Elder Law Blog
Here you can read the entries from our blog at www.ArkansasElderLawBlog.com. You can follow the link above to keep up with our full blog. Be sure to check back often as we will be posting regularly with information about the Elder Law issues, news, and information.
1)
How much money can I give away
That is probably one the most popular questions I get. The short answer is that you can give away as much as you want. This is America and as long as you are not giving away money to defraud a known creditor, you can give your money to whomever you wish. Now, just because you can give away your money, doesn’t mean that you should. Particularly when applying for Medicaid.
With Medicaid, you will suffer a penalty when you give away your property. Also, please understand that when I say “give away” I mean actually giving away the asset but also when you take someone’s name off of an account or when you sell an item for less than fair market value. An example of a gift is when you take mom’s name off of a bank account that was mom’s money but had both you and your mother’s name on it. Also, if you add your name to your parent’s home, that is considered a gift of one half of the value of the house. What if you sell your house to your child? You can do that, but selling it for less than its Fair Market Value will result in a gift in the difference in the amount of the sale and the Fair Market Value.
So, the answer is you can give away all that you want. However, Medicaid will penalize you for the gift in terms of when you will qualify for Medicaid. Medicaid penalizes the giving away of assets in preparation for applying for Medicaid.
Now, let me address the “in preparation for applying” phrase. The rules state that only those gifts that are given away in order to qualify for Medicaid will cause a penalty. Trust me, I have been doing this for a long time and only in the clearest of situations where the money was truly stolen by another person with documentation of a police report and a lawsuit filed against that person to get the money back, will Medicaid allow that transfer to not be in “preparation for qualifying for Medicaid”. And even in a few of those cases the transfer was considered a gift. So, the rule is that any money transferred within the lookback period will be seen as a gift resulting in a penalty unless it falls under one of the exceptions.
Now, what happens when the money is given away? Medicaid takes the amount of money and determines how many months that money would have paid for the average nursing home in the state of Arkansas and imposes that length of time in penalty. For example, if you give away $45,000, that would have covered about 10 months of nursing home care so you would be disqualified for 10 months.
This penalty applies to anything that is transferred; money, cars, real estate and life insurance with cash value. Anything with value will be penalized.
There are ways to reduce the amount of the penalty so that some of the money is actually protected. However, I will cover that in a future posting.
1/11/2010
I just hungup from a lady that worked with the nursing home in submitting an applicationfor her mom. Mom had no assets otherthan a house, which normally is a non-countable asset. The nursing home helped her apply forMedicaid thinking everything was fine. Five months later (yes, five months even though the case is supposed tobe processed in 45 days) the case worker comes back with a denial.
The reason for the denial was that the house was in a revocable living trust. The nursing home missed this and it took thecaseworker apparently 5 months to figure this out. Why does that make a difference? The Department of Human Services (the State) allowsa person to keep their house for two reasons. The first reason is if the person gets better, they will have a place togo to from the facility. The secondreason (and I think the main reason) is that the house is a “pot” of money thatthe state can go after when the person passes away. However, the only way the State can get theirhands on the house is if the house goes through probate. If the house is in a revocable trust, thenthe house doesn’t go through probate and the State cannot gettheir money. Therefore, a house in arevocable trust is a COUNTABLE resource and will cause a person to bedisqualified. It’s for this reason thatI think the State is not so concerned about the applicant having a place to goback to but a pot of money to go after.
Please don’t take my discussion above as “anti-Trust”. I’m not. Trust’s are very goodfor what they do: avoid probate. Arevocable trust though does not help with Medicaid and as shown above, can hurtyou with Medicaid. The fix is easy but youhave to know something needs to be fixed!
So, my advice to these people (and the nursing home) was not what they really wantedto hear. She was disqualified for thosefive months and will owe the nursing home for that time. The patient doesn’t have any money so thehouse will have to be sold to reimburse the facility.
This brings up two major issues. First, why did theState take five months to read a deed and see that the house was in atrust? I hear from people all the time “Can’tI just go down to the DHS office and let them help me do my application?” My answer typically is “Do you want the IRSto help you fill out your tax return?” The answer is a resounding “NO”. They do not have your best interest at heart. They work for the state. Granted, there are a few caseworkers that Ihave worked with that I think do look out for the applicant and will helpthem. However, those are very few. Most of them are bureaucrats that apparentlysee it as their job to deny you the benefits to which you are entitled. Even what appears to be a simple applicationcan cause significant problems.
The second issue this brings up is the fact that you need someone with a tremendous working knowledge of the DHS rules and how they function. There are a number of rules that, when read initially,seem to be somewhat clear but the State functions very differently than theyare written. Also, Medicaid is a Federallaw. The State should follow Federallaw, but there certain times that they do not. A qualified person who understands both State Medicaid policy andpractice but then also Federal law should be the person completing yourMedicaid application. A person with thisknowledge can recognize these intricate issues that may cost you a significantsum of money.
If you have questions, do not hesitate to contact our office at any time and speak to any of our attorneys.
Todd Whatley, CELA*
Certified Elder Law Attorney
LL.M. Elder Law
12/16/2009
The Holiday Season is great time to be with family and create memories. Many times aging parents have issues that they really do want to talk about. At the same time, the adult children have questions about those very same issues. Some of the topics are sensitive and we just are not sure how to bring them up and usually parents do not know how to bring them up either. The attached document lays out a few ways to start the conversation and clear the air and get everyone on the same page during this critical time.
12/8/2009
You need a Miller trust when your income is above the state’s limit for that year. In 2009, that number is 2022. Now, one point that many people miss, including nursing home supervisors, is that the amount of money deposited into your account by Social Security is not your total income. What is deposited is your total income after the Medicare premium is deducted. So for 2009, you need to add $94.60 to what is deposited to get the actual income that will be counted by DHS. I have seen this be a problem many times for clients coming into the office after they have gotten bad advice from other people. The problem is that this is one of those rules that DHS is very firm on in that if you need a Miller Trust and your income does not go into that account, then you will be disqualified for that month. No ifs, ands or buts about it: disqualified!!! And many times it may take DHS 3-6 months to get an application processed. If you get to the end of this six month process and you have been disqualified the whole time, there is a huge financial burden there that someone is going to have to cover and usually it is the family or the nursing facility. I let one of these slip by in the office and I had to pay for a month or so of nursing home care for my client so we don’t miss these any more. So, be sure to look at the total gross income to make sure this does not happen to you.
7/22/2009
I have been frustrated by the limitations the Medicaid system has placed on us by limiting the planning for those clients that are not healthy and need some help but don't need to go into a long term care facility.
I recently attended a 3 day Veteran's Benefit "Boot Camp" that explained how the Veteran's Administration has a pension program that provides benefits to those veterans that served at least 90 days and one of those during a time of war. There are income and asset limitations but there ways to proceed through those requirements and still qualify.
This plan provides a range of benefits depending your level of disability. The benefits are available if you are the veteran or the widow or widower of a veteran. If you qualify you can receive benefits up to $1949/month. This is a tremendous benefit that can truly make a difference in someone's life and hopefully keep them out of a nursing home when many times people end up in nursing purely for financial reasons. Finding these benefits and helping these people really makes my day.
Also, check my new updated website at www.elderlaw-ar.com. It should soon have some information on there about VA benefits but now there is language regarding estate planning and long term care issues.
6/3/2009
I never cease to be amazed at the response I get when I do meetings. I spoke to the
Stroke Support group in Fort Smith yesterday and had a good time. My topic was the Elder Law Test. It is a simple test that tests some very basic information regarding Elder Law issues. No person gets them all right and most of the general public miss almost all of them. That makes for a very good topic starter. How would you do?
Below is the test. Now, one question (#3) is my opinion but I have very strong feeling about that and will justify that opinion. I posted the test below. Take the test and email me (todd@elderlaw-ar.com) with your answers and I will tell you how you did.
Elder Law Test
1. T/F Having a will avoids Probate.
2. T/F You need a minimal amount of assets before a trust is for you.
3. A _____________________ is probably THE most important document one needs.
4. T/F You can not make any gifts within five years before applying for Medicaid.
5. T/F A spouse can keep $100,000 of their assets when the other spouse goes into the nursing home. (*____________________)
6. T/F The home has to be sold in order to qualify for Medicaid.
7. T/F "Spend Down" is the process of spending money on nursing home care in order to qualify for Medicaid services.
8. The minimal amount of money a spouse gets to keep while their spouse is on Medicaid is $______________________.
9. The appeal process for a denied Medicaid application is called a:
“______________ Hearing”
Bonus: What is the minimum number of DHS employees that are present? 0, 1, 2, 3, 4.
10. T/F Putting assets into the name of a child or family member is usually a good idea.
4/30/2009
As with any job, sometimes we get down due to the stress of the job, the constant fights with opposing parties, etc. But then, there are times when we do things for people that make the job really worth it.
Mr. Jones (not his real name) came in to see us to say that he had applied for Medicaid thinking that from all he had read that he should qualify. If you remember from my previous postings, when a person is married and their spouse goes into the nursing home, you get to keep half of your countable resources as of the date the spouse goes into the facility. Mr. Jones thought he had done this in the fact that his investment portfolio had gone down significantly after his wife went into the Nursing Home. The caseworker told him that "the decrease in value of your portfolio was YOUR money going down not your wife's". This is ridiculous reasoning and completely goes against the policy.
Thankfully, the facility told Mr. Jones to come see us. However, he came in 5 months after his meeting with the caseworker. We evaluated his situation and determined that Mr. Jones was qualified the time he met with the caseworker. We were able to tell Mr. Jones that if we did the application that very day, then Medicaid would go back 3 months to qualify his wife. We submitted the application, with a detailed letter explaining the State's error, and his wife was approved 3 months prior to the application. Mr. Jones was very thankful and we as a team felt very satisfied that we helped Mr. Jones. We also felt good because we "encouraged" (shall we say) the State of Arkansas to follow their own rules and do what they should have done the first time.
This has happened a number of times but this case was just approved this week and I wanted to share it with you. If we can be of assistance to you or anyone you know, please do not hesitate to contact us.
Also, check out our updated website: www.elderlaw-ar.com We just got it up and going yesterday. It still needs a little work but it now has the new office addresses and the new 2009 Medicaid numbers.
4/7/2009
An issue that comes up quite frequently (and one that I’m sure is very important to many facilities) is when a person is approved for Medicaid services but still owes money for prior medical expenses. By the way, prior nursing home payments are considered to be “medical expenses”.
This happens many times when a facility resident’s family does the application and something gets messed up along the way. I have seen this occur with unknown assets such as life insurance policies with cash value and also when a Miller Trust becomes over funded and is not corrected. The nursing home bill then goes unpaid while this mistake is in effect. To add insult to injury, many times the DHS office takes quite some time to make their determination and then, all of a sudden, you have a substantial past due amount.
The good news is that there is a Federal Medicaid (CMS) rule stating that the applicant’s income should be used to pay for their pre-eligibility medical expenses while Medicaid then makes up the difference to the facility while this back debt is being paid. The Federal Law is 42 C.F.R. § 1396a(r)(1)(A)(ii). Specifically, the income can be used to pay for “medical services not covered under the State plan”. The few cases that have pursued this have, to this point, ruled that nursing home bills fall under this category and therefore can be paid.
Therefore, how this works out is best to ask for the income offset when you apply for Medicaid if you know of pre-eligibility debts. However, there is no reason not to go to DHS now and ask for an income offset for resident’s that now owe for previous debts. Please understand this has not been done in Arkansas to my knowledge. I am currently pursuing one of these and have had little response from the State. I did not pursue this aggressively because I was waiting on some other information from other states, which I now have.
In order to pursue this you must ask the caseworker for the income offset. He or she will more than likely not know what you are talking about or will deny the request. You must then proceed to a Fair Hearing. You must have a good understanding of Administrative Law to make a good record and more than likely pursue this to Circuit Court based only on the Fair Hearing record.
If you know of someone in this situation, please contact our office with some details. We will look at these cases and consider taking them to the caseworkers. I am excited about this new information and look forward to working with families and facilities to eliminate a problem that up until this time really did not have a good answer. Please contact us if you have any questions.
4/3/2009
Let me say that I know it has been a while since I have updated. Things have been a little crazy. I promise to do better. I am currently in Washington DC at the National Academy of Elder Law Attorneys annual meeting. I'm learning many good things. I will address these things in subsequent posts.
However, I want to take this opportunity to discuss quickly one of the hottest new topics in Medicaid planning. There is a new development that will now allow the well spouse (Community Spouse - CS) to protect the vast majority, if not all, of their assets while their loved one is in a long term care facility. One of the biggest concerns of the well spouse while going through this horrible situation is that the well spouse (many times this is the wife) will be left destitute. There have always been protections to make sure the well spouse keeps half of the resources up to decent amount. However, in many situations, that amount of money really did leave that person with a drastic change in their way of life that was simply not fair.
Now, we can take the money that would have otherwise been spent and allow it to go back to the well spouse. The details are very complicated but I suggest that you contact us for a phone consult if you have questions. We will be more than happy to see if you qualify for this very exciting program.
If you know of someone who would benefit from this information, please let them know. As always, if you have questions on this blog, you have the opportunity to comment.
Thanks,
Todd
9/10/2008
So, you have a loved one on Medicaid and they are living in a nursing home and still own a house. The Medicaid rules say that you can qualify for Medicaid and own a home, even a home worth $500,000. Why would they do that? Why let you qualify for Medicaid owning a half a million dollar home? The reason is simple!
The home is called a non-countable asset for qualification. However, it is an asset that they come and get when the person dies. So, it is not really non-countable, but it is excluded initially. When the Medicaid recipient dies, the house then has to go through probate (even if you have a will!!!). One of the requirements for probate is to notify the state if that person was on public benefits. So, once they are notified, they get the amount of money that they spent on your loved one out of the house. Either the family pays that amount of money out of their own pocket to keep the house or the house has to be sold to generate the cash to pay the claim.
The real problem with this is that the children of the applicant typically keep the house and pay the upkeep, utilities and taxes thinking they will get the house when mom dies. They are then surprised when they loose the house after putting all that money into the house over the past few years. It is one of those surprises that many people don't learn until it is too late.
Therefore, very few of my clients go onto Medicaid owning their home. We take care of it prior to application. However, what if you are in the above situation? Here are some suggestions.
First you can sell it to your family. Yes, that is correct. Now, you can not sell it for a dollar (well, you can but any difference between a dollar and the actual value will be a gift and you don't really want that unless you have quite a bit of money ready to pay for the facility). You can sell the house to a family member for "fair market value". Why sell the house to a family member? Fair market value to Medicaid is the county assessed value of the house. Typically, in most markets the county assessed price is lower than the actual market price. If the family bought the house at county assessed value, that is all that Medicaid needs to see. You then can sell it at whatever the market will handle and keep the difference.
If the family can't buy the house, then you sell the house on the open market. Make sure the house sells for more than the county assessed value or else Medicaid will consider it a gift even if it was sold to a complete unknown third party. Trust me, they will penalize you for any difference unless you can prove beyond the shadow of a doubt and with the Chairman of the National Real Estate Board, two congressmen, a senator and your pastor testifying that the price you got was fair (not quite but almost).
When you sell the house, the applicant now has money in her account that will disqualify her from services. A common misunderstanding is that Medicaid has to be paid for all past bills out of the new "house" money. That is not correct. She will simply come off of Medicaid services until that money is spent down on. Since she now has this money, there are things we can do with that money that will help protect at least a portion of the money for the family. That is too complicated and I prefer not to put it out to the general public, but there are things we can do to protect usually at least half of the money if not three-fourths of the money for the family. If you have questions about this technique, feel free to contact me at any time.
9/5/2008
First, let me say I am very sorry for not posting more frequently. I started out posting every day and here lately things have been a little crazy. Primarily, I have started to LLM (masters of Laws) courses at the same time. These are generally full time courses within themselves and for some reason I have started two of them. So, if you have questions or want information, please leave me a note and I will get an email. With some prompting, I will post more often.
I wanted to discuss the issue of Ageism in America and how it has shown up in the Presidential race. Since John McCain was nominated last night as the Republican nominee, it is now official. Regardless of which party you are for, you will have to admit that Mr. McCain's age has been an underlying issue. Particularly since he nominated Sarah Palin, the governor of Alaska. as the Vice President pick.
All we hear is how with his age and him having been diagnosed with Cancer 3 or 4 times, she very well could be president. That is true. However, if you watched the convention last night you would have seen that Mr. McCain's mother was present and did a part of the video introducing him. She is 96 years old!!! If genetics has anything to do with it, John McCain could probably serve two terms and have many years afterward.
The comments I have heard is that he is "old and grumpy". Well, he is also experienced and has a lot to bring to the table. It depends on how you see it.
On the other hand, the opposite has been stated about Barack Obama. The comments about him is "he is so young. What experience does he bring?". that is the opposite of Mr. McCain's comments. I think the previous bias is much more common in America than the latter.
I deal with older people all the time. I love it! I always assume that they are competent and able to make their own decisions until I am given a reason to think otherwise. One thing that gets me really mad is when people are discriminated against just because they are old. We can not make fun of any other group of people (other than Christians) and get away with it. We need to look at people for what they are and what they know. Age brings with it a number of benefits and it is time that our country start to appreciate the experiences and wisdom that those with a few years behind them can bring.
6/18/2008
I get questions very fequently on Reverse Mortgages. If you watch any television, you have seen Robert Wagner telling you of all the advantages of a reverse mortgage. However, I have seen these in a number of situations and many times they are not what the client thought they were and ended up causing problems.
AARP has a good article on the subject. It is here:
http://www.aarp.org/money/revmort/revmort_basics/a2003-03-21-revmortfactsheet.html
If you are thinking about getting a reverse mortgage, please read this article and talk to your financial planner about other options that may provide a better option.
6/10/2008
This is one the most important issues in Medicaid planning. It is very confusing because the general public thinks that you have to sell the house to qualify or that you have to give it to the nursing home or something. There are some very specific rules regarding the house and some pretty neat things you can do also.
The simple rule is that you can qualify for Medicaid owning your home if it is where you intend to return if you get better (which is pretty much always the case) and if your equity value in the house is no more than $500,000 (who's isn't?). It is considered a non-countable resource when you apply for Medicaid. But the question is: why would Medicaid let you qualify for Medicaid owning a half a million dollar house? The reason is that when you die, Medicaid then comes in and puts a lien on the house as the house goes through Probate. So, before your kids get the house after you die, Medicaid has to be paid. So, the house is not really a "non-countable" asset, but is actually a "delayed countable resource" since they get their money anyway. Medicaid getting an asset after the death of a person is called "Estate Recovery".
There are exceptions to Estate Recovery, but they are limited and I usually do not count on them because it is basically up to the State to decide if they want to not go after the house or not.
Another bad situation is that even though Medicaid says you can own the home while getting their services, all of your income goes to the facility. So, who pays the utilities, the insurance (if you can get it) and the upkeep? Well, it is usually a child that expects to get the house upon your death. However, if the services provided by Medicaid exceed the value of the house, the child will get nothing after paying all these expenses. That is not good!
Therefore, most of my clients don't keep the house when they go onto Medicaid. So, what do you do with the house? There are a number of things that are simple. You can sell it. You sell it on the open market and get as much as you can. This does create money in the person's name but there are things we can do with that (I will discuss that later). You CAN sell it to a family member. However, the sale must be for fair market value. A sale for less than fair market value will be considered a gift in the amount that is different between what the child paid for it and what it was worth. There are different ways to determine Fair Market Value (FMV). The most common is to get an appraisal. That is usually the most accurate value. However, you can also use the county assessed value as FMV. This works well if the child is the one buying the house since that price is generally lower than an appraisal. PLEASE be careful with this. It is fraught with pitfalls. I have had a number of appeals of cases on this very issue because DHS really doesn't want this to happen but it can if done correctly.
Giving away the house is normally not a good idea. Any gift from a person applying for Medicaid for the next 5 years, will cause a penalty where the person will not qualify for Medicaid. However, there are few exceptions. The house can be given to the well spouse. That may seem useless but there are good reasons to do it. Also, the house can be given to a disabled child. However you must be careful to not disqualify the child from services by doing so or giving that child full right to sell the house and then be disqualified. There are ways to make sure that happens.
One final issue on the house. When the time comes that the older person can not live by themselves, it does make a huge difference whether they move in with a child or a child moves in with them. This issue is way too complicated to cover here but there are very significant ways to save the house or to protect a large sum of money depending on which way you decide to go. Please contact a qualified Elder Law Attorney if you are thinking about doing this because it could make a difference between protecting the house or loosing a lifetime of savings.
6/4/2008
I apologize for not updating the blog in a few days. This weekend, I had a first hand encounter of what many of my clients go through everyday.
My mom had some medical issues come up while she was here visiting us. It started about 9:30 last Thursday night. We had to call an ambulance and we spent half the night in the Emergency Room and the other half and part of the morning in CCU. She is fine now but it was a little scary.
As they say, the cobbler's children have no shoes. I have been telling families for years to make sure they have access to health care documents when the time arises. Well, all of my mom's documents were in the Bryant office, not in our hands when I needed them at 11:00 pm 3 hours away. Thankfully the hospital took my word that I was her Power of Attorney but they did not have to. They could have easily sent me out and dealt with my mom in a way they thought was best, not according to her wishes.
I have recommended a service for years to my clients that stores the pertinent documents and then sends you a card with a phone number and an ID number. The hospital finds this card, calls the number, puts in the client's ID number and their fax number and in just a few seconds, the documents are there at the facility wherever it is. Well, we didn't have that service but we now do.
Thankfully, my mom was conscious the whole time. However, if she wasn't things could have gotten very tense. Emergency rooms and hospitals are trained to save lives. They do what they can to keep you alive regardless of the effect on the patient. Clients create living wills, health care Powers of Attorney and HIPAA releases to help fix this problem. However, without the document in hand, they will do what they feel is best which is to do everything possible. Therefore, I will from now on be encouraging clients much more strongly to have this service.
Having this service is also most important if you have appointed a non-family member as the person to make those decisions. As my mom's only child, they would pretty much go with me since I was all there was and I am legally the next of kin, but they do not have to. However, if you appoint a person who is not next of kin, it becomes absolutely necessary that you have this service. We use Legal Directives. They have fax availability and internet availability for retrieval of the documents. There is also a service called Docubank. You can implement this service after you do all the documents. I would highly encourage you to do it becuase I wish I had it at the time. We now have that service in place.
5/27/2008
I had a great Memorial day. We drove back from Benton after seeing family all weekend and going to Riverfest (which was hot and crowded). However, on Memorial Day my family cooked out and then we watched "Flags of our Fathers". It is about Iwo Jima and planting the flag. It did have the very graphic battle scenes like those in "Saving Private Ryan".
I never cease to be amazed at the stuff those men went through to protect our country. I honor the men that gave their lives for us and I look up tremendously to those who survived, came back and have had full productive lives. They made it back when many other men just like them, standing beside them, in front of them or just behind them did not make it. It is truly amazing. We owe them far more than we give them.
That is one reason I do what I do. I see it as my part to make sure that this government does all it can to help them in their final years. The rules are there in some archaic and confusing way. My job is to use those rules to make sure that these men and their family get what they deserve. Some people ridicule what I do because I "get people on Medicaid that don't deserve it". I'm told "they should pay their own way until they are broke". These men and their families that suffered while they were gone, have paid their own way. They defended this country. They built this country. We would not be here and have the government that we have were it not for these men and their families. We owe them everything we can give them. Our government doesn't think twice about paying Welfare for an able-bodied person their entire life even though they could go get a job and contribute something to this country but choose not to do so. Rarely is anything said about that money being spent every month. However, when I try to preserve the little remaining money that an elderly person has and has saved for their entire life, I am then the bad guy. I don't think so!
Our veterans of any conflict deserve whatever this country can afford to give them. Our government spends its money on a number of things I don't agree with. So, when I help someone get the entitlement they deserve, I feel good about that. That is why I do this every day.
Yep, some of you are going to be mad. Good. If you have a comment, please let me know. Otherwise, let me do my job helping those that deserve it.
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