If We Apply for Nursing Home Medicaid are We Giving Up?
June 7, 2010
When working with families struggling with the sudden realization that long term nursing care is necessary for a loved one, two issues so often cause internal conflict. One is the fear that, at $10,000 a month or more, “we’re going to run out of money”. The other is the desire to do everything possible to bring my loved one home. In other words, by applying for nursing home Medicaid does that mean we’re giving up on going home?
The answer is “absolutely not”. As the cost of long term care increases and the population continues to age, two things become increasingly clear. It is usually less expensive to receive long term care at home and most people prefer to receive their care at home. Yet, when 24/7 care is necessary and you’ve run out of money, getting Medicaid to cover care at home has always been much harder than in a nursing home. But that is starting to change.
In New Jersey we have several community waiver programs. That’s what Medicaid calls programs that pay for long term care outside of a nursing home, in the community. It could be in a person’s own home or in an assisted living facility. In 2006 then Governor Corzine signed a bill to enable Medicaid nursing home residents to return to the community provided they are medically able to do so. In 2009 what came to be known as the Global Options program was expanded to include several waiver programs.
So, what does this mean in plain English? That if my spouse is in a nursing home on Medicaid he or she doesn’t have to stay there. We must contact the nursing home social worker who will then assemble a team of nursing home staff and the resident’s family who will discuss whether and how that can be done while preserving the health and safety of the resident.
The financial eligibility requirements for Global Options are similar to those for institutional (nursing home) Medicaid although there is no option of coverage for those whose income exceeds the $2022 per month income cap. However, Global Options can be a great option for many families struggling with the need for nursing home care now but who don’t want to give up on the possibility of bringing their loved one home at some point down the road.
Can I Be Paid to Provide Care for Mom? (Part 2)
May 10, 2010
So, we were talking last week about a recent New Jersey case in which Daughter and Mom entered into a life care contract for Daughter to provide personal care services to Mom. Mom then applied for Medicaid and her application was denied. Mom appealed that decision and lost at the first level of appeal and just lost again on the next level. Why did this happen and what can we learn from their case that would help us avoid the same result?
A big problem with this contract was the fact that it was a lump sum payment. Daughter was paid $56,000 before she even performed a single hour of services. Now, this was necessary in order to spend down to below $2000 for Mom to be under the asset limit. And, every attempt was made to calculate an amount that was based on fair market rates. In fact, the rate was at the low end of that scale.
However, there were other parts of the contract that the court found objectionable. For example, the contract stated that the caregiver was not obligated to devote full time to care since Daughter had a career and family to attend to. She would devote as much time as she could to providing care. The contract anticipated the average amount of time would be 15 hours or more. The contract also stated that the $56,000 due under the contract was not dependent on the exact amount of time Daughter worked and that if Mom canceled the contract Daughter would be paid under the assumption she had worked 15 hours per week.
The court found the contract to be one-sided. Daughter was not obligated to perform any minimum amount of services. Her compensation was not tied to actual performance. In the normal commercial transaction would anyone pay for something without being sure what they were going to receive? And, although the court didn’t specifically mention it, I think the fact that Mom was in a nursing home and not at home receiving care may have also had something to do with it’s decision. The nursing home was providing 24/7 care so what Daughter would provide in the way of services was even less certain.
So, does this mean that a child can’t be paid for providing care to a parent? Absolutely not. But, the line between what works and what doesn’t isn’t a black and white one. That’s why cases like this help us define it with a bit more clarity so that we, as elder law attorneys, can help our clients decide what the best course of action is in their particular situation, as we guide them through what we call the elder care journey.
Can I Be Paid to Care for Mom?
May 3, 2010
In times of crisis, families pull together. Long term care is no different. So much of the care is administered by family members. And it doesn’t take too long before the question is asked. “Can I be paid to care for my mom or dad?” A recent New Jersey case decided by the appellate court makes it clear how tricky that can be.
Mom was 97 years old and in a nursing home. Daughter entered into a caregiver contract with Mom to provide care and was paid the sum of $56,000. This amount was based on daughter performing 15 hours a week at a rate of $25 per hour for 2.9 years, the life expectancy of a 97 year old. The payment was made and within 5 years of that payment Mom applied for Medicaid. The State denied her application, counting the $56,000 as a transfer for less than fair value, not a payment for fair value received.
We use life care contracts often in the cases in our office. But, we also know that the State will scrutinize those contracts very closely because when the payments are going to family members the State assumes that these transfers are “for less than fair value”, what most people would call gifts. They will then impose a penalty period, or period of ineligibility.
For example, the contract can’t be retroactive. If I have been caring for Mom for the last 2 years and now we decide that it would be a good idea for her to pay me for that care, Medicaid will flag that transfer. I had no expectation that I would be paid when I performed the services so I can’t change that now. There must be a contract in place going forward. I also can’t be paid an outrageous sum of money. Mom can pay me no more than what are fair market rates for the services I will perform.
So why didn’t our 97 year old Mom get Medicaid? We’ll explain that in next week’s post.
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.
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.
How Does Medicaid View Same Sex Partnerships?
February 1, 2010
The past year has seen failed attempts by supporters of same sex marriage to have the definition of marriage expanded to include gay and lesbian unions. However, some states have passed laws creating domestic partnerships and civil unions, which then carry with them some of the benefits of marriage. New Jersey has a civil union law which it established in 2007. So, how would partners in a civil union be treated for Medicaid purposes? Not surprisingly, the answer isn’t so clear cut.
While Medicare, for example, is a federal program governed by rules established by Congress, Medicaid, on the other hand, is a mix of federal and state law. It is that attempted blend of two governmental systems and sets of laws and regulations that makes the Medicaid system so uncertain for those trying to tap into it. The issue of civil unions is a perfect example.
New Jersey’s law states that civil union couples are entitled to the same benefits (as well as held to the same set of responsibilities) as heterosexual spouses, including Medicaid. But, it’s not that simple. Of course, with the government it never is. That’s because there is a certain federal law known as the Defense of Marriage Act which says that, in interpreting any act of Congress the term marriage means only a legal union between a man and a woman. This presents a problem for states recognizing civil unions because they get federal money to support their Medicaid programs. So, they may be violating federal law and possibly lose federal funding by treating civil union partners as married for Medicaid purposes. At least that’s what the federal agency overseeing Medicare and Medicaid has indicated on at least one occasion. On the other hand, the New Jersey’s civil union law seems quite clear that civil union couples are to be treated as married for purposes of Medicaid.
Where does that leave things? We’ll probably have to battle this one out in court. And, by the way, it isn’t necessarily the case that treating civil union partners as married is best when it comes to Medicaid. As readers of this blog are aware each case must be examined individually. In some instances it would be advantageous to be married, in others it wouldn’t. But, the question does raise some interesting issues and is just another example of why the long term care system is so impossibly confusing to navigate alone.
Hope For Haiti — Despair for Mom?
January 25, 2010
The recent outpouring of support for the victims of the earthquake in Haiti highlights a question often asked about gifting and charitable contributions as it relates to Medicaid. For example, last week Mary called me to ask whether it is OK for Mom to make a charitable contribution to help the earthquake relief effort. You would think that helping out others in need is a good thing, something to be encouraged. Well, the answer is not so clear cut.
Mary’s mom is now living in a nursing facility and is in spend down mode. In her case, she will be eligible for Medicaid in 3 years if she lives that long. But to preserve her right to benefits she must do more than spend down her remaining assets. She must spend in such a way that she receives something of equal monetary value in return. Now, she’ll spend most of it on her nursing care but what about charitable contributions? Does Mary’s mom receive fair value back for the contribution? Or does she make a transfer for less than fair value which will then result in a Medicaid penalty — a period of ineligibility, which, by the way, doesn’t start until she has no more money left?
Certainly, Mom is getting a benefit. She is helping others in need, but that is not exactly something we can put a monetary value on. The same answer would seem to be the case for contributions to Mary’s favorite religious our civic charities. But what if she makes a small gift of, say, $100? Will that cause a penalty?
Applying the letter of the Medicaid rule as written, any transfer for less than fair value, no matter how small, will trigger a penalty. And think about it. If the State goes through 5 years of your financial records (that’s the 5 year lookback), how many of these charitable contributions and other transfers might it find? If we total them up it might turn out to be a pretty big number, causing a few months of ineligibility or more. And, don’t you think, if the State can delay paying for Mom’s nursing home care, at a time when our incoming New Jersey governor, Chris Christie, has declared the State to be nearly bankrupt, it would do so?
On the other hand, if Mom’s charitable contributions are small, infrequent and far enough in advance of her application for Medicaid, they most likely won’t cause a problem. But, that’s what makes the whole long term care system so frustrating. It’s the uncertainty, not knowing what you can or can’t do. That’s why it is so important to seek advice from a trusted advisor first You just don’t want to take the wrong step. In Mary’s case I told her a small gift would be OK. It didn’t make me feel good having to tell her that the government laws and rules in this case discourage charitable giving. But that’s a whole separate discussion for another time.
How the Medicaid System Differs From the Criminal System
January 18, 2010
“Mom and Dad have always been big believers in paying cash for everything. They don’t use credit cards”, John tells me. “Don’t buy on credit”, they always said. While that’s a pretty sound financial approach, it can get Mom and Dad into hot water when it comes time to apply for Medicaid. That’s because the Medicaid system works very differently than the criminal system. Let me explain.
First of all, you need to understand some basics about how Medicaid works. In order to qualify, one must spend down assets first. When essentially all your money is gone, (in the case of a married couple the healthy spouse gets to keep a small amount) then Medicaid will kick in. However, if you have made transfers for less than fair value, what most people would call gifts, then you won’t be eligible for Medicaid. The greater those transfers the longer your ineligibility period.
And before the government will step in and pay for your care it will insist that you show it how you spent your money. And by “show”, I mean on paper, by producing each and every financial statement dating back what will soon be 5 years from the date you apply for benefits. So, this is where my reference to the criminal system comes in. Everyone knows from grade school the concept of “innocent until proven guilty”. With Medicaid, however, that concept is turned around. You are “guilty” until proven “innocent” when it comes to transfers for less than fair value. By that, I mean to say, that if you can’t prove what you have spent your money on, then Medicaid will consider it a transfer for less than fair value, a “gift” in essence, causing a denial of benefits.
Let’s then, go back to John’s parents. As we know, cash is hard to trace. Think about it. If Mom and Dad have been withdrawing cash for their spending needs how hard is it going to be to prove, going back as many as 5 years, what they spent that money on. All we’ll see on their bank statements are cash withdrawals. No explanations. Who keeps all those receipts? Hardly anyone. But that’s what Mom and Dad need to do in order to preserve their eligibility for government benefits.
So how do they avoid this potentially catastrophic result? They need to better prepare themselves for the possibility of needing long term care, well before they need it time and consult with a knowledgeable elder law attorney who can tell them how to spend down their assets and establish a clear paper trail, while preserving their ability to qualify for government benefits.
How a Call From Mary’s Attorney Saved Her $90,000
January 11, 2010
One of the common themes I repeat often, when it comes to Medicaid, is that timing is everything. A recent call we received from Mary’s personal injury attorney, Bill, illustrates the point. Mary’s husband, John has dementia and is about to enter a nursing home. Mary and John don’t have much in the way of assets, about $100,000, but Bill is pursuing a claim on Mary’s behalf for injuries she received in a car accident. Bill, recognizing the potential Medicaid issues, called me to ask if John’s situation impacts Mary’s claim. I told him he reached out to me at the right time. Here’s why.
In the case of a married couple, Medicaid considers the assets of both the healthy and ill spouse in determining eligibility. The questions then becomes “what point in time do we value their assets?” That is what is called the “snapshot date”. Medicaid values the assets as of the first day of the first month of continuous institutionalization. Bill told me that he was close to settling Mary’s case and asked whether pushing the case to settle would be helpful.
I explained that if Mary receives the settlement proceeds before John is approved for Medicaid it would count as part of the spend down and she would only be able to keep, at most, one-half of the money. We don’t want the case to settle until after John gets Medicaid because at that point there is a “division of assets”. Mary keeps the $50,000 of assets that they have left after the spend down and whatever other assets she receives after that date.
Once Bill understood the best sequence of events he recommended that Mary contact us to guide her on how to spend down and to handle the Medicaid application. And that’s what we did. In a few months time, John received Medicaid, Mary kept $50,000 of their savings and then Bill settled the case, providing Mary with $150,000 of additional funds to support her, money she especially needs since she most of John’s income must be paid to the nursing home. So when we talk about timing being everything, in Mary’s case it meant, an extra $90,000 in her pocket.
