If Dad Needs Nursing Home Care will the State take Mom’s Home (Part 2)?
March 29, 2010
Last week we ran through the basics of estate recovery, when the State will – and won’t – seek reimbursement for benefits paid out. This week we’ll look at how that process actually works in real world situations – and doesn’t work. For example, what does the “estate” consist of? Well, that varies from state to state.
Some states define it narrowly to mean the probate estate, that is property that passes by way of the estate administration process. But other states (New Jersey is one) have expanded that definition to include any property that belonged to the Medicaid recipient at the time of death, including jointly held property and assets held in trust. Life insurance proceeds would not be included where there is a specific named beneficiary. On the other hand they would be included if the estate is the beneficiary.
What if there aren’t enough assets in the estate to pay the lien and other expenses? Medicaid gets a priority right after reasonable funeral expenses and costs of estate administration, along with taxes and ahead of other creditors and heirs. The law requires the executor or administrator to contact the state to find out if any money is owed.
But, as with many laws and regulations, the estate recovery laws may not work so smoothly in practice. Let’s say Dad is on Medicaid and Mom owns the home. Dad dies but Mom is still alive. No estate recovery yet. The State must wait till she dies. But, what if Mom lives another 5, 10 or 20 years? The home may no longer be in Mom’s name. If she sold it and spent the money on her own care then, no problem. That’s what the State wants. However, what if she transfers the home out of her name? Can the State enforce a lien in that case? And, how would they even know when to file a lien? Maybe they would know if there is a will probated or an estate administration action. But, if that’s not the case then most likely, the State won’t be aware of Mom’s death. And there doesn’t appear to be any requirement to notify Medicaid of Mom’s death unless she too received Medicaid.
So, what would happen in that case? Many of these questions may take time to answer as these different scenarios play out over a number of years. Just another example of why it is so difficult to navigate the long term care system.
If Dad Needs Nursing Home Care will the State Take Mom’s House?
March 22, 2010
It’s a question I get – or some variation of it – probably more often than any other, and it refers to what is called “estate recovery”. As part of the deal that the states enter into with the federal government before they can get federal funding for their Medicaid programs, each state has to make an effort to recoup, after the Medicaid recipient dies, the money it paid out in benefits.
The process by which this is done is called estate recovery, and as with most things Medicaid, that process differs greatly state to state. First, let’s review the basics. Estate recovery applies only to Medicaid benefits provided for services received after age 55. The State will not seek immediate recovery as long as there is a surviving spouse or child under age 21, blind or permanently and totally disabled. The key word is “immediate’. After the spouse and/or child dies, reaches age 21 or is no longer disabled, as the case may be, the State will then attempt to recover assets from the deceased Medicaid beneficiary’s estate.
A common misconception is that the State has a lien when Medicaid starts to pay benefits. In fact, Medicaid doesn’t place a lien on the home until after death. It often can take months, or in the case above where there is a surviving spouse or qualifying child, that lien might not be filed for years.
There are also other scenarios where the State may not seek estate recovery. Under what is known as a hardship exception, if property in the estate is the sole source of income for one or more survivors and pursuing recovery would likely result in those individuals needing public assistance themselves, then the State may not go after assets. Also, if a family member was living in the home before the Medicaid beneficiary died, and continues to make it his/her primary residence then the State will record a lien but wait until the property is either sold or the family member dies or moves out, before seeking repayment.
Those are the basics. But, you’ve probably got a whole bunch of questions about how the whole process works. For example, what exactly is counted as part of the ‘estate”? We’ll tackle that one next week.
New Social Security Policy Change an Indication of More to Come?
March 15, 2010
A decision last month by the Social Security Administration (SSA) to add new medical conditions to its list of “Compassionate Allowance” conditions, including forms of Alzheimer’s Disease and dementia, may signal a change in how the government views and treats those illnesses from which a disproportionate number of long term care residents suffer. While this change will by no means solve the growing long term care problem in this country, it just might be the beginning of a shift in thinking – maybe.
Social Security and Supplemental Security Income disability benefits are paid to those who have been deemed disabled and no longer able to work. The application process, however, is a complex and drawn out one, often resulting in initial denial and then an appeal process that can take years. However, approval often opens the door to other government benefits, such as Medicaid.and Medcare. A decision of disability by Social Security is proof of disability for many other state and federal programs.
The “Compassionate Allowance” program is Social Security’s attempt to streamline the process and recognize certain conditions that clearly result in disability without extensive medical documentation so that applicants can get much needed benefits quickly. What is interesting is that Early Onset Alzheimer’s Disease (Alzheimer’s affecting those under age 65) and Mixed Dementia (persons suffering from dementia with more than one origin, eg. Alzheimer’s and vascular dementia) appear on the most recent list of 38 new conditions that the SSA deems to be so serious that it considers people with these diagnoses to “obviously meet disability standards”.
One of the problems with the long term care system is that government benefits available to pay for care discriminate based on disease. Alzheimer’s, Dementia and the like, that affect mental capabilities are so often treated differently than diseases and illnesses such as cancer, which are physical. Medicare, for example, provides no coverage for long term care which is typically needed by sufferers of Alzheimer’s and Dementia. So when a government agency decides to include these illnesses in its list of “fast track” diseases it is noteworthy. We’ll need much more than that to make a dent in the problem but you’ve got to start somewhere. And Social Security is as good a place as any.
Why Pay Someone to File an Application I can Complete Myself?
March 8, 2010
The call usually starts out this way. “I’ve given all of Dad’s money to the nursing home already and am ready to apply for Medicaid. His situation is really simple. I can handle it myself but I just have a few questions.” I’m always happy to try to help whenever I can but when I tell people that doing it yourself can often cause a loss of tens or even hundreds of thousands of dollars they act surprised. A recent case we handled in our office will illustrate.
Julie called us regarding her dad, who was in the hospital, ready to be transferred to a nursing home. She had picked out a nursing home, applied for Medicaid and thought she had a plan in place. Dad would move to the nursing home, private pay for a few months and then move over to Medicaid. Then she got a letter from Medicaid stating that Dad had made a number of asset transfers which would result in his being ineligible for benefits. The caseworker requested copies of checks and documents explaining deposits and withdrawals before he could tell Julie how long her dad’s penalty would be. Julie called us in desperation.
Now, I have to tell you, that some of the most challenging cases we get are those where we haven’t done the planning for families or even filed the Medicaid application but, rather, are called in to finish a process that has suddenly been derailed. And that, unfortunately, was what happened to Julie. The nursing home she lined up for Dad learned of the Medicaid problems and said she needed to get them straightened out before they could admit him. We took a look at the details and here is what we discovered.
Dad had transferred his home to his children 10 years earlier. That wasn’t the problem. However, Dad was still living there and paying much of the expenses of the home, but doing so by way of reimbursing Julie who was actually paying the taxes, insurance, etc. Additionally, Dad had been giving money to his children over the past several years, hardly unusual, but, transfers subject to a penalty, nonetheless. Finally, Julie had been using Dad’s bank account to deposit some of her own funds. She did this out of convenience but didn’t realize what a problem it would cause when Medicaid counted it as Dad’s.
The questionable transfers totaled almost $75,000, a 10 month Medicaid penalty if we couldn’t prove otherwise. So, we rolled up our sleeves and got to work. We learned that Julie’s brother Bill was disabled. Transfers to a disabled child are exempt from the transfer rules (something Julie didn’t know and which never came up at the Medicaid interview). That reduced the questionable transfers to $50,000.
We then painstakingly went through the nearly four years of account statements and had Julie provide us with as much information as possible to piece together the entire picture of money going in and money going out of Dad’s account. We separated what was actually Julie’s and proved it to Medicaid. Most of the payments that Dad made relating to the home he no longer owned we also were able to get Medicaid to treat as reasonable home expenses.
All this helped to reduce the $75,000 down to $20,000, resulting in a 3 month penalty. Dad entered the nursing home, the family private paid for 3 months and then Medicaid kicked in. The net savings to the family by knocking 7 months off the penalty was $70,000. Not knowing the Medicaid ins and outs, Julie would have never been able to do it on her own. Yes, she filled out the application. But, it was the rest of the complicated process she needed our help with.
The Difference Between Medicare and Medicaid
March 1, 2010
In speaking with people about Medicaid, they will often refer to it as Medicare. Perhaps it’s just a slip of the tongue since the two words sound so similar. But, I think, there is very often a fundamental misunderstanding about the two programs. Medicare is the federally funded and state administered health insurance program primarily designed for those individuals over age 65, disabled or blind. But, here is where the common mistake lies. Medicare does not cover long term care.
Not that this is different from any employer sponsored health insurance program. It isn’t. What most don’t realize until they need long term care is that health insurance policies, Medicare included, do not cover custodial nursing home care. Medicare does cover skilled nursing care but only if you’ve got an illness or injury from which you can recover. The common illnesses which cause long term care stays, such as Alzheimers and Parkinsons, have no known cures. Medicare won’t help you. Which surprises many who are confusing skilled nursing care and custodial care.
In general, if you are enrolled in traditional Medicare, and you’ve had a hospital stay of at least 3 days, and then are admitted to a skilled nursing facility, Medicare may pay for a while. If you qualify, Medicare may pay the full cost of the nursing home stay for the first 20 days and can continue to pay for the next 80 days, but with a deductible of about $130 per day. Some Medicare supplement insurance policies will even pay the cost of that deductible so that in the best-case scenario, Medicare may pay up to 100 days for each “spell of illness.”
In order to qualify for this 100 days of coverage, however, the nursing home resident must be receiving daily “skilled care” and generally must continue to “improve.” (Note: Once the Medicare beneficiary has not received a Medicare covered level of care for 60 consecutive days, the beneficiary may again be eligible for the 100 days of skilled nursing coverage for the next spell of illness).
While it’s never possible to predict at the outset how long Medicare will cover the rehabilitation, from our experience, it usually falls far short of the 100 day maximum. It makes sense, since the recuperative abilities of an 80 year old are certainly not what they are for a 40 year old. But, even if Medicare does cover the 100 day period, what then? What happens after the 100 days of coverage have been used?
At that point, in either case, you’re left with paying the bills with your own assets or long term care insurance, or qualifying for Medicaid which does cover long term care but is a needs based program. That means you’ve got to meet certain income and asset limits, but if you were thinking Medicare was going to cover you, then you’ll be completely unprepared when it comes to long term care. And if you’ve been a frequent reader of this blog you know what happens when you’re totally unprepared for the prospect of long term care.
