elder care in new jersey: legal and financial issues presented by donald d. vanarelli, esq....

Elder Care in New Jersey:Elder Care in New Jersey:Legal and Financial IssuesLegal and Financial Issues

Presented by Presented by Donald D. Vanarelli, Esq.Donald D. Vanarelli, Esq.

Certified Elder Law Attorney Certified Elder Law AttorneyRegistered GuardianRegistered Guardian

R.R. 1:40 Qualified Mediator 1:40 Qualified Mediator

Overview of Government Overview of Government Sources for Long Term Sources for Long Term

CareCare

A Truth Almost A Truth Almost Everyone Must FaceEveryone Must Face

Most older people develop physical or mental impairments which at some point prevent them from living completely independent lives.

Long Term CareLong Term Care

Long Term Care refers to the kind of care a person needs when he or she is unable to care for himself or herself due to illness, frailty or cognitive impairment.

Long Term CareLong Term Care

Long Term Care is different from traditional medical care. Long term care helps one live as he or she is now; it may not help to improve or correct medical problems.

If you cannot live independently, If you cannot live independently, what care options are available?what care options are available?

1. Stay at home - Home Health Care

2. Move in with Family

3. Assisted Living Facility

4. CCRC

5. Nursing Home

The Need for Long Term The Need for Long Term CareCare

• 1 of 2 women and 1 of 3 men who reach the age of 65 will use a nursing home at some point during their lives.

• 40% of nursing home residents are between 18 and 64 years of age.

• Average stay in NH - 2.9 years

• 7 in 10 individuals will need home health care.

The Cost of Long Term CareThe Cost of Long Term Care

Average cost of 24 hour Home Health Aides provided by an agency - $4,500 per month, or $54,000 per year.

Range of costs charged by Assisted Living facilities - $4,500 - $6,500 per month, or $54,000 - $78,000 per year.

Typical cost of Nursing Home care in New Jersey - $8,000 per month, or $96,000 per year.

Who Pays For Long Term Who Pays For Long Term Care?Care?

1. Private Pay 49%2. Medicaid 44%3. VA Benefits 4%4. Medicare 2%5. Private Long Term Care Insurance 1%

Long Term Care CostsLong Term Care CostsCovered by MedicareCovered by Medicare

1. Home Health Care

2. Nursing Home Care

Medicare - Home Health Care Medicare - Home Health Care AidesAides

• Covers up to 100 home visits per “spell of illness”.

• Preconditions to payment: prior hospital stay of at least 3 days and home health care initiated within 14 days of discharge.

• Beneficiary must be homebound and need skilled nursing care, physical or speech therapy, NOT custodial care.

Medicare Payment of Medicare Payment of Nursing Home CareNursing Home Care

• Immediate prior hospital stay of 3 days

• Admitted to NH within 30 days of hospital discharge

• Covers, skilled nursing care or rehabilitation only, NOT custodial care.

Custodial CareCustodial Care

Custodial Care (sometimes called Personal Care) is the level of care provided in ALFs and NHs. Custodial Care helps one with activities of daily living (ADLs). ADLs include bathing, eating, dressing, toileting, continence and transferring. Medicare does NOT pay for custodial care.

Compare: Custodial Care vs. Skilled Nursing Care

How Much Does Medicare How Much Does Medicare Pay?Pay?

• Maximum Coverage - 100 days

• Day 1-20 - Medicare pays 100% of covered charges

• Day 21-100 - Medicare pays all covered charges, except coinsurance amount. Year 2008 coinsurance payment = $128/day, or about $3, 840/month

• Day 101 - on your own

Medigap PoliciesMedigap Policies

Medigap policies fill in the gaps in Medicare coverage, but do NOT extend coverage for long term care needs beyond what Medicare provides.

Compare Medicare and Compare Medicare and MedicaidMedicaid

• Medicare is an insurance program. Medicaid is a welfare program.

• Medicare is for elderly and disabled people regardless of their income or resources. Medicaid is for elderly and disabled people with low income and resources.

MedicaidMedicaid

Joint Federal and State Program

Provides medical assistance for financially eligible persons who are aged, blind or disabled.

General EligibilityGeneral Eligibility

1. U.S. Citizen or legal alien

2. New Jersey Resident

3. Age 65 or older, blind or disabled

4. Financial Limitations

Income and Resources Income and Resources LimitsLimits

Income - all income is counted in determining eligibility

Income cap - Community Medicaid programs which pay for home health aides and care in Assisted Living facilities have an income cap. In 2008, the cap is $1,911/month. No cap for Nursing Home Medicaid.

Resource LimitsResource LimitsCountable resources - all assets in the

sole name of applicant, in the sole name of spouse, or in joint names, either with the spouse or another person. Includes pension and retirement assets of BOTH the applicant and spouse.

Resource Limits - $2,000 for an individual and $3,000 for a couple.

Excess resources - must be spent down.

Transfer of Resource RulesTransfer of Resource Rules

Instead of spending down excess resources on long term care costs, some have attempted to achieve Medicaid eligibility and preserve assets by making gifts to family members and others.

Transfer of Resource Transfer of Resource RulesRules

To prevent gifting of assets, Medicaid imposes a “penalty period”, or period of ineligibility for Medicaid, for all gifts made within the “lookback period”.

Estate Recovery: Estate Recovery: The Medicaid LienThe Medicaid Lien

Federal and State law requires the States to seek, from the estate of a deceased Medicaid recipient, recovery of all Medicaid benefits paid when the recipient was 55 years of age or older when the Medicaid benefits were received.

Comparing Medicare and Comparing Medicare and Medicaid Coverage for Long-Medicaid Coverage for Long-

Term Care CostsTerm Care Costs

Medicare: covers home health aides and nursing home costs for many people, but only for a short time. No financial limits.

Medicaid: covers home health aides, assisted living facilities and nursing homes, but only for aged, blind and disabled people who meet strict financial limits.

Long Term Care PlanningLong Term Care Planning

Includes:

LTCI

Wills

Advance Medical Directives

Powers of Attorney

Trusts

Guardianships for incapacitated persons

Asset Inventory

Restructuring of assets

Estate Planning When A Estate Planning When A Spouse Is Confronting Spouse Is Confronting

Health IssuesHealth Issues

Estate Planning ForEstate Planning ForThe Healthy SpouseThe Healthy Spouse

When one spouse is a resident of a nursing home or medical institution, the “community spouse” may utilize various strategies to protect and retain resources for the family without jeopardizing the institutionalized spouse’s Medicaid eligibility.

Asset Titling-Deeds, Bank Asset Titling-Deeds, Bank Accounts and Life InsuranceAccounts and Life Insurance

Transfer Title of Principal Residence to CS- this is an “exempt” transfer when determining eligibility of IS.

-Significant estate planning measure

-Home will escape “Medicaid lien”

Spend DownSpend Down

• Pre-Pay Real Estate TaxesPre-Pay Real Estate Taxes• Pre-Pay Homeowners InsurancePre-Pay Homeowners Insurance• Pay Off DebtsPay Off Debts• Pay For ServicesPay For Services

Convert Countable To Convert Countable To Non-Countable AssetsNon-Countable Assets• Buy household goods and personal effectsBuy household goods and personal effects• Make home repairs and improvementsMake home repairs and improvements• Purchase a more expensive homePurchase a more expensive home• Purchase life estate from childrenPurchase life estate from children• Purchase a new carPurchase a new car• Buy cemetery plotBuy cemetery plot• Pre-pay funeralPre-pay funeral

Retitling of Bank Retitling of Bank AccountsAccounts

and Life Insuranceand Life Insurance Life InsuranceLife Insurance

• Change beneficiary designation to a third partyChange beneficiary designation to a third party• Assign policy to funeral homeAssign policy to funeral home• Assign policy to childrenAssign policy to children• Borrow Cash ValueBorrow Cash Value

Bank AccountsBank Accounts• Change bank accounts to exclude name of Change bank accounts to exclude name of

institutionalized spouseinstitutionalized spouse

Changing CS’s Will to Changing CS’s Will to Exclude Disabled Exclude Disabled

SpouseSpouse

• If institutionalized spouse is named beneficiary of If institutionalized spouse is named beneficiary of CS’s Will and CS passes away first, IS may be CS’s Will and CS passes away first, IS may be ineligible for Medicaid ineligible for Medicaid

• Elective Share IssueElective Share Issue

Durable Power of Durable Power of Attorney with Gift-Giving Attorney with Gift-Giving

PowerPower° POA - Legal instrument which authorizes an POA - Legal instrument which authorizes an

“agent” to perform specific acts documented in the “agent” to perform specific acts documented in the POA on behalf of the “principal”. POA on behalf of the “principal”.

° NJ statute specifically authorizes an agent under NJ statute specifically authorizes an agent under POA to conduct banking transactions.POA to conduct banking transactions.

° To execute POA, principal must understand To execute POA, principal must understand nature and effect of appointing an agent.nature and effect of appointing an agent.

° “ “Durable” POA is not affected when principal Durable” POA is not affected when principal becomes disabled. Must specifically so state in becomes disabled. Must specifically so state in document.document.

Durable Power of Attorney Durable Power of Attorney with Gift-giving Power, with Gift-giving Power,

cont’dcont’d

• Plan ahead to avoid guardianship proceeding-Plan ahead to avoid guardianship proceeding-In reIn re KeriKeri issues issues

• ““Gifting powers” must be specifically granted to Gifting powers” must be specifically granted to the agent for purposes of Medicaid planning.the agent for purposes of Medicaid planning.

• Tailor gifting provisions to include other siblings Tailor gifting provisions to include other siblings or alternate agent in process to avoid appearance or alternate agent in process to avoid appearance of “self-dealing”.of “self-dealing”.

Exempt TransfersExempt Transfers Transfer Home ToTransfer Home To

• CSCS• Disabled ChildDisabled Child• Caregiver ChildCaregiver Child• Sibling with an equity interestSibling with an equity interest

Transfer Non-Home Assets ToTransfer Non-Home Assets To• CSCS• Disabled ChildDisabled Child

Exempt Transfers,Exempt Transfers,cont’dcont’d

Transfer To Trust for Disabled ChildTransfer To Trust for Disabled Child• Disability Annuity TrustDisability Annuity Trust• (d) (4) (A) Trust(d) (4) (A) Trust• Pooled TrustPooled Trust

Transfer For Value-Transfer For Value-No PenaltyNo Penalty

• Purchase Commercial AnnuityPurchase Commercial Annuity• Spousal Annuity TrustSpousal Annuity Trust• Private annuityPrivate annuity• SCINSCIN• Sell Remainder interest in senior’s homeSell Remainder interest in senior’s home• Buy Life Estate in child’s homeBuy Life Estate in child’s home

Transfer For Value, cont’dTransfer For Value, cont’d

• Board and Care AgreementBoard and Care Agreement• Life Care ContractLife Care Contract• Family Reverse MortgagesFamily Reverse Mortgages• Interest-Only NoteInterest-Only Note

Countable Transfers - Countable Transfers - Result in PenaltyResult in Penalty

• Large transferLarge transfer• Half-a-loaf transferHalf-a-loaf transfer• Monthly or Sequential transfersMonthly or Sequential transfers• Transfer home, retain life estateTransfer home, retain life estate

Thank You Thank You For Your AttentionFor Your Attention

Questions or Comments?Questions or Comments?