Assisted Living Medicaid – Another Example of the Risks of Going it Alone
June 29, 2009
A few months ago I wrote about the difficulties qualifying for assisted living Medicaid. (See 3/23/09 blog post). Last year I wrote about the risks of trying to handle a Medicaid application yourself. (See 10/5/09 blog post). A recent case we handled in our office illustrates both issues.
John had been in an assisted living facility for several years. His wife, Mary was living at home and private paying for his care. She had numerous conversations with the assisted living facility about Medicaid and was told that qualifying wouldn’t be a problem and that John could remain in the facility on Medicaid. Pretty simple, or so it seemed.
Mary began the long winding journey that we have come to know as the Medicaid application process. Similar to the couple I wrote about in March, Mary did not understand the timing aspect of Medicaid, that she had to reach a target level of assets before John could qualify and that each month she missed that target was a lost month, never to be recaptured. This was of paramount importance to her, since she is several years younger than John and will need to preserve as much as she can to live on after he is gone.
The Medicaid application process dragged on as the caseworker asked for each follow up piece of documentation, all very confusing to Mary. She finally sought assistance and we were able to help her finally achieve financial eligibility. At that point Medicaid sent a nurse out to the facility to evaluate John medically, to determine that he needed nursing home care. Mission accomplished. John received the go ahead. Now, all that remained was for the facility to complete its required form, indicating that it would OK John for a Medicaid slot. Imagine the surprise when we received word of Medicaid’s denial.
When we followed up, we learned that the facility refused to make a Medicaid slot available, resulting in the denial, despite the promises made to John and Mary. We were told, however, by Medicaid that John could still be approved if the facility simply changes its stance and agrees to make a slot available.
John and Mary’s experience is a cautionary tale for families. Qualifying for Medicaid is anything but simple, especially so when it comes to assisted living. It requires the cooperation of families and the facilities caring for their loved one. It is confusing and time consuming and best not handled without the guidance of a qualified professional, such as an elder law attorney. And keep in mind that much of this is state specific. While the long term care options are complicated no matter where you live, each state has its own system and set of laws so make sure you consult with someone familiar with the process in the state where your loved one lives.
Is Remaining at Home Always the Best Option? Maybe Not
June 22, 2009
As I have written previously, in speaking with families, overwhelmingly the desire is for elderly family members to remain in their own home as they age and face declining physical and mental health. But, is that always the best thing? Perhaps, not for everyone.
I was reading a recent post on the New York Times New Old Age blog (www.newoldage.blogs.nytimes.com) which highlighted two cases in which elderly parents were living at home in declining health. One was a 95 year old woman living in her own home with a team of aides and other assistance, all coordinated by her overwhelmed daughter. The other was an elderly man suffering from Alzheimer’s Disease, living in the basement of his son’s home. The woman had visitors and activity in her home every day. The man did not, spending most of the day alone watching television.
The two cases raise some interesting questions. Would the elderly man be better served in an assisted living facility or at least, adult day care? He is not getting any mental stimulation through most of the day, which, if received, could slow down the progression of his disease. There is the safety issue as well. He remains at home in the basement for long hours unsupervised. What if there is an emergency? Will help arrive in time?
The elderly woman would seem to be better cared for. She has visitors in and out of her home throughout the day. But, her daughter is coordinating all this care. It sure sounds like a full time job. And then we learn that the daughter, herself, is 74 years old. How is this affecting her health and what happens if she needs care? Finally, I wonder what Mom’s finances are? All this assistance can approach and exceed the cost of care in a facility. Will she run out of money and if so, what happens then?
As 77 million babyboomers begin turning 65 in 18 months, long term care will continue to be a major issue families will have to wrestle with. And, I am not saying that remaining at home shouldn’t be the goal for many. However, as with most complex problems a one size solution does not fit all. Assisted living facilities and nursing homes will always have a place in the continuum of care and may just be the right fit for some. Food for thought and a different perspective to consider.
Spent Down? Not So Fast
June 15, 2009
Some months ago I wrote about the couple who, not understanding the peculiarities of the Medicaid rules, did not spend down in a timely manner and, as a result, lost six months of Medicaid eligibility. Even though the money was eventually spent those lost months could not be recovered and the wife was stuck with a nursing home bill of $60,000 she should not have had. (See 10-5-08 blog post)
The ins and outs of Medicaid are complex and confusing. Another example which we recently addressed in our office highlights that point. Mr. Jones was in a nursing home and we were applying for institutional Medicaid. Under Medicaid rules the applicant needs to be below $2000 in assets as of the first moment of the first day of the month in order to qualify for Medicaid for that month. We tell clients that they must be below this number as of the last day of the preceding month.
Spending down means making transfers for value, that is to say, a purchase of goods or services for fair or equal value. Very often this spend down occurs right up until the last day of the month. So, what happens if I write a check to pay a bill on the 31st of the month but the person or business I give it to doesn’t cash it until the next month? As long as it is dated the 31st (or earlier) and you give it to that person or business no later than the 31st, then it is counted as being spent even though it will not clear your checking account until the next month.
Now, this all sounds very trivial, and I would agree with you, but don’t think for a minute that the State will overlook these transactions. They won’t. They scrutinize them very carefully. If you’re over the Medicaid limit by a dollar, you’re over for that month and have to wait until the next month. (See above)
Let’s go back to Mr. Jones. His son was spending down Dad’s assets. He had credit card, rent and utility bills to pay. We spoke on the 31st and Son confirmed that Dad’s 3 accounts totaled $1200 after accounting for payments. Now, we didn’t have statements yet for one of the accounts so we had to rely on Son’s statement. We filed the application and several weeks went by before we heard from the Medicaid office. They wanted missing statements from one of the accounts at an out of state bank. With some difficulty (because the bank at first balked at accepting the power of attorney Dad had executed in Son’s favor) we obtained the statements but were surprised to learn that some of the bills were not paid by check, but rather by electronic transfer on the first of the month. So, while Son kept telling us that Dad’s accounts totaled $1200 that was not, in fact, true. He was counting these electronic debits which Medicaid would not.
As it turned out, we still were under $2000 in Mr. Jones’ case, but not by much. (We tell clients we want them to be well below $2000 to leave room for just these types of surprises.) The next case may not work out so favorably. Just another example of how tricky the Medicaid rules really are and why you don’t want to go it alone.
No Estate Tax in 2010 – Will It Really Happen?
June 8, 2009
Ever since Congress passed the current estate tax legislation in 2001 it was the belief of many, including myself, that legislators would have to go back and pass changes to the law before 2010. You see, in 2010 there is no federal estate tax. But, the elimination of the tax applies only to that one year. In fact, in 2011 the federal exemption, the amount one can pass free of federal estate tax, goes back to $1,000,000. It doesn’t take much imagination to see why that can be a dangerous thing. A little explanation is required.
In 2001 the federal exemption amount was $675,000 and heading towards $1,000,000 by 2006. President Bush came to office having promised during his presidential campaign in 2000 to push for legislation eliminating the estate tax. However, he couldn’t get his bill passed through Congress and had to reach a compromise. That is why the current law gradually raises the exemption until, in 2010, the tax is eliminated. But, the law contains a ‘sunset provision’, meaning it expires on December 31, 2010. The previously law becomes effective once again. Bush intended to go back and eliminate the tax permanently after midterm Congressional elections, which he hoped would increase the Republican majority in Congress. As we all know, 9/11 and the Iraq war changed everything and in the last year the economy has sunk into recession.
The federal estate tax is a pretty hefty one. The tax rate is 45% so the tax can very quickly reach six and seven figures. So, if Dad dies in 2010 there is no tax, but if he dies in 2011 the tax can be hundreds of thousands or millions of dollars. Legislators often change the tax laws to influence public behavior. We make so many financial decisions based on the tax impact (too many, in my opinion). So, what will happen if families know that they can save millions in taxes if Mom or Dad dies on December 31, 2010, rather than January 1, 2011?
That is one reason why I always felt that change would happen before 2010. Well, we’re 6 months away and still, no change. Last year there was some talk about extending the exemption through 2015 at $3,500,000. With the economy worsening, and government deficits increasing, however, that doesn’t seem likely. The latest proposal is to put the exemption amount at $2,000,000. But what if change doesn’t happen this year? Can the law be passed after the beginning of next year? Experts believe it can because estate tax is due 9 months after death, meaning the first 2009 returns are due October 1, 2009.
Things will certainly be interesting so stay tuned. And keep in mind that even if your estate is below $1,000,000 many states have their own estate tax which kicks in at amounts lower than the federal exemption amount.
Elder Law Today Podcast Show #18 Continuing Care Retirement Communities
June 3, 2009
Podcast: Play in new window | Download
Continuing care retirement communities can be a great option for many people.
I can move into one community that can meet all my needs, from independent
housing to assisted living to nursing home care as I need it.
In Show 18 of his monthly elder law podcast, Yale Hauptman, a practicing
elder law attorney, provides an overview of CCRCs, the pros and cons.
So often, he sees people enter into these financial arrangements without
closely examining the 40+ page contract that typically the resident
must sign. The contracts often require a large upfront financial
commitment. What will the CCRC agreement cover? What won’t
it cover? What happens if you run out of money? What if
the facility runs out of money?
If you are considering a CCRC for yourself or a loved one you’ll definitely want to tune in first
To subscribe to our podcasts click here
Continuing Care Retirement Community – Is It Right For Me?
June 1, 2009
Continuing Care Retirement Communities (CCRCs), are communities that provide a full continuum of care for their residents. They have flexible accommodations designed to meet their resident’s health and housing needs as those needs change over time, offering independent living, assisted living and nursing home care, usually all in one location.
As a requirement for admission to most CCRCs, residents are required to pay an entrance fee or a lump sum ‘buy-in’ which, in addition to other things, guarantees the resident’s right to live in the facility for the remainder of his/her lifetime. In addition to the entrance fee, residents pay a monthly service fee.
The entrance fee is often, but not always, reimbursable (at least partially) if the individual moves from the facility, passes away while a resident at the facility, or otherwise terminates the contract. Many contracts also contain a provision wherein an individual is able to use a portion of the entrance fee towards monthly resident charges if the resident exhausts his resources and becomes otherwise unable to pay.
The concept is a very appealing one. The resident knows that as he or she ages and needs increased care it will all be provided by the same organization, usually in the same location. There are certain risks, however, that make it unsuitable for many.
The CCRC is promising to provide care over a potentially long time frame without knowing exactly how much it will cost or when it will be needed. The concept is something akin to insurance. The company must make projections as to how many of its residents will need what level of care at any one time. But so many things can go awry. What happens if too many people need nursing home care at one time? What about the rising cost of long term care? What happens if residents run out of money? Or the CCRC runs out of funding? Certainly possible in today’s world, where not even big financial companies like Prudential or AIG are safe.
Because of all these contingencies the CCRC contracts have many so called ‘out’ clauses. When you buy into the community there isn’t an iron clad guaranty that no matter what you’ll be able to stay. Under some scenarios you may run out of money and be asked to leave. This risk is especially present when husband and wife move to the community together. If one spouse needs nursing home care for an extended period the couple may spend down their assets towards that care, leaving the health spouse with not enough to cover his/her care. In some cases the entrance fee can be used for that care but then what? Is Medicaid a possibility? Maybe, but usually the resident must satisfy certain conditions imposed by the CCRC in addition to Medicaid eligibility rules. It depends on the terms of the contract.
It is, therefore, very important to review the contract (which can be 40 pages or more) with an elder law attorney before signing and go through these different scenarios. If you put all your financial eggs into the CCRC basket, what happens if that basket springs a leak? It is a good idea to have an emergency plan in place.
