When someone dies having received Medicaid New York asks that their estate assets be used to repay the program for costs spent. Until earlier this year the only estate recovery was against probate assets, those assets in individual name that required the full probate process through a local Surrogate's Court. With the budget law signed this past April, estate recovery has been expanded to include all assets that pass under a will OR BY INTESTACY and ANY REAL AND PERSONAL PROPERTY IN WHICH THE DECEDENT HAS ANY LEGAL TITLE OR INTEREST AT THE TIME OF DEATH.
Major changes are at hand. New emergency regulations were just published in the last two weeks, effective back to September 8, 2011, and an administrative directive was just issued by the Department of Health last week, the state agency that oversees the New York State Medicaid program. Everyone who has engaged in any kind of asset protection planning, those who have even thought about protecting assets and those who are currently on Medicaid (or their agents) should be meeting with skilled elder law attorneys to review those plans and determine what, if anything, needs to happen now. No longer will non-probate assets escape State recovery efforts; joint accounts, life estate interests in deeds (VERY common tool used by unsophisticated attorneys in the past), and annuities are all on the table now. And surviving spouses will simply receive deferred recovery until they pass away. The new regulations and directive leave much open to interpretation and are not to be treated lightly.
We will provide a Long Term Care Assurance Session for all of our clients on one of our VIP Membership Plans, but given the serious nature of these changes in the law we urge other Rochester area families to contact us for a no-obligation Long Term Care Assurance Session. Options for planning still exist, but you need to see an actual elder law attorney, not the general practitioner down the street who dabbles in whatever comes through the door. Please contact our Client Services Director at (585) 244-2170 to schedule your own Assurance Session.
Jim Ziegler, Jr., one of my favorite elder law attorneys, authored a great article about the anniversary of the Deficit Reduction Act of 2005, now affectionately known as the "DRA." Read it here!
In a very exciting move New York State recently provided a new web page that explains in very good detail what happens with surplus income for the Medicaid program, often known as a "spenddown." This program is for certain people whose monthly income exceeds the income threshold for a Medicaid recipient, but who have medical expenses on an ongoing basis that could be covered through the Medicaid program. By using their medical expenses to offset their excess income they can qualify for community Medicaid or a number of waiver programs available to individuals outside a nursing home setting. New York Medicaid applicants and recipients can learn a lot in this one-stop shop.
Applicants and recipients need to know that they only need to incur a medical expense equal to or greater than their spenddown amount. The expense does NOT need to be paid prior to submission to the Medicaid caseworker. However, Medicaid will only pay qualified providers of care – debts owed for care provided your neighbor, church friend or the kid down the street do NOT count for Medicaid reimbursement. Also, home care expenses incurred through a licensed home care agency instead of a certified home health agency ("CHHA") will not be reimbursed either, unless there is a special contract between the agency and the particular County, so check your agency's licensing BEFORE incurring care expenses. (Monroe County has 3 CHHAs – Visiting Nurse Service, Lifetime Care and HCR.) There are many companion agencies out there providing wonderful services, but they cannot bill the Medicaid program.
Education and implementation are two different things…so please contact us if you are interested in exploring this possible Medicaid option in the Rochester area or if you are seeking options for meeting your spenddown such as using a pooled supplemental needs trust.
A well-recognized fellow National Academy of Elder Law Attorneys ("NAELA") member will be on the John Stossel show on Fox tonight (check you local listings). (Yes, this competes in some areas with the Cornell basketball game – go Big Red.) If you cannot watch the interview, though, read here how K. Gabriel Heiser counters John Stossel's hostile remarks that Medicaid asset protection planning amounts to efforts to cheat the government.
New York State issued has issued the base numbers to be used for Medicaid qualification for 2010 and they will not increase. An applicant can keep $13,800 in resources and for nursing home Medicaid the community spouse resource allowance ("CSRA") will still fall between $74,820 and $109,560. This is because the Medicaid allowances are tied to the cost of living increases generally given for Social Security income. Social Security payments will not increase for 2010, so Medicaid is not increasing its allowances for individuals or couples. The monthly allowance for community spouse income will likewise remain $2,739.
Even though Medicaid is not changing the numbers that apply to consumers do not think for one moment that medical expenses and long term care pricing will stay stagnant. In speaking with nursing home representatives in Rochester where I practice the fees keep rising for all of the associated expenses of running a home. The assisted living communities are also facing increasing needs and demands from their residents. All costs continue to escalate and the need to engage in long term planning is as important as ever. Contact me or use the handy calendar tool posted to the left to set up your consultation with me. There's no time like the present!
On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act (ARRA) of 2009 “Stimulus Bill” Public Law 111-5, which provides a one time payment of $250 to each recipient of Social Security, Supplemental Security Income, Railroad Retirement Benefits and Veterans Disability Compensation or Pension Benefits.
For purposes of determining eligibility under any federal program or under any state or local program financed in whole or in-part with federal funds, the ARRA of 2009 “Stimulus Bill” mandates that these payments are not countable as income and are not a countable resource for the month of receipt and the following nine months.
What this means in plain English is that a Medicaid recipient in New York will not need to count the receipt of the $250 as income or as a resource in the month it arrives (May 2009 for many) or in the following nine months. If the individual is on Medicaid with a spend-down, the $250 receipt will not need to be included in the spend-down in the month it arrives. If the individual is in a nursing home receiving Medicaid assistance the payment does not need to be paid over to the nursing home because it is not part of income or resources. The funds should likely be spent for the recipient during the following nine months, however, as depending on the individual's exact situation the $250 could cause them to be "over-resourced" when they are recertified for their Medicaid program after the end of the ten-month "grace period." To determine whether this could happen the recipient should review their situation with the attorney who helped them qualify for benefits or another elder law attorney.
So why do you want a GOOD person reviewing long term care insurance with you? See the email I received from a financial advisor below. I think she forwarded it on because she knew her clients were not getting the best advice from her inhouse "expert." (This is not the advisor’s email, but rather an email from a so-called long term care insurance “expert” reviewing the advisor’s clients’ circumstances. My comments are in RED.)
If her husband can’t get a LTC policy, and has no life insurance and can’t get that either, and [they] need to pay for his care out of pocket, at that point you would want to consult a very good elder law attorney. The consultation should be NOW before a crisis hits. Options narrow when Medicaid planning involves nothing but a reaction to a tragic event.
Usually but not always, a healthy spouse can more easily provide care for the unhealthy spouse at home, provided healthy [spouse] is smart enough not to try to do it all themselves, don’t become as sick as the uninsurable; caregiving 24/7 wears a person down. The translation here is that home services should be hired; the reality is that often the person needing services refuses to allow “outsiders” to come into the home. Options should be explored, or at least discussed, before the need arises. If a diagnosis of a degenerative condition has been received (i.e. Parkinson’s) there is significant planning that can be done, often with specialized care available. In this example, one of our local home care agencies (HCR) even has a special program for Parkinson’s.
Life insurance can be utilized to “pay back” the estate once the unhealthy spouse who needed care dies. In the Medicaid context the cash value of life insurance owned by either spouse is included in the calculation of resources. Clients are often forced to take loans against the cash or even cash in policies.
If Mrs. N. is the one who needs care, the NYS Partnership protects not only her assets but all those belonging to her husband, even if he doesn’t have a policy. That’s because Medicaid as it exists today lumps together all assets belonging to husband and wife, so it doesn’t matter whose name the asset is in, no point in moving everything from him to her, in other words. This is just wrong. While the partnership policies can protect all assets if structured appropriately, assets must still be transferred out of the applying spouse’s name. And there is a limit on the non-applying spouse’s assets if she is the “community spouse.”
NY presently has what’s called “spousal refusal” meaning a spouse somehow gets her spouse into a nursing facility (no way around laying out some money here) and then after a couple of months of paying out of pocket, refuses to pay anymore. This is a gross misstatement of the law and how it works. “Spousal refusal” refers to a non-applying spouse refusing to make his or her assets and income available to the applying spouse, as required under New York law (spouses must support each other and cover each other’s medical expenses). The refusal takes place at the time of the Medicaid application, not at the time of a nursing home admission. Nursing home admissions frequently arise in the context of rehabilitation services following a hospital admission, which can result in Medicare covering the initial costs of the nursing home stay. It is not automatic that there will be a couple of months of out of pocket expenses paid by a couple.
And then there’s always divorce, but you can’t divorce an incompetent person, plus the courts are going to divide assets anyway – equitable distribution, they won’t allow one spouse to have everything just to avoid paying the other spouse’s nursing home bill. Divorces CAN be carried out through a guardianship if one spouse is incompetent and there are a number of judges who are sympathetic to Medicaid planning. That being said, divorce is usually the last choice. In more than a decade of Medicaid work none of my couples have ever been forced to divorce – yet.
There’s always a Medicaid trust, again, requires a very good elder law attorney, there’s a 5-year look-back, always an option, and one spouse having LTCI, especially with the daily benefit she’s applying for, would be really helpful if a trust is the choice. Finally – I agree with the need for a skilled elder law attorney. Options should be explored early and reviewed every couple of years. If an irrevocable trust is used (incidentally the only kind of trust that is useful for Medicaid planning) the terms must be strictly followed and only suitable investments included – NO ANNUITIES INSIDE A TRUST EVER. But that’s for another discussion about the dangers of annuities…to be continued.
So what is the lesson to be learned from this? You need to arm yourself with knowledge and only use trusted advisors like Susan Suben, from Long Term Care Associates, who only focuses on long term care insurance and teaches it to other long term care professionals. If you are meeting with a long term care insurance person get multiple quotes and ask them what they know about the interplay of long term care insurance with Medicaid. Better yet, sit down with a reputable elder law attorney AND your long term care insurance person. Those who know what they are doing welcome the opportunity to meet your elder law attorney and elder law attorneys are happy to involve your financial team in your planning – as long as your advisors are not recommending annuities.
Tax season is upon us and a number of you may be scrambling to pull together records for your
tax preparers. The Internal Revenue
Service recommends that everyone keeps the following records:
card and other receipts
imaged checks or other proofs of payments
other records to support deductions or credits you may claim (in New York you
will want to make certain to have a detailed bill if you paid nursing home
expenses because the 6% assessment can be claimed on your state return – 2008 Claim Form Attachment)
What if you are over 65?
You should be keeping records, contrary to the popular fiction that “less is
more.” Do not think of these records as
clutter, but as necessary history. In
addition, if there is any chance that you may need to file for Medicaid
assistance for long term care, and let’s face it, there is a chance for most
seniors, you will also want to gather the following documents in addition to
the IRS- recommended paperwork:
statements for all types of assets owned (checking, savings, IRA, brokerage, mutual
funds, annuities, life insurance)
statements for all stock ownership held outside of a brokerage account
of all income sources (Social Security annual letter, letter from pension
for any real estate
tax returns (federal and state, including all 1099s) from 2005 forward
value statement for all life insurance
showing value of any prepaid burial arrangement
If you do not have everything in
the list currently on hand, start collecting now. The reporting requirements officially go to
five (5) years for all assets on February 8, 2011, but between now and then a
caseworker reviewing an application will review documents back to November 1,
2005. (You can potentially be eligible
for Medicaid retroactively three months prior to your application date, so use
November 1, 2005 as your beginning date.)
For a more detailed list of
everything required to be produced at a Medicaid application, please contact me.
Welcome to 2008. The pertinent Medicaid figures are out now.
The "community spouse" of a Medicaid applicant can keep between $74,820 and $104,400 as his Community Spouse Resource Allowance ("CSRA"). The community spouse is also entitled to a minimum monthly maintenance needs allowance of $2,610.
Unfortunately, the Medicaid applicant is still only entitled to a personal needs allowance each month of $50, the same small amount that has been in effect for two decades.