Medicaid

Estate Planning Documents and Medicaid Planning

The conversation that you have with an estate planning attorney, when you are in your thirties with a new house, young children, and many years ahead of you is different than the one you’ll have when you are much older, maybe just before you retire. The estate planning attorney will know that you are about to enter a time in your life, when the legal documents you prepare are more likely to be used, says the article “Learn about legal documents and Medicaid” from the Houston Chronicle.

The need for long term care increases as we age.

It should be noted that everyone needs an estate plan at any time of life, so they can state their wishes for how assets are distributed and name a person who will speak on their behalf in the event of incapacity because of an illness or injury.

An estate plan also includes a power of attorney, so someone you chose can serve as your agent to transact business and handle your financial matters. There should also be a declaration of guardian, in the event of later incapacity and a HIPAA medical authorization document. In some instances, a designation of remains is prepared in order to name an individual who will be the appointed agent to care for the body at the time of death.

However, there’s another reason why you’ll need to meet with an attorney at this time. As we get older, the need to address long term care becomes more important. Making the right decisions now, could have a big impact on the quality of your retirement and your later in life medical care.

If you have not updated your will or your powers of attorney, specifically a durable power of attorney for property, it would be wise to do so now. You will need a document to clearly authorize your agent to deal with assets. Any documents that are out of date, or in which named agents have predeceased you, won’t be effective, leading to problems for you and your heirs.

The document may also need to include a broad gifting power for your named agent, so assets can be transferred out of the estate. If this detail is overlooked, the agent may not be able to protect your assets.

This is the time when you may want to take steps to protect your children upon your death or upon the death of the second parent. If your goal is to eliminate assets to be eligible for Medicaid coverage, this planning needs to be done well in advance. In numerous states, there are state administered programs that pursue recovery of assets when a person has received Medicaid benefits.

Your attorney will be able to work with you and your family to address your specific situation. It may be that your estate plan will include trusts, or that certain assets need to be retitled. Meet with an estate planning attorney who is familiar with your state’s laws. And don’t procrastinate.

Reference: The Houston Chronicle (April 19, 2019) “Learn about legal documents and Medicaid”

Moving to a Care Community? Check the Fine Print

Reading the fine print when purchasing a home in a retirement community or a care community is intimidating. The typeface is tiny, you’ve got boxes to pack and movers to schedule and, well, you know the rest. What most people do, is hope for the best and sign. However, that can lead to trouble, advises Delco Times in the article “Planning Ahead: Moving to a care community? Read the agreement.”

Pay attention to the fine print

If you don’t want to read the fine print or can’t make heads or tails of what you are reading, one option is to ask your estate planning attorney to do so. Without someone reading through and understanding the contract, you and your family may be in for some unpleasant surprises. Here are some things to consider.

What kind of a community are you moving into? If you are moving to a Continuing Care or Life Care Community, your documents will probably have provisions regarding health insurance, entry fees, deposits, a schedule of costs, if you need additional services, fees for moving to a higher level of care and provisions for refunds and estate planning.

When you enter an Assisted Living facility, you may find yourself signing documents regarding everything from laundry policies, pharmacy choices, financial disclosures and statements of your rights as a resident. Not every document you sign will be critical, but you should understand everything you sign.

If moving into a nursing home that accepts Medicaid, you and your family need to know that nursing homes that accept Medicaid are not permitted to demand payment on admission from either an adult child or a power of attorney from their own funds.

If your adult children ask you to sign documents and “don’t worry” about what documents are, you may want to sit down with an attorney to review the documents. When someone is not trained to review these documents, they won’t know what red flags to look for.

If someone signs the document who is not the applicant/future resident, that person may become responsible for the costs, depending upon what role you have when you sign: are you a guarantor or indemnitor? That person typically agrees to pay after the applicant/resident’s funds are exhausted. The payments may have to come from their own funds. Sometimes the “responsible party” is simply the person who handles business matters on the applicant’s behalf. You’ll want to be sure that the person signing the papers understands what they are agreeing to.

Almost all agreements will say that the applicant, or the person receiving services, is responsible for payment from their own assets. However, if someone signing the documents is power of attorney, they need to be mindful of what they are signing up for.

If possible, the person who will receive services should be the one who signs any paperwork, but only after a thorough review from an experienced attorney.

Reference: Delco Times (Feb. 5, 20-19) “Planning Ahead: Moving to a care community? Read the agreement”

Protect A Life of Saving from Long Term Care Costs

Every month, Lawrence Cappiello writes a check to a nursing home for $12,000 to pay for his wife’s nursing home and long term care costs. Two years ago, his net worth was $500,000. In less than two years, the Cappiello’s savings will be gone. This unsettling story is explained in the article “How to Keep LTC Costs From Devouring Your Client’s Life Savings” from Insurance News Net. He is suffering from nursing home sticker shock and says he should have known better.

With proper planning, long term care costs won’t take your life’s savings

Cappiello was a professor at the University of Buffalo for 25 years. During that time, he taught an introductory course on health care and human services that touched on the costs to consumers. He said it was clear even then, that the cost of long term care was going to escalate out of control.

To qualify for Medicaid payments of nursing home care in New York State, residents are permitted to own no more than $15,450 in nonexempt assets. However, elder law attorneys, whose practices focus on these exact issues, say that the way to protect the family’s assets, is to take steps years before nursing home or long term care is needed. Some general recommendations:

  • Signing over the deed of the home to children or any others who would otherwise inherit it from you in a will. The transaction would need to stipulate that you have life use of the home.
  • Establishing an irrevocable trust, that upon death, transfers the house to the beneficiaries. There must be language that ensures that you have life use of the house.
  • Giving away savings and other financial assets.

Transfers of any assets must take place more than five years before applying for Medicaid nursing home and long term care coverage. If they have been given away or transferred within the five year “look-back” period, then there is a chance that they may still qualify, or they may have to wait five years.

That is why planning with an experienced estate planning attorney is so critical for families, especially when one of the spouses is facing a known illness that will get worse with time. There are steps that can be taken, but they must be done in a timely manner.

Many older people are not exactly jumping with joy at the idea of handing over their assets, even when relationships with adult children are good. The idea of giving up assets and the family home is a marker of the passage of time and the inevitability of one’s own passing. These are not things that we enjoy considering. However, taking steps in advance, can make a huge difference in the quality of the well spouse’s life.

It should be noted that a sick spouse can move assets to a healthy spouse, to make the sick spouse lawfully poor and eligible for Medicaid. There is no look back period or penalty relating to long term care for interspousal transfers. This may sound like a very simple solution. However, these are complex matters that need the help of an experienced attorney. If it were so easy, countless spouses would not be facing their own impoverishment because of an ill spouse’s long term care needs.

Reference: Insurance News Net (Feb. 4, 2019) “How to Keep LTC Costs From Devouring Your Client’s Life Savings”

Why You Need to Review Your Estate Plan

One of the most common mistakes in estate planning is thinking of the estate plan as being completed and never needing to review your estate plan again after the documents are signed. That is similar to taking your car in for an oil change and then simply never returning for another oil change. The years go by, your life changes and you need an estate plan review.

Review your estate plan periodically to insure that it will work the way you want it to

The question posed by the New Hampshire Union Leader in the article “It’s important to periodically review your estate plan” is not if you need to have your estate plan reviewed, but when.

Most people get their original wills and other documents from their estate planning attorney, put them into their safe deposit box or a fire-safe file drawer and forget about them. There are no laws governing when these documents should be reviewed, so whether or when to review the estate plan is completely up to the individual. That often leads to unintended consequences that can cause the wrong person to inherit assets, fracture the family, and leave heirs with a large tax liability.

A better idea: review your estate plan on a regular basis. For some people with complicated lives and assets, that means once a year. For others, every four or five years works just fine. Some reviews are triggered by major life events, including:

  • Marriage or divorce
  • Death
  • Large changes in the size of the estate
  • A significant increase in debt
  • The death of an executor, guardian or trustee
  • Birth or adoption of children or grandchildren
  • Change in career, good or bad
  • Retirement
  • Health crisis
  • Changes in tax laws
  • Changes in relationships to beneficiaries and heirs
  • Moving to another state or purchasing property in another state
  • Receiving a sizable inheritance

What should you be thinking about, as you review your estate plan? Here are some suggestions:

Have there been any changes to your relationships with family members?

Are any family members facing challenges or does anyone have special needs?

Are there children from a previous marriage and what do their lives look like?

Are the people you named for various roles—power of attorney, executor, guardian and trustees—still the people you want making decisions and acting on your behalf?

Does your estate plan include a durable power of attorney for healthcare, a valid living will, or if you want this, a DNR (Do Not Resuscitate) order?

Do you know who your beneficiary designations are for your accounts and are your beneficiary designations still correct? (Your beneficiaries will receive assets outside of the will and nothing you put in the will can change the distribution of those assets.)

Have you aligned your assets with your estate plan? Do certain accounts pass directly to a spouse or an heir? Have you funded any trusts?

Finally, have changes in the tax laws changed your estate plan? Your estate planning attorney should look at your state, as well as federal tax liability.

Just as you can’t plant a garden once and expect it to grow and bloom forever, you need to review your estate plan so it can protect your interests as your life and your family’s life changes over time.

Reference: New Hampshire Union Leader (Jan. 12, 2019) “It’s important to periodically review your estate plan”

300,000 Americans to Gain Medicaid Benefits

Most of those who will be eligible in 2019 are over age 50 and would otherwise have no healthcare.

Ballot measures in three states—Idaho, Nebraska, and Utah—will extend the federal- and state-funded healthcare program to allow access to approximately three hundred thousand low-income Americans.

MP900398819AARP’s recent article, “Medicaid to Expand in 3 States,” reports that with the passage of ballot measures in those three states, 37 states, including DC, have now expanded the Medicaid program, since the Affordable Care Act (ACA) created the opportunity to offer more people coverage.

The success of the three ballot measures “is a recognition that Medicaid plays an important role in our society for those who are in need and that it’s an issue that has changed a great deal over the past five or six years from a political standpoint,” says John Hishta, AARP senior vice president for campaigns. “I think the voters have led the way in some of these states.”

Montana voters rejected a measure that would have increased tobacco taxes on cigarettes and taxed other tobacco products to pay for the state’s share of Medicaid expansion, veterans’ mental health, and home- and community-based services. Nearly 130,000 low-income residents in that state may now lose their Medicaid eligibility in 2019, if the state Legislature doesn’t act.

The mid-term election results in three other states could have implications for their Medicaid programs as well. Maine’s Democratic Governor-elect Janet Mills supports expanding Medicaid. The state’s voters decided in 2017 to expand the program, but the current governor, Republican Paul LePage, refused to implement the expansion.

Kansas’ Democrat Governor-elect Laura Kelly stated in the campaign that she’d push for legislation to expand Medicaid during her first year in office. In 2017 the Republican-controlled Kansas House of Representatives and Senate passed legislation to extend Medicaid, but the current Governor Sam Brownback vetoed it. The Legislature couldn’t override his veto.

Wisconsin’s Governor-elect Tony Evers says he wants to expand Medicaid, which would provide coverage to at least an additional 80,000 people in that state.

Most of the people who apply for Medicaid work but do not earn enough to cannot afford health insurance. The program allows people between 50—64 years of age to get health care coverage.

Reference: AARP (November 8, 2018) “Medicaid to Expand in 3 States”

How Does Medicaid Treat College Savings Funds?

Saving for college but needing to receive Medicaid is a complicated equation.

The answer “It depends” is not much of a comfort when considering how college savings accounts will be treated for Medicaid purposes.  However, it is, unfortunately, the most accurate answer. There are several factors that must be considered:

  • What type of account you used to set aside the college money;
  • How and when you funded the account; and
  • Whether you still have access to the money.

A recentnj.com article asks, “Will my college savings be counted for Medicaid?” If you can liquidate an account and access the money that you deposited, Medicaid will typically expect you to do so to fund your own care for as long as possible. Another challenge is that Medicaid will always penalize gifts. Odds are good that the funds you added to these college accounts are gifts.

MedicaidHowever, there may be an exception: if the account was funded prior to the 60-month lookback period, the applicant can’t be penalized for making a gift.

Let’s examine why the type of account is also important.

If the money was put into a 529 plan, the funds aren’t part of the donor's taxable estate, and the assets aren’t includible. However, if the funds are invested in an account “ITF” (“in trust for”) a grandchild, then the funds would be includible. It its calculations, Medicaid examines all assets in the name of the applicant. Assets held in 529 plans—although the donor's name may be shown as the participant—are deemed to be a gift, when the assets are transferred and, therefore, are no longer the donor's asset.

To be safe, grandparents who set up 529 plans for their grandkids should change the participant to the grandchild's parent or guardian. This entirely disconnects the donor's name with the account.

If the grandparent just added a grandchild's name on one of his savings accounts, then that would be includable. This is true even if it were completed more than 60 months earlier, because it wouldn’t be deemed to be a completed gift.

When it comes to the intersection of college savings and Medicaid, you may need to speak with an elder law attorney who will be able to review how the college savings assets are owned, and whether or not they’ll impact your Medicaid eligibility.

Reference: nj.com (September 19, 2018) “Will my college savings be counted for Medicaid?”

Everyone Needs to Have an Estate Plan—Here’s Why

You need an estate plan, whether you are rich or poor or somewhere in the middle.

You need an estate plan, whether you are rich or poor or somewhere in the middle. Without one, decisions will be made for your family that you may not have wanted.

Th (2)More than half of all Americans do not have a will, reports Wealth Advisorin the recent article, “The 3 Reasons Why People Do Estate Planning.”Maybe that would change, if people were better able to remove the worry and emotion and address estate planning as the necessary legal preparation to manage or distribute your assets during your life if you should become incapacitated and after your death. Minimizing gift, estate and income taxes are another reason to have an estate plan.

It’s really important to have a will, even if your total assets are minimal. While you can find a will online, you’re much safer visiting with a qualified and experienced estate planning attorney to develop a customized plan that works for you. An estate planning attorney has the in-depth knowledge and skills to make suggestions that will help determine your future asset allocations.

When considering a legacy and to whom and what to leave behind, there are three reasons why people do estate planning: probate fees and tax reduction, asset protection and control and management.

Probate Fee and Tax Reduction.When a person has more than a certain level of assets, they may have to pay state and federal estate taxes, depending upon the value of the accounts and based on where they live (some states have estate taxes, while others don’t). An experienced estate planning attorney can help explain the laws and help you to make wise decisions as to whom, where and when to designate your assets. Working with a legal professional who’s well-versed in estate planning will help you to reduce probate fees and inheritance taxes.

Asset Protection.It’s critical to protect your assets, like safeguarding your assets from spend-down (the process of reducing assets to qualify for Medicaid) in a nursing home situation. That’s a great reason to be proactive and develop an estate plan.

Control and Management.This is a big reason why many families engage in estate planning. Properly done, it eliminates worries and ensures that your final wishes regarding asset distribution are carried out.

Is there another reason to have a will? It will cost more to settle the estate and take longer, if no will is in place. Think of your estate plan as a gift you leave your family to let them know you wanted them to be taken care of after you are gone.

Reference: Wealth Advisor (May 29, 2018) “The 3 Reasons Why People Do Estate Planning”

Work Requirements from Medicaid May Harm Some Seniors

States that have opted to require Medicaid recipients to work, will put some seniors at risk of losing healthcare coverage.

States that have opted to require Medicaid recipients to work, will put some seniors at risk of losing healthcare coverage.

Bigstock-Senior-couple-standing-togethe-12052331A recent article from US News & World Report, “How Medicaid Work Requirements Could Hurt Older Americans,”explains how the new requirements for Medicaid recipients to work or meet “community engagement” requirements may create hardships for some seniors. Many lower income Americans depend on Medicaid for healthcare, including adults age 50 to 64, who often suffer from chronic health conditions.

The Centers for Medicare & Medicaid Services announced in January that states can apply for waivers to implement work requirements for people who receive Medicaid benefits. The waivers have been approved in three states and are pending approval in others. Age limits vary for who might have to fulfill work or "community engagement" requirements for up to 80 hours a month. In Kentucky, Medicaid recipients are exempt at 64. In Indiana, it’s 60, and in Arkansas, 50 is the threshold. Some other states are looking to implement work requirements. They include Arizona, Kansas, Maine, Mississippi, New Hampshire, Utah and Wisconsin.

Beth Kuhn, commissioner of the Kentucky Department of Workforce Investment, notes that most people on Medicaid also receive Supplemental Nutrition Assistance Program (SNAP) benefits—also known as food stamps. For those 80% of Medicaid recipients, she says, work requirements don't apply after age 49.

Community engagement is the prime focus of the new requirements, which entails four facets: volunteering, training and education, work, and caregiving of a family or community member in need.

There are many who are excluded from the requirement, and one group is the medically frail. Medical frailty would be determined by an eligibility specialist.  However, it’s not clear now how chronic medical conditions impacting many beneficiaries, like asthma, diabetes, heart disease, high cholesterol, and hypertension, will be considered.

A group of Kentucky residents receiving Medicaid, are now being represented in a federal class action lawsuit by The Southern Poverty Law Center, National Health Law Program, and Kentucky Equal Justice Center. A joint brief was filed by the National Academy of Elder Law Attorneys (NAELA), AARP, AARP Foundation, Justice in Aging and the Disability Rights Education and Defense Fund.

According to a spokesperson with Justice in Aging, the brief focuses on the elimination of pre-application coverage, elimination of non-emergency medical transportation and the imposition of lockout penalties for various transgressions. With no pre-application coverage, an individual could easily become liable for thousands of dollars of health care costs, if an illness or injury prevented them from filing a Medicaid application.

Reference: US News & World Report (April 20, 2018) “How Medicaid Work Requirements Could Hurt Older Americans”

Can a Revocable Land Trust Shield Assets from Medicaid?

Control of an asset is a key element, when Medicaid considers an individual’s eligibility.

Control of an asset is a key element, when Medicaid considers an individual’s eligibility.

31903821451_e117f0eddd_oA recent article from nj.com, “What revocable land trusts mean to Medicaid eligibility,” starts with what sounds almost like a warning: it’s not easy to protect or hide assets from Medicaid. A revocable land trust won't help to protect an asset from Medicaid's spend down requirements, because a trust that’s revocable can be revoked or terminated at any time by the grantor.

A land trust is a private agreement with the trustee agreeing to hold title to property for the benefit of the beneficiary or beneficiaries. The creator of the trust is called the settlor or trustor. This person is usually the titleholder to the property, before it’s transferred into the trust.

The settlor frequently remains the beneficiary of the trust for his lifetime. In effect, the trustee holds the title to the property and must follow the instructions of the beneficiary. The beneficiary typically has the absolute right to direct and control the trustee and receive all income from the trust. The trust agreement, at the creation of the trust, dictates the relationship between the trustee and beneficiary. As a result, the trustee often has no more power than the settlor gives him. In addition, he doesn’t have any other function, other than to do as the trust deed instructs.

Medicaid sees the assets in a revocable trust as countable because the Medicaid applicant who places the home in the trust she created has total control over the Trustee, and therefore, the assets in the trust.  It means that she can take back the asset at any point in time.

In such a case, Medicaid will deny the application. They’re effectively telling the applicant to sell the home, spend down the assets, and then reapply when they have no more than $2,000 in assets in the applicant's name and in the revocable trust combined.

Assets in an irrevocable trust may, however, be excluded from Medicaid spend down rules, based on the terms of the trust.  Though, even if a home was placed in an irrevocable trust that would exclude it from Medicaid, the transfer to the trust must be completed more than five years, before applying for Medicaid to avoid the five-year lookback and Medicaid penalty provisions.

An experienced estate planning attorney, with current knowledge of Medicaid regulations, will know what trusts or other strategies will work best to enable an individual to become eligible for Medicaid.

Reference: nj.com(April 9, 2018) “What revocable land trusts mean to Medicaid eligibility”

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