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The Law Offices of Jeffrey A. Asher, PLLC, is a full service law firm, handling Estate Planning, Elder Law, Probate, Estate and Trust Administration, Estate and Trust Litigation, Special Needs Planning, Long-term Care Planning, and Medicaid Planning. We provide comprehensive legal services, tailored to meet your specific needs.

It is our philosophy that you are best served by thorough and detailed legal advice, focused on giving you the Protection, Security, and Peace of Mind you are looking for in the most practical, efficient, and cost-effective manner possible.

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Disclaimer

This blog does not contain any legal advice upon which you should rely or act. If you need advice on a particular issue or problem, please contact an attorney. Use of this Web site does not create an attorney-client relationship between you and the Law Offices of Jeffrey A. Asher, PLLC.

Posts Categorised: Elder Law

New Jersey Medicaid

There are five criteria an individual must satisfy in order to qualify for New Jersey long term care Medicaid for seniors (known as Medicaid Managed Long Term Services and Supports). First, the applicant must be a United States Citizen or an Eligible Alien. An Eligible Alien is an individual who has lived in the US for at least five years as a permanent resident.

Second, only New Jersey residents are eligible to collect Medicaid in New Jersey. New Jersey statute defines a resident as any person who is living in NJ voluntarily and not for a temporary purpose, with no present intention of leaving. This is easily satisfied when an individual relocates to a facility or a private residence and files for benefits in that county.

Third, by definition the applicant must be over age 65. However, New Jersey will allow one under the age of 65 to receive Medicaid if she meets the criteria to be deemed disabled under the Social Security Disability laws.

Fourth, the applicant must be within the State’s financial eligibility criteria for both income and assets. This depends on certain criteria, including whether the individual is single or married.

Fifth, the applicant must be “disabled” under New Jersey Medicaid standards. It must be determined that the applicant requires long term institutional level of care. An applicant is considered medically eligible if she needs assistance with at least three activities of daily living. Activities of daily living include toileting, transferring, bathing, dressing, and walking, and eating. Mental deficiencies also satisfy this requirement if the applicant’s mental condition places his or her health or safety at risk.

In the last few years a number of Medicaid application service businesses have appeared. While it may be tempting to employ a service to aid you in applying for Medicaid, families are most often better served using an elder law attorney to guide them in this important and complicated process. Not only is the application process fraught with pitfalls, but there are also many legal strategies that can make the process easier and save the family tens or hundreds of thousands of dollars. Only attorneys are licensed to counsel applicants on these legal strategies – many of which are unknown and beyond the expertise of Medicaid service providers.

There are generally two types of Medicaid coverage: Medicaid home care (also referred to as community based Medicaid), which provides home health care, some hospital coverage, doctor appointments, medications, etc. And, Medicaid nursing home care (also referred to as institutional Medicaid), which is care in a skilled nursing facility or similar institution.

Medicaid Benefits

To qualify for Medicaid, a Medicaid recipient (whether for home care or nursing home care) may only keep a small amount of assets and income. In 2016, a Medicaid recipient living alone may keep no more than $14,850 in non-exempt assets and have no more than $825 per month in income (both of these amounts increase depending on the number of family members who live with the Medicaid recipient), plus an unearned income credit of $20 if the applicant is over 65, blind, or disabled. An individual in a nursing home or similar institution is restricted to a personal needs allowance of $50 per month. Income includes Social Security payments, distributions from IRAs and other retirement accounts, interest, and dividends, etc.

Transfer of Assets

Giving assets away to qualify for Medicaid is not permitted. A Medicaid applicant who does so is “penalized” – denied Medicaid benefits – for a period of time following the transfer; provided, however, that there are certain transfers which are considered “exempt transfers”.

The Look-Back Period

In determining the penalty period, Medicaid will “look back” at the applicant’s assets over a period of five (5) years. The “look back” period examines account statements, deeds, tax returns, etc., and is intended to discover any transfer of assets which would disqualify an applicant from Medicaid. The transfer of assets penalty period begins on the date the applicant makes his or her Medicaid application, is in an institution receiving care, and would otherwise be eligible for Medicaid but for the transfer of assets.

The Planning Process

Because of the threat of a penalty period, the obvious solution would be to merely wait the five (5) years from the date of the transfer to apply to Medicaid. That way, Medicaid will not see the transfer within the look-back period.

But, what if, as happens many times, the applicant needs Medicaid to pay for the nursing home within the five (5) year look-back period? Or, as happens quite often, the applicant needs Medicaid nursing home care immediately? This is where the Good Elder Law Practitioner’s long-term care planning techniques are useful.

One technique that we use to protect assets AND qualify a person for Medicaid nursing home benefits is what we call the promissory note (i.e., loan) / gift plan. It entails a transfer of some of the exposed assets and a loan of the remaining exposed assets, and is explained as follows:

Under Medicaid’s rules, whereas a transfer of funds is a penalty transfer, a loan of those same assets instead is not a transfer but is a conversion of those assets into an income stream. In other words, loaning money, instead of gifting it, will not create a penalty period nor will it create an exposed asset for Medicaid purposes. The loan would merely create an income stream to the Medicaid applicant and income does not disqualify a person for Medicaid benefits.

Scenario One:     John has $450,000 in non-exempt assets. John must be admitted to a nursing home. John does nothing with his assets. His family pledges to use his assets to pay for his care. The nursing home costs $400 per day. On average, this amounts to $12,000 per month. $450,000 divided by $12,000 per month is 37.5 months. In 37.5 months, John’s $450,000 will be spent entirely on his nursing home with nothing left to show for it. After the money has all been spent down, then John could make a Medicaid application to pay for his Medicaid. Because John would then have less than the threshold for purposes of Medicaid nursing home care benefits, Medicaid would pay for John’s nursing home.

Scenario Two:      John has $450,000 in non-exempt assets. John must be admitted to a nursing home. John gives all $450,000 to his daughter, Darla. While John now has less than the $14,850 threshold for purposes of Medicaid nursing home care benefits, the $450,000 gift created a penalty period of approximately 38 months … or a little more than three years. $450,000 divided by $12,029 per month (which is what Medicaid believes is the average cost of nursing home care in NYC) or 37.41 months.

Scenario Three:      Rather than gifting the entire $450,000 to Darla, John gifts only half of it but loans to Darla the other half. Medicaid applies a penalty period on the half that he gifted, but not on the half that is a loan. So John, who transferred $225,000 to his daughter, will incur a roughly 18 month penalty period during which he will not be able to receive Medicaid but will use the monthly loan repayments from his daughter to pay for nursing home care. After the roughly year and half penalty period, John starts getting Medicaid while his daughter legally keeps $225,000.

In Scenario One and Two, John’s family will have preserved nothing from John’s assets. In Scenario Three, John’s family will have preserved at least half of John’s assets, with the savings likely being greater when an actual calculation can be made. The question boils down to whether, in this hypothetical, John’s family wants to do the planning … or not. The bottom line is that Medicaid will likely be needed at some point. Is it better to get Medicaid involved sooner and save a good amount of money? Or, wait until it become necessary and get Medicaid involved when there is nothing left to save.

Nursing home Medicaid planning is not to be entered into lightly. Use only a qualified Elder Law attorney. If you would like to learn more about nursing home Medicaid benefits, or other types of Medicaid planning, or have questions regarding the above, please contact us at (877) 207-6803 or info@asherlawfirm.com.

There are generally two types of Medicaid: Home care (or Community) Medicaid and nursing home (or Institutional) Medicaid. To qualify for either type of Medicaid, in New York (in 2016), an individual cannot have more than $14,850 in non-exempt assets. Exempt assets generally include, among other things, your home (provided that the equity in your home is less than $828,000) and your retirement accounts (provided that your retirement accounts are in “payout status”). Any asset that is not exempt is called an exposed asset or otherwise called a non-exempt asset or an available resource for Medicaid purposes.

Imagine the following scenario: Applicant owns a home worth about $700,000. He also has an IRA worth approximately $500,000. Applicant is currently withdrawing his Required Minimum Distributions (RMDs) from the IRA. Applicant also has a checking account with approximately $10,000 in it. Applicant’s monthly income includes his Social Security Retirement income of $1,260, pension income of $1,800, and a small other pension of $800.

Because the equity in the Applicant’s home is less than the $828,000 threshold, his home is not counted as an available resource for Medicaid purposes. Because the Applicant’s IRA is in payout status (i.e., he is withdrawing his RMDs), the IRA is not counted as an available resource for Medicaid purposes. And, finally, because the Applicant’s checking account is less $14,850, the checking account is not counted as an available resource for Medicaid purposes. This means that the Applicant is qualified for home care Medicaid.

Imagine the following modification to the above scenario: In addition to the above, the Applicant also has a $250,000 brokerage account. The home is still not counted as an available resource. Nor is the IRA or the checking account. But, the $250,000 account at UBS is not an exempt asset. In fact, it is an exposed asset and will be counted as an available resource for Medicaid purposes. What should the Applicant do if he wants to qualify for home care Medicaid?

In New York, there is no penalty period or look-back period for home care Medicaid. That’s not true for nursing home Medicaid, but that’s for a different discussion. One thing that the Applicant could do to qualify for home care Medicaid would be to create a Medicaid Irrevocable Income-Only Trust and transfer the $250,000 brokerage account into the Trust (or, some say re-title the $250,000 brokerage account into the name of the Trust).

The Applicant is the grantor (a/k/a creator) of the Medicaid Irrevocable Income-Only Trust and someone the Applicant appoints (e.g., child or children) is the Trustee (a/k/a manager). The Trust agreement provides that the Applicant gets all of the net income from the Trust, but he cannot get any of the principal from the Trust. By preventing the Applicant’s access to the principal of the Trust, we prevent Medicaid’s access to the principal of the Trust. And, since income does not disqualify anyone from Medicaid, it is safe to pay the income from the Trust to the Applicant.

And, what, you may be asking, is the income from the Trust? Income from the Trust depends on what the Trust assets are invested in. In this case, the Trust asset is a $250,000 brokerage account. In that account may be stocks, bonds, some cash, etc. So, income from the brokerage account would be dividends, interest on the bonds, interest on the cash account – in other words, whatever type of income one would normally earn on an investment account. All of that income would be paid from the Trust to the Applicant – monthly, quarterly, semi-annually, however often the Applicant wants it.

You may be also asking: what happens if the Applicant needs more than just the income from the Trust? What happens if the Applicant needs some of the principal from the Trust? Just because we said above that paying principal from the Trust to the Applicant makes that principal available to Medicaid (which it does), it is not impossible to get some portion of the principal back to the Applicant. This is where the Trustee(s) and Beneficiary(ies) come into play.

A Medicaid Irrevocable Income-Only Trust agreement generally provides that, although the Trustees cannot pay principal to the Applicant, the Trustees may pay principal to the Beneficiary(ies). Imagine the following further modification to the above scenario: In addition to the above, we know that the Trustees of the Trust are the Applicant’s two children. We likewise know that the Applicant’s two children are also the Beneficiaries of the Trust. In addition to paying the Applicant the net income from the Trust, the Trust agreement also allows the Trustees to pay to the Beneficiaries any portion they want of the principal of the Trust. This means that the Applicant’s children, as Trustees, can pay a portion (or all) of the Trust principal to themselves, as Beneficiaries, legitimately, pursuant to the terms of the Trust agreement. And, if the Beneficiaries, as the Applicant’s children, choose to give to their father, the Applicant, all or some portion of the principal they received from the Trust, then that’s their business and they do not need to explain anything to Medicaid.

So, with the Medicaid Irrevocable Income-Only Trust, the Applicant has protected the brokerage account, as follows: The Applicant transferred the brokerage account to the Trust; the Applicant will keep the same amount of income from the Trust as he had been receiving from the account before he transferred it to the Trust; none of the principal will be available to Medicaid; but, if the Applicant ever needs principal, then his children can decide at that time to give him some.

Here are a few points to consider when using a Medicaid Irrevocable Income-Only Trust:

  • A Medicaid Irrevocable Income-Only Trust-based plan should only be considered with the help of a qualified Elder Law attorney.
  • Penalty periods and look-back periods are real, but only in the world of nursing home Medicaid benefits.
  • A Medicaid Irrevocable Income-Only Trust based plan should be contemplated with great caution if there is a real risk of imminent nursing home care.

The Medicaid Irrevocable Income-Only Trust is only one tool in the Medicaid planning toolbox. If you would like to learn more about Medicaid Irrevocable Income-Only Trusts and other types of Medicaid planning, or have questions regarding the above, please contact us at (877) 207-6803 or info@asherlawfirm.com.

Medicaid is an extremely complicated yet valuable program that can provide health care services to a senior living at home, in an Assisted Living Facility, or in a Skilled Nursing Facility. We meet with many families who have tried unsuccessfully, or are in the process of applying for Medicaid, who require guidance in order to receive Medicaid approval. Due to the complexity of the application and the documentation required for an approval, many families retain us to guide them through the process.

Although a Medicaid Application processing company can prepare an application, there are limitations. These companies are specifically prohibited from providing legal advice regarding transfers of assets that are allowed by Medicaid. In addition, there are several exceptions to the general rule that an individual cannot transfer assets within five year years preceding a Medicaid Application. Medicaid processing companies are not aware of these valuable exceptions. This lack of guidance often results in financial hardship for other members of the family.

On the other hand, an Elder Law Attorney provides guidance on potential opportunities for spending down along with filing an application on the client’s behalf. To put it simply, the main goal of a processing company is to have the applicant approved for Medicaid, whereas the goals of an Elder Law Attorney are to have the applicant approved for Medicaid while saving as much money as possible using allowable legal strategies. Some examples of the benefits of working with an Elder Law Attorney are: Saving the spouse from impoverishment; providing for a disabled child; saving a home from estate recovery; or merely allowing the Medicaid recipient some extra money to provide for a better quality of life in her final years.

Our guidance takes into account the appropriate healthcare considerations for our client, combined with the financial and tax consequences. A Medicaid processing company will not have these considerations in mind when handling your loved one’s application. Who would you rather guide you during the process, a processing company with a singular focus or an Elder Law Attorney that takes a holistic approach and considers all the legal consequences involved with submitting a Medicaid Application?

Your home may be hiding a significant amount of cash that could otherwise be used to pay for such things as household expenses, renovations, travel, or retirement expenses. A Reverse Mortgage allows a homeowner to convert the available equity in the home to cash. The cash from a Reverse Mortgage could also be used to pay for long-term care.

To qualify for a Reverse Mortgage, the homeowner(s) must be at least 62 years old, and must reside in the home. The Reverse Mortgage typically does not have to be repaid until the last homeowner dies, sells the home, or moves out of the home.

With a Reverse Mortgage, the homeowner(s) receives a lump sum of money from the lender. The amount received by the homeowner(s) is based on the value of the home, the age of the homeowner(s), and current interest rates.

For a client in need of quick cash to finance long-term care, a Reverse Mortgage may be a great idea. However, for those clients that wish to pass on their home to their loved ones, it probably will not be. With a Reverse Mortgage, there is no obligation on the homeowner(s) to make monthly payments. Interest on the loan is tacked onto the outstanding balance of the loan. At the time the loan becomes due (e.g., when the last homeowner dies, sells the home, or moves out of the home) the lender gets paid the original amount borrowed plus all of the accrued interest. The potential for exposure is if the house value is out-stripped by the outstanding balance on the loan. However, Reverse Mortgages are non-recourse loans. This means that the homeowner(s) is not responsible for the unpaid balance of the loan if there is not enough value in the home to satisfy the outstanding balance. So, even though the homeowner(s) would not be able to pass the home onto his or her loved ones, the homeowner’s(s’) loved ones are not obligated to make the lender whole.

Disadvantages of the Reverse Mortgage include the possibility that the homeowner will not be able to pass the home onto loved ones; the forced sale of the home in the event the homeowner moves out (e.g., into a nursing home); and the closing costs – which are higher than normal closing costs on conventional mortgages/home equity loans. Reverse Mortgages are usually offered by commercial financial institutions. The typical Reverse Mortgage is offered as a line of credit, but it is not required. This means that the Reverse Mortgage proceeds, although still offered as a lump sum, are instead deposited into the financial institution’s account for the homeowner. When the homeowner needs money from the account, the line of credit dispenses the amount. One of the advantages of this program is that the money is protected, even invested for the homeowner, and the homeowner does not incur interest on the amount borrowed until actually received by him or her. However, one of the disadvantages of this program is that the homeowner does not receive his or her financing right away but has to set up a system with the financial institution whereby the homeowner can make withdrawals from the line of credit account. Plus, because the closing costs are paid out of the loan proceeds, the homeowner already has an amount outstanding from day one. Many times, the homeowner is unaware that he or she is already accruing interest on this amount, especially when the homeowner does not withdraw any money from the line of credit.

Another disadvantage is the treatment of Reverse Mortgages for government benefit purposes. For most Medicaid applicants/recipients, Reverse Mortgages are disregarded as income but countable as a resource if the proceeds from the Reverse Mortgage are kept beyond the month received, but this may be inconsistent with state law. However, if the Reverse Mortgage is in the form of an annuity, then the annuity payments are unearned income in the month received and a resource thereafter.

If you would like to learn more about reverse mortgages, and how the Law Offices of Jeffrey A. Asher, PLLC, can help you, please contact us at (877) 207-6803 or info@asherlawfirm.com.

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Long-term care (LTC) insurance is becoming more and more vital to getting quality long-term care for ourselves and our loved ones when it is needed most.

An LTC insurance policy should be discussed as part of an overall Elder Care plan to provide full and complete long-term care for you and/or your loved ones.

We should be concerned about our long-term care options. We deserve and are entitled to the best care we can get along with the ability to pay for such care. LTC insurance is designed to provide the financing to pay for home care services and long-term living arrangements, such as assisted living facilities or skilled nursing facilities. Additionally, by ensuring that we will get the care that we need, and have it paid for by the LTC insurance company under the terms of the LTC insurance policy, we will make sure that our loved ones act as our caregivers by choice not by obligation.

Take a few moments to discuss your long-term care options with your Elder Care attorney. Ultimately, your Elder Care plan may or may not include LTC insurance. But, you will be better off for asking the right questions of the right professionals, than not fully understanding your rights and options when it comes to your own long-term care.

The firm’s Elder Care Department works with its clients in connection with their long-term healthcare decisions, disability protections, and need for advanced medical directives. We also represent individuals and assist them in obtaining Medicare and Medicaid benefits to pay for long-term home care and nursing home care.

If you would like to learn more about long-term care planning, and how the Law Offices of Jeffrey A. Asher, PLLC, can help you, please contact us at (877) 207-6803 or info@asherlawfirm.com.

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The Internal Revenue Service has issued the 2015 long-term care insurance premium deductibility limits.

Long-term care insurance is becoming more and more vital to getting quality long-term care for ourselves and our loved ones when it is needed most. Having the increased income tax deduction will make it easier for people to afford long-term care insurance. You should factor the availability of the deduction into your calculation whether long-term care insurance is the right choice for you and/or your loved ones. Generally, my advice to our clients is that long-term care insurance is ALWAYS a good idea provided that you can afford it. Now, with the increased deduction limits, and the fact that you can treat premiums paid for long-term care insurance for yourself, your spouse or any tax dependents (such as your parents) as a personal medical expense, long-term care insurance just became a much more worthwhile option for many of our clients.

Personal medical expenses, reported as itemized deductions on your individual income tax return, are deductible to the extent that they exceed 7.5% of your Adjusted Gross Income (AGI). The portion of the long-term care insurance premium that is allowed as a medical expense in 2015 (and the change from 2014) is shown in the table below.

Attained Age Before Close of Taxable Year

2014

2015

40 or below

$370

$380

Above 40 but not older than 50

$700

$710

Above 50 but not older than 60

$1,400

$1,430

Above 60 but not older than 70

$3,720

$3,800

Older than 70

$4,660

$4,750

To fit within the increased deduction limits, the long-term care insurance policy must be a “qualified” policy. A “qualified” policy, issued on or after January 1, 1997, satisfies certain requirements within the policy details. For example, policies that offer optional provisions for “inflation” and “nonforfeiture” protections are qualified policies. Policies purchased before January 1, 1997 are grandfathered into the new deduction limits, and will be treated as “qualified,” provided that they policies have been approved by the insurance commissioner of the state in which they are sold.

Taxation of Benefits: Benefits from reimbursement policies – policies that pay for the actual services a beneficiary uses – are not included in taxable income. Benefits from indemnity policies – policies that pay a predetermined amount each day, or otherwise called “per diem policies” – are likewise excluded from taxable income, except to the extent that the per diem amount received exceeds the beneficiary’s total qualified long-term care expenses per day. The per-diem limitation for periodic payments received under a qualified long-term care insurance contract for 2015 remains at $330 (the 2014 limit was also $330).

Planning Tips:  Long-term care insurance may be expensive, but there are things you can do to minimize the cost. For example, some long-term care insurance companies offer a “shared care” policy where husband and wife can share the benefit pool under one long-term care insurance policy. With a shared care policy, the pool of benefits is split between you and your spouse. This is especially helpful when there is a difference in ages between the spouses.

The most significant way to reduce the cost of long-term care insurance is think about how long you will need the policy. First, unless you have a family history that includes specific, long-term illnesses, the typical insured under a long-term care insurance plan is not likely to need coverage for more than five or six years. Second, when combined with a viable Medicaid plan, long-term care insurance is only required for a five- or six-year period. By limiting coverage to approximate a five- or six-year period, you can save thousands of dollars in premiums.

Medicaid Planning: A long-term care insurance policy is typically combined with a legal and ethical Medicaid plan to provide full and complete long-term care for you and/or your loved ones. Everyone is entitled to Medicaid-funded long-term care; eligibility for the government benefit is a different question. Eligibility for benefits depends on both a medical qualification and financial qualification.  The Law Offices of Jeffrey A. Asher, PLLC, will assist you with the financial eligibility question and get you and/or your loved ones Medicaid benefits when appropriate.

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Question: My mom’s health is failing rapidly. What should I do to get ready to handle her decisions in the event she becomes mentally incapacitated?

Answer: The best thing to have in these situations is both a Health Care Proxy and a Power of Attorney. A Health Care Proxy is a legal document signed by an individual (called, the “Principal”) that appoints another individual (called, the “Agent”) to make medical, health care, and/or long-term care decisions for the Principal if and when the Principal cannot make his or her own medical, health care, or long-term care decisions.

A Power of Attorney is a legal document signed by an individual (called, the “Principal”) that appoints another individual (called, the “Agent”) to make financial decisions for the Principal. That authority may be effective the moment the Power of Attorney is signed, in what is called a general Power of Attorney. Or, it can be effective in a particular event or for a particular purpose, in what is called a limited Power of Attorney. Or, it can be effective upon the triggering of a certain event, such as the mental incapacity of the Principal, in what is called a springing Power of Attorney.

So, while an Agent under a Health Care Proxy cannot make health care decisions for the Principal if the Principal is able to make his or her own health care decisions, an Agent under a general Power of Attorney can make financial decisions for the Principal even if the Principal is perfectly capable of making of his or her own financial decisions. So, it is important to get the right advice when preparing a Health Care Proxy and/or Power of Attorney. Plus, state laws may govern what a Health Care Proxy and/or Power of Attorney look like, or how each is signed. So, again, it is important to get the right advice from a qualified Estate Planning or Elder Law attorney to help with these forms.

But, for the parent (or other loved one) whose health is failing rapidly, a Health Care Proxy will allow the child (or other Agent) to make medical, health care, and/or long-term care decisions. And, a Power of Attorney will allow the child (or other Agent) (it does not have to be the same child or Agent) to make financial decisions. In the event the parent (or other loved one) does not have the requisite mental capacity to sign a Health Care Proxy or Power of Attorney, then a guardianship may be the only solution. A guardianship is a legal process by which the parent’s (or other loved one’s) incapacity is determined and declared by the Court and a person is appointed by the Court to act as Guardian of the Person and/or the Guardian of the Property. A guardianship is a public proceeding, which may be both time consuming and expensive. So, for these reasons, in most situations, it is preferable to have a Health Care Proxy and/or Power of Attorney executed.

Once an individual is appointed – as Agent under the Health Care Proxy, or Agent under the Power of Attorney, or Guardian, as the case may be – that individual would be able to help the parent (or other loved one) get the medical and/or long-term care help the person may need in the event of their incapacity, but also do the necessary and appropriate asset planning to qualify for government benefits to help pay for such medical and/or long-term care help.
In all cases, and all types of planning, it is important that you get the right advice from a qualified Estate Planning or Elder Law attorney.

If you would like to learn more, and how the Law Offices of Jeffrey A. Asher, PLLC, can help you, please contact us at (877) 207-6803 or info@asherlawfirm.com.

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Originally Posted at eCareDiary.com
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The best way to keep Medicare covered skilled maintenance care in place is to know your loved one’s rights and have the support of your loved one’s physician. Your loved one should not lose access to therapy because he or she will not improve or because he or she has reached the financial cap.

Here is the typical scenario:

Your love one is receiving skilled nursing care, home health services, or other certain types of therapy. Medicare Part B is paying for this care because it is provided by a skilled professional (a physical, occupational, or speech therapist) or in a qualified facility. You are told that the care will be discontinued because your loved one has “plateaued,” returned to “baseline,” is “maintenance only,” or requires only “custodial care.” You believe your loved one continues to need, and will continue to benefit from, the provided care.

Facilities and skilled care providers sometimes try to convince Medicare beneficiaries that Medicare coverage for their care may be denied on the grounds that they are not likely to improve, or are “stable,” or “chronic,” or require “maintenance services only.” These are not legitimate reasons for Medicare denials. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.

First, tell the facility that they’re wrong and ask them to reconsider the termination of benefits.

The 2013 settlement of Jimmo v. Sebelius, a federal class­action lawsuit, means that Medicare can no longer deny coverage for skilled nursing care, home health services, or other maintenance services because the patient or resident reaches a “plateau” and their condition is not improving. This allows people with Medicare who have chronic health problems and disabilities to get the skilled maintenance care they need, for as long as they need it, if they meet other coverage criteria.

As of December 6, 2013, the Centers for Medicare and Medicaid Services (CMS) Policy Manuals have been updated to reflect the settlement provisions. The manuals now make it clear that improvement is not necessary for coverage of physical, occupational, and/or speech therapy. What matters is the need for care to maintain or slow deterioration of the individual’s condition.

The intent of the Jimmo v. Sebelius settlement was to clarify Medicare’s longstanding policy that when services are required in order to provide care that is reasonable and necessary to prevent or slow further deterioration, coverage cannot be denied based on the absence of potential for improvement or restoration.

When talking with the facility, try to keep your loved one’s care in place. Medicare pays for care that has been prescribed. It does not pay for care that should have been prescribed. Once your loved one’s care is discontinued, it will be essentially impossible to reinstate the care without a Medicare appeal. The first step, therefore, is to keep the care in place. When services are terminated, your loved one’s long-term health may be endangered.

Second, contact your loved one’s doctor and ask him or her to order more care.

Therapists work under the orders of physicians. If the physician ordered three therapy sessions, the therapist will discharge your loved one after three therapy sessions. If you do not think your loved one is ready for the discharge, contact your physician and ask him or her to order more care.

Medicare will only pay for services if the services are medically reasonable and necessary. Unfortunately, for a long time, many believed that Medicare would only cover therapy if the patient would improve significantly in a short period of time. The use of this illegitimate standard, known as the “Improvement Standard”, caused patients with chronic conditions to lose access to reasonable and necessary medical care.

Ask your physician to write a letter explaining why your loved one’s services was, and still is, medically reasonable and necessary, including information about possible medical harm that might occur if your loved one does not receive the services. If possible, also include a letter supporting the claim from the treating therapist (even though this is sometime difficult because the therapist may work for the facility who is terminating services).

Because of the devastating effect of the improvement standard on the lives of people living with chronic conditions, the Jimmo v. Sebelius settlement stated that Medicare coverage does not require actual or even the possibility of improvement.

Third, show the facility the new materials published by the Center for Medicare and Medicaid Services (CMS) following the Jimmo v. Sebelius settlement.

CMS published the following, clarifying that maintenance therapy is covered by Medicare:

1. Jimmo v. Sebelius Settlement Agreement Fact Sheet.

2. CMS Transmittal 179 – Manual Updates to Clarify Skilled Nursing Facility (SNF), Inpatient Rehabilitation Facility (IRF), Home Health (HH), and Outpatient (OPT) Coverage Pursuant to Jimmo vs. Sebelius.

3. CMS Medicare Learning Network Notice on Manual Updates to Clarify Skilled Nursing Facility (SNF), Inpatient Rehabilitation Facility (IRF), Home Health (HH), and Outpatient (OPT) Coverage Pursuant to Jimmo vs. Sebelius.

If your loved one’s therapy is ending because your loved one’s therapist or facility believes your loved one will not improve or not improve quickly enough, but also thinks that continued care is necessary to maintain your loved one’s condition or slow determination, give the therapist or facility a copy of the CMS publications listed above. In addition, ask your loved one’s physician to give the therapist and/or facility copies of published research or clinical guidelines from professional sources supporting the medical benefit of maintenance therapy for your loved one’s medical condition. This information, in combination with the Jimmo settlement, should convince your loved one’s therapist to continue maintenance therapy and bill Medicare.

Fourth, know what to say when the therapist and/or facility claims services are denied because of the annual Medicare payment cap.

Your loved one’s therapist or facility might discharge your loved one from services because he or she reached the annual Medicare payment cap. If your loved one continues to need skilled maintenance care, you should ask your loved one’s therapist or facility to bill the ongoing care through the “Exceptions Process”. To support your loved one’s need for ongoing care and in case Medicare denies payment for the care; the therapist and/or the facility should obtain documentation from the medical literature or guidelines from professional sources supporting your loved one’s need for ongoing therapy. Your loved one’s physician may be able to help locate this literature.

If the steps above do not succeed and Medicare denies coverage, and you continue therapy, paid by you or another agency, the denial can be appealed through the Medicare Part B appeals process.

Fifth, if maintenance therapy is denied, consider appealing.

If your loved one’s Medicare Summary Notice (MSN), or the service provider, indicates that your loved one’s care has been denied coverage, look to see whether your or your loved one, or the provider, has been held financially responsible. If you or your loved one have been held financially responsible, you should certainly appeal.

If the therapy provider has been held financially responsible, and you want to get more therapy of a similar kind, you should also appeal.

Question: My parent was just diagnosed with a progressive disease. How do I help protect my parent’s assets?

Answer: Learning that your parent was just diagnosed with a progressive disease, whether it be Alzheimer’s disease, Parkinson’s disease, cancer, stroke, for example, is a devastating and life-changing event. Beside the unknown of what is going to happen, it means understanding levels of care that you never thought your parent would need. It may also mean adjusting your own life to provide that care to your parent. Whatever the diagnosis means to you and your family, getting the legal and financial answers you need – such as in answer to the question you asked – will be the role of the qualified Elder Law attorney. The first step in protecting your parent’s assets is to understand from what are you trying to protect your parent’s assets. Estate planning is the ability to pass your parent’s assets to whomever your parent wishes while minimizing, as much as possible, expenses and estate taxes. Medicaid planning is the ability to exclude your parent’s assets, as much as possible, from being included as available resources for Medicaid purposes when seeking Medicaid paid-for home care services or nursing home care. Assuming you mean protecting your parent’s assets for Medicaid purposes, the second step in protecting your parent’s assets is to know where those assets are, how much the assets are valued at, and whose name the assets are in. Under the right circumstances, some assets are exempt for Medicaid purposes, such as retirement assets (i.e., IRA, 401(k), pension), certain business assets, and your parent’s home. So, knowing what your parent owns, and how, will tell us the extent to which we need to protect your parent’s assets. But, once we understand what your parent owns, and how, the third step in protecting your parent’s assets is to determine what type of help he or she needs. Is it help around the house? Or, does your parent need complete care in a nursing home? There are two different types of Medicaid applications (i.e., home care or nursing home care), and processes for becoming eligible for both types of Medicaid. Working with the doctors we will determine the proper level of care your parent needs and how best to provide that care to him or her. These are, generally, the first three steps in the process to getting your parent’s assets protected and getting your parent qualified for benefits to help take care of him or her.There are many steps in the whole process, but a qualified Elder Law attorney will help navigate these steps with you. Protecting your parent’s assets is not something that can be done with a quick fix, or with a phone call and a change of address form at the bank. And, there are severe ramifications if not done properly. Be sure to fully understand those first three steps discussed above and discuss these steps with your Elder Law attorney to make sure the whole process is done correctly.

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Question: Can Medicaid Take My Home Away From Me?

Answer: No. A home is exempt from Medicaid for so long as it has an equity value of less than $750,000, and it is the Medicaid applicant’s primary residence or the primary residence of a spouse, minor child, or an adult child who is certified blind or certified disabled. When a Medicaid applicant is living outside of the home, but has an intent to return home, the home will continue to be exempt for Medicaid purposes, without regard to the applicant’s actual ability to return home. However, if the home has an equity value of $750,000 or more, or if the applicant or his or her family member(s) no longer reside in the home, then the home is deemed a “countable resource” for Medicaid purposes. This means that Medicaid can include its value in the applicant’s list of assets to determine whether or not he or she qualifies for Medicaid. This, still, does not mean that Medicaid or a nursing home can take the applicant’s home. It merely means that Medicaid may have the ability to place a lien on the home to be repaid the cost of its services when and if the home is ever sold. However, there is a different answer when a guardian is appointed by the court to assist in obtaining Medicaid benefits. For example, if you reside in a nursing home and the nursing home is not being paid, the nursing home may apply to the court for the appointment of a guardian in order to pay the bills and/or obtain Medicaid. When this happens, the guardian is typically given the power by the court to sell your assets, whatever they might be, including your home. So, while Medicaid and/or the nursing home cannot take your home, the court-appointed guardian may have to sell your home in order to pay the nursing home and/or qualify you for Medicaid benefits. A proper elder care plan, including planning for a nursing home and/or Medicaid, will typically avoid this scenario. But, it is always good to know ‘what if?’ when it comes to your disability and long-term care planning.

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Get Your Legal and Financial Houses in Order

(1) Health and Financial Documents, (2) Death and Distribution Documents, and (3) Elder Care Plan. These are not necessarily in order, but should be accomplished at the same time and as part of the same comprehensive Elder Care Plan created with a qualified Elder Care attorney.

Health and Financial Documents:
These are generally the Health Care Proxy (known sometimes as a Durable Power of Attorney for Health Care), the Financial Power of Attorney, the Living Will, the Designation of Guardian, and the DNR. The purpose of these documents is to evidence in writing the wishes and decisions of the loved one themselves vis-à-vis health care and financial decisions, so that the burden is lifted from the caregiver and/or the loved one’s family.

For a loved one diagnosed with Alzheimer’s disease, or other similar progressive disease, issues of health care will dominate the rest of his or her life. At the beginning, decisions may be easy because they can still be made by the parent diagnosed with the disease. However, as the disease takes its course, the parent will slowly (although sometimes quite quickly) be unable to make these decisions for himself or herself. The Health Care Proxy (or otherwise in some fashion known as a Durable Power of Attorney for Health Care) is used to name an alternative decision maker for health care purposes. If the parent becomes unable to make his or her health care decisions, then the Agent under the Health Care Proxy would be able to make those decisions. Without a Health Care Proxy, on the other hand, the hospital, nursing home, long-term care facility would have to rely on the decisions of the spouse and if there is no spouse, the unanimous decisions of the children. However, if the hospital, nursing home, long-term care facility found reason to doubt the motive or sincerity of the spouse, or if there was disagreement among the children, or there was no one else to make these health care decisions, then the hospital, nursing home, long-term care facility may insist upon a guardianship to sort out the differences. This is not a good solution. In fact, this is not any solution. This is an example of what happens when you don’t plan properly.

Going hand-in-hand with the Health Care Proxy is the Authorization for Release of Health Information Pursuant to HIPAA, or otherwise called the HIPAA Privacy Release. HIPAA, or the Health Insurance Portability and Accountability Act provides, in small part, that a person’s personal medical information is private to him or her and may not be disclosed by certain health care providers, without being authorized to do so by the patient. This document is extremely important when facing disability issues, such as Alzheimer’s disease, since without it and without the loved one’s consent the health care provider would be powerless to release, much less discuss, the private medical information.

The financial Power of Attorney (either “Springing” or not) is similar to the Health Care Proxy, to wit: it names an alternative decision maker for financial purposes. A standard Power of Attorney is effective the moment that it is signed by the necessary parties, whereas the “Springing” Power of Attorney is effective upon some occurrence in the future. That occurrence is typically the principal’s mental disability as noted by the principal’s doctor(s).

The Living Will is a document which evidences the maker’s intent to either be kept alive by heroic and life-sustaining measures in the event he or she has no hope of survival without such measures. Or, the Living Will evidences the maker’s intent to be kept off of and away from the same heroic and life-sustaining measures. Many people believe that a Living Will is only necessary if you do not want to be “kept alive on a machine,” but what if you do want to be kept alive and no one knows. Use the Living Will to make sure that everyone knows.

The Designation of Guardian is a document whereby it expresses the maker’s selection for Guardian if all other planning fails. In a Guardianship proceeding the selection of Guardian is left to the Judge. Although the Judge will still make the final decision, it would be nice if the Court knew that the incapacitated person had a preference for Guardian and evidenced that preference in a Designation of Guardian before he/she became incapacitated.

And finally the DNR – or Do-Not-Resuscitate Order. There are two kinds: A Hospital DNR, or one that is issued while the person is in a hospital or other facility, and the Non-Hospital DNR, or one that is issued while the person is not in a hospital or other facility. Whether the person needs a Hospital DNR or a Non-Hospital DNR, one this is absolutely clear – this is not a document that can be requested of or provided by an attorney. A DNR can only be issued by a doctor, and so the family must discuss this issue with the doctor and medical staff. If the medical staff believe that it is appropriate, then they will work with the family to have a DNR issued.

Death and Distribution Documents:
These would be the Will, Trusts, and the burial fund. The Will and any Trusts should be self-explanatory – they are used to make sure that assets remaining after the parent dies are passed down to whomever they are intended, at the most minimal of costs and effort. Trusts are also used in connection with Elder Care Planning, which I will discuss in the next section.

Burial funds are very important since now is the time to create them. Waiting for the parent to become incapacitated is not going to help with this inevitable decision. Burial must take place. It is better to set it up now, and pay for it, while the parent is alive and well and can make his or her decisions. Of course, if the conversation will add unnecessary stress to an already frail mind and body of the parent, then don’t have the conversation. But, still set up the burial fund with your preferred funeral home. As with Trusts, burial funds are useful in Elder Care Planning, especially as it relates to Medicaid planning. In that context, the only thing to keep in mind about burial funds is that in order for them to be exempt from Medicaid’s reaches, the funds must be placed in an irrevocable “Medicaid compliant” burial account or pre-need funeral arrangement.

Elder Care Plan:
This usually entails a comprehensive plan to arrange for and coordinate the elder parent’s appropriate living arrangement. This may be at home with a home health aide or attendant, or in a nursing home, or anything in between. The question that is most often posed is this … how can we pay for the care without either spending all of our money or losing our home? These are good questions, especially after spending the better part of an adult lifetime earning and saving the money. The bottom line is Medicare and Medicaid. The third part of “GET YOUR LEGAL AND FINANCIAL HOUSES IN ORDER” is sometimes the most important. The reason is because this part must be answered by a qualified Elder Care attorney, who if he/she is truly qualified and knowledgeable would be able to capably assist with both Part One (Health and Financial Documents) and Part Two (Death and Distribution Documents) of “GET YOUR LEGAL AND FINANCIAL HOUSES IN ORDER”.

With that said, a qualified Elder Care attorney will help the family arrange for the appropriate living arrangements, will advise the family on the selection of home health care agency, and may work toward getting Medicare, Medicaid and other government benefits as applicable and appropriate. Medicaid planning is not inappropriate per se – as in wrong – but it must be appropriate for the client and his/her circumstances and needs. There are many tried and true techniques and planning options in getting Medicaid to pay for the home care or the nursing home care. But, because Medicaid is a need-based welfare program, the applicant must qualify both medically and financially. Medically qualified merely means that the applicant is in need of home care or nursing home services and Medicaid agrees. Financially qualified means that the applicant has no more than a certain level of assets and/or income, and has not made any transfers that would otherwise disqualify the applicant from Medicaid benefits. The level of assets and/or income changes depending on whether home care or nursing home care is needed, and the types of transfers that would disqualify an applicant are complicated and best explained by the qualified Elder Care attorney.

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About This Blog

The Law Offices of Jeffrey A. Asher, PLLC produces this blog to provide general news and information about Estate Planning, Trusts & Estates, and Elder Law.