The MMNA (Minimum Monthly Needs Allowance) has a long history and it is worthwhile to discuss its derivation. Approximately 20 years ago, I had a case that went to administrative hearing known as Cleary v. Waltman.
The MMNA is the shelter cost of a community spouse if a primary residence is owned by a community spouse and an applicant is on Medicaid.
The query at the time was can you shift income from the applicant to make up the MMNA or must you shift principal that generates sufficient income to make up the MMNA. Mr. Cleary decided to take the course that you can shift principal and increase the community spouse resource allowance. The Supreme Court of the United States denied cert. and the District Court held that you must shift income.
This is no longer an issue as the new law provides for the "income first" rule which requires that the applicant's income be shifted first to make up the MMNA and if more income is needed (unlikely), then assets can be shifted.
Various blogs have indicated that in addition to the MMNA, the community spouse can keep income to pay Medigap insurance and $35 a month.
Therefore, it is generally prudent not to make the nursing home the representative payee, but reimburse to the nursing home the balance of social security and pension after keeping the MMNA, Medigap insurance and $35 a month.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2012, Post 191
Monday, April 2, 2012
Monday, March 26, 2012
Medicaid Must Be Read From the Public Benefit's Point of View and Not as a Trusts and Estates Lawyer
Prior blogs have discussed the seminal case of Mistrick v. Division of Medical Assistance and Health Services 154 NJ 158 (1998). In Mistrick, the New Jersey Supreme Court held that an IRA of a spouse is not considered a resource.
Literally, the New Jersey Supreme Court was incorrect. The reason is that the rules of social security are incorporated in the Medicaid rules by reference. Under the social security rules, an IRA of a recipient is a resource. Since such rules are incorporated in the Medicaid rules, an IRA of a community spouse should be a resource for Medicaid purposes.
Notwithstanding, the Mistrick case held that the IRA of a spouse must be considered. Although this whole thing is literally wrong, New Jersey does not want to allow the community spouse to receive a large retirement payment which is rolled over to an IRA and still receive Medicaid.
Once again, the area of Medicaid is still filled with minefields and you must interpret the law from a public benefit's point of view.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2012, Post 190
Literally, the New Jersey Supreme Court was incorrect. The reason is that the rules of social security are incorporated in the Medicaid rules by reference. Under the social security rules, an IRA of a recipient is a resource. Since such rules are incorporated in the Medicaid rules, an IRA of a community spouse should be a resource for Medicaid purposes.
Notwithstanding, the Mistrick case held that the IRA of a spouse must be considered. Although this whole thing is literally wrong, New Jersey does not want to allow the community spouse to receive a large retirement payment which is rolled over to an IRA and still receive Medicaid.
Once again, the area of Medicaid is still filled with minefields and you must interpret the law from a public benefit's point of view.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2012, Post 190
Monday, March 19, 2012
The Most Egregious Example of the Failure of Medicaid to Follow Precedent
In an administrative decision, the father of a nursing home resident (M.M.) predeceased the nursing home resident and established a discretionary testamentary trust for the benefit of M.M. The trust contained no standards of invasion and provided that the trustee had sole discretion as to the use of the funds (see M.M. v. Division of Medical Assistance and Health Services, OAL Docket #11123-95, 2/20/96, 4/11/96). The trust also included supplemental benefit language. The County denied eligibility and the Administrative Law Judge affirmed holding that the trust was not an excludable resource.
The significance of this case is that the Director reversed on the basis that the Medicaid recipient was not the grantor, the trust was irrevocable and the trustee had considerable discretion. Such reversal presumably indicates an acknowledgement by Medicaid authorities that the corpus of a purely discretionary trust (at least without any standards of invasion, and possibly with supplemental benefit language) is not an available resource.
Notwithstanding, what appears to be precedent has not been followed by Medicaid who now treats a purely discretionary trust as an available resource.
This is just an example of Medicaid's refusal to follow precedent.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2012, Post 189
The significance of this case is that the Director reversed on the basis that the Medicaid recipient was not the grantor, the trust was irrevocable and the trustee had considerable discretion. Such reversal presumably indicates an acknowledgement by Medicaid authorities that the corpus of a purely discretionary trust (at least without any standards of invasion, and possibly with supplemental benefit language) is not an available resource.
Notwithstanding, what appears to be precedent has not been followed by Medicaid who now treats a purely discretionary trust as an available resource.
This is just an example of Medicaid's refusal to follow precedent.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2012, Post 189
Monday, March 12, 2012
Transfers into the Name of a Potential Medicaid Recipient
Although it is illegal to require payment for a fixed time in order to stay in a nursing home, we know that many nursing homes set such a requirement and rather than fight the issue, payment is often made for the required period of time.
Suppose an individual does not have sufficient funds? It would be appropriate for a child to pay money to the individual so that the required number of months be paid.
There is no penalty for a transfer to an applicant. The penalty only refers to a disposition of assets under 42 U.S.C. Section 1396(p)(c).
That is, a disposition of an asset (resource, income) can give rise to a penalty. However, a transfer of assets into the name of an applicant does not give rise to a penalty, and would fulfill the requirement of the nursing home.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2012, Post 188
Suppose an individual does not have sufficient funds? It would be appropriate for a child to pay money to the individual so that the required number of months be paid.
There is no penalty for a transfer to an applicant. The penalty only refers to a disposition of assets under 42 U.S.C. Section 1396(p)(c).
That is, a disposition of an asset (resource, income) can give rise to a penalty. However, a transfer of assets into the name of an applicant does not give rise to a penalty, and would fulfill the requirement of the nursing home.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2012, Post 188
Tuesday, March 6, 2012
Marketing by the Elder Law Attorney
There was a time when it was unconstitutional for a lawyer to advertise. However, the courts have held that the public's right to know entitles an attorney to advertise so long as the attorney follows the ethics rules. For example, in Post 174I pointed out that it is unethical to refer to yourself as a Super Lawyer. A lawyer cannot advertise himself as being superior to another lawyer. Therefore, in that post I pointed out that the proper language for a Super Lawyer is as follows:
"Mr. Smith is on a list called Super Lawyers for the year 2011. Such list is prepared by Thomson Reuters. The selection process includes peer nominations, a blue ribbon panel review and independent research of candidates. Such list does not imply a comparison to other lawyers, but is compiled by the above process. This advertisement has not been approved by the Supreme Court."
There are numerous ways for a lawyer to market his services. Public speaking, his or her website, seminars and written communications are some of the typical ways. For example, on my website I post blogs weekly which discuss various topics of interest. In preparing such blogs, I take care to make them as clear as possible and provide information that I think is relevant.
It is important in conveying information that New Jersey law be referenced, in particular, if that law conflicts with the United States Constitution. I have pointed out in numerous posts that New Jersey does not follow the federal Constitution and is more restrictive. For example, disinheritance of a Medicaid recipient, spousal refusal and what constitutes a transfer are some of the areas in which the State is more restrictive than the federal government. On the other hand, the State can be more lenient than the federal Constitution. For example, the 90-day rule and the treatment of a retained life estate as not being a resource are examples where the State is less restrictive. Finally, I do not believe that the elder law attorney can know 90% of the rules. That is, the attorney must be familiar with all the rules otherwise Medicaid can be denied.
As I have pointed out in my posts, the elder law attorney must be familiar with various areas of law. In addition to elder law, the attorney must be familiar with constitutional law, tax law and the law of wills and estate. In addition, in Post 179I pointed out that the lien law and the asset rules were not drafted with reference to each other. Therefore, it is incumbent upon the elder law attorney to advise the client of this discrepancy. That is, in Post 167, I pointed out that the elder law attorney must give the client options and not be dictatorial in light of the ambiguity of the New Jersey law.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2012, Post 187
"Mr. Smith is on a list called Super Lawyers for the year 2011. Such list is prepared by Thomson Reuters. The selection process includes peer nominations, a blue ribbon panel review and independent research of candidates. Such list does not imply a comparison to other lawyers, but is compiled by the above process. This advertisement has not been approved by the Supreme Court."
There are numerous ways for a lawyer to market his services. Public speaking, his or her website, seminars and written communications are some of the typical ways. For example, on my website I post blogs weekly which discuss various topics of interest. In preparing such blogs, I take care to make them as clear as possible and provide information that I think is relevant.
It is important in conveying information that New Jersey law be referenced, in particular, if that law conflicts with the United States Constitution. I have pointed out in numerous posts that New Jersey does not follow the federal Constitution and is more restrictive. For example, disinheritance of a Medicaid recipient, spousal refusal and what constitutes a transfer are some of the areas in which the State is more restrictive than the federal government. On the other hand, the State can be more lenient than the federal Constitution. For example, the 90-day rule and the treatment of a retained life estate as not being a resource are examples where the State is less restrictive. Finally, I do not believe that the elder law attorney can know 90% of the rules. That is, the attorney must be familiar with all the rules otherwise Medicaid can be denied.
As I have pointed out in my posts, the elder law attorney must be familiar with various areas of law. In addition to elder law, the attorney must be familiar with constitutional law, tax law and the law of wills and estate. In addition, in Post 179I pointed out that the lien law and the asset rules were not drafted with reference to each other. Therefore, it is incumbent upon the elder law attorney to advise the client of this discrepancy. That is, in Post 167, I pointed out that the elder law attorney must give the client options and not be dictatorial in light of the ambiguity of the New Jersey law.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© March 2012, Post 187
Monday, February 27, 2012
Utilization of Social Security After Qualifying for Medicaid
In Post 1, I discussed the handling of social security after a person qualifies for Medicaid. Since I have had this question on numerous occasions, I thought I would briefly summarize this issue.
After an individual qualifies for Medicaid, the nursing home will request that you assign social security and pension to them as representative payee.
The problems with such an approach are as follows:
1. Pension monies cannot be assigned as under the Internal Revenue Code they are inalienable (cannot be assigned).
2. Medicaid subsidizes Medigap insurance. Therefore, assigning the social security causes you to rely on the nursing home to pay the Medigap insurance, when you have the right to withhold the Medigap insurance and pay it yourself.
3. A Medicaid recipient can retain $35 a month. You can retain that in a separate account rather than assign that to the nursing home.
Therefore, if the nursing home requests to be the representative payee, refuse to do so and give the above as your answer.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2012, Post 186
After an individual qualifies for Medicaid, the nursing home will request that you assign social security and pension to them as representative payee.
The problems with such an approach are as follows:
1. Pension monies cannot be assigned as under the Internal Revenue Code they are inalienable (cannot be assigned).
2. Medicaid subsidizes Medigap insurance. Therefore, assigning the social security causes you to rely on the nursing home to pay the Medigap insurance, when you have the right to withhold the Medigap insurance and pay it yourself.
3. A Medicaid recipient can retain $35 a month. You can retain that in a separate account rather than assign that to the nursing home.
Therefore, if the nursing home requests to be the representative payee, refuse to do so and give the above as your answer.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2012, Post 186
Tuesday, February 21, 2012
Review Sale of Remainder Interests in a Life Estate
In Post 36, there was a discussion about transferring property and retaining a life estate.
The advantages to such technique are the life estate has no resource value and is not subject to the Medicaid lien. However, the disadvantage is that when a property is transferred and a life estate is retained, there is a transfer of the remainder interest. The tables for determining the remainder interest can be obtained from your Medicaid office. However, they are identical to the Internal Revenue service tables of 1988 (before the rate of interest became variable) or are set forth in Rev. Proc. 64-19.
The technique I suggested was that if a nursing home applicant transfers property and retains a life estate, the remainderman should purchase the remainder interest so that there is no transfer.
Although this seems like an ideal solution, there are some drawbacks.
Firstly, after the individual gets Medicaid, the expenses of the life tenant must be paid by the remainderman. That is, the applicant cannot use his or her pension or social security to pay the interests of the life tenant. As pointed out in Post 36, if the remainder interest were transferred to a "protected transferee", (i.e. a child who provided the necessary care to allow the applicant to stay at home rather than to go into the nursing home), there would be no period of ineligibility with respect to the transfer and the remainderman would not have to make any payment since the remainder interest is protected under the transfer rules.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2012, Post 185
The advantages to such technique are the life estate has no resource value and is not subject to the Medicaid lien. However, the disadvantage is that when a property is transferred and a life estate is retained, there is a transfer of the remainder interest. The tables for determining the remainder interest can be obtained from your Medicaid office. However, they are identical to the Internal Revenue service tables of 1988 (before the rate of interest became variable) or are set forth in Rev. Proc. 64-19.
The technique I suggested was that if a nursing home applicant transfers property and retains a life estate, the remainderman should purchase the remainder interest so that there is no transfer.
Although this seems like an ideal solution, there are some drawbacks.
Firstly, after the individual gets Medicaid, the expenses of the life tenant must be paid by the remainderman. That is, the applicant cannot use his or her pension or social security to pay the interests of the life tenant. As pointed out in Post 36, if the remainder interest were transferred to a "protected transferee", (i.e. a child who provided the necessary care to allow the applicant to stay at home rather than to go into the nursing home), there would be no period of ineligibility with respect to the transfer and the remainderman would not have to make any payment since the remainder interest is protected under the transfer rules.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© February 2012, Post 185
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