technical issues arise throughout the Medicaid process, but for purposes of computing the community spouse resource allowance they must be addressed immediately so that eligibility can be projected.
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 74
Wednesday, April 7, 2010
Importance of Reviewing Checking Records as the Date of Eligibility Approaches
Post 4 discusses significance of payment of debts and expenses. This post is to serve as a clarification of some of the points made.
1. The general rule, of course, is that 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). For example, if June eligibility is anticipated, the amount reflected in the account on June 1 is not the proper amount. That is, you are to look to the first moment of the first day of each month. The June 1 balance is not the first moment. In actuality, the balance as of the close of business on May 31 is the proper amount. Do not fall into this trap.
2. Another key rule is that subsequent changes after eligibility during the month do not effect the original determination of eligibility – N.J.A.C. 10:71-4.1(e). This is discussed in the context that the funds are used for appropriate purposes prior to the beginning of the first moment of the first day of the subsequent month. Post 4 discusses possible approaches to reduction of the amount. However, it is important to use the funds for an excludable resource such as a prepaid revocable funeral trust or valid expenses of the home if the individual happens to be married. Very often in this circumstance I have seen clients use the funds for purposes that may be subject to question such as checks drawn to the child or checks drawn to cash. It is important to be conservative in this regard.
3. Another rule set forth is that a check drawn on the account reduces the value of the account whether or not negotiated – N.J.A.C. 10:71-4.1(e)2. It is extremely important to be aware that the records will not show the account being reduced by the first of the month since the check was not negotiated. It has been my practice to keep a copy of the check and submit it to Medicaid for the subsequent month in order to establish eligibility. If such a resource is anticipated such as an income tax refund for a medical reimbursement, it would make sense in advance as to plan the use of such monies. For example, meet with the funeral director in advance and make preliminary arrangements. As indicated in prior posts, expenses relating to the joint home are excludable. However, such expenses should be justified and are subject to the concept of reasonableness.
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 73
1. The general rule, of course, is that 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). For example, if June eligibility is anticipated, the amount reflected in the account on June 1 is not the proper amount. That is, you are to look to the first moment of the first day of each month. The June 1 balance is not the first moment. In actuality, the balance as of the close of business on May 31 is the proper amount. Do not fall into this trap.
2. Another key rule is that subsequent changes after eligibility during the month do not effect the original determination of eligibility – N.J.A.C. 10:71-4.1(e). This is discussed in the context that the funds are used for appropriate purposes prior to the beginning of the first moment of the first day of the subsequent month. Post 4 discusses possible approaches to reduction of the amount. However, it is important to use the funds for an excludable resource such as a prepaid revocable funeral trust or valid expenses of the home if the individual happens to be married. Very often in this circumstance I have seen clients use the funds for purposes that may be subject to question such as checks drawn to the child or checks drawn to cash. It is important to be conservative in this regard.
3. Another rule set forth is that a check drawn on the account reduces the value of the account whether or not negotiated – N.J.A.C. 10:71-4.1(e)2. It is extremely important to be aware that the records will not show the account being reduced by the first of the month since the check was not negotiated. It has been my practice to keep a copy of the check and submit it to Medicaid for the subsequent month in order to establish eligibility. If such a resource is anticipated such as an income tax refund for a medical reimbursement, it would make sense in advance as to plan the use of such monies. For example, meet with the funeral director in advance and make preliminary arrangements. As indicated in prior posts, expenses relating to the joint home are excludable. However, such expenses should be justified and are subject to the concept of reasonableness.
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 73
Thursday, April 1, 2010
Transfers Made By Potential Applicant After February, 2006
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
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
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
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