medicaid power point 2011

Elder Law & Medicaid Planning

Futterman & Lanza, LLP222 East Main Street, Suite 314

Smithtown, New York 11787631-979-4300.

Attorneys & Counselors at Law

Copyright © 2011 Futterman & Lanza, LLP

Vision Statement

• Preserving and protecting your family’s hard earned assets and passing them on to family members, not to the potentially catastrophic costs of long-term care (i.e., the nursing home).

What is long-term care?

• Long-term care is a variety of services that include medical and non-medical care to people who have a chronic illness or disability. Long term-care needs can be provided through:

• (1) Home health care;

• (2) Assisted Living facilities;

• (3) Skilled nursing home facilities.

What are the costs of long-term care?

• Home health-care costs vary depending on the number of hours required and the hourly pay rate charged by the personal care aide.

• Assisted Living costs range from $3,000/month to $8,000/month.

• Skilled nursing care costs on Long Island range from $9,000 to over $17,000 per month.

Who is exposed to these costs?

EVERYONE!

How do you pay for long-term care?

• (1) Medicare (limited benefit);

• (2) Private pay;

• (3) Long-term care insurance; or

• (4) Medicaid.

MedicaidMedicaid is a “means tested” insurance program jointly funded by the federal, state and local governments (DSS), and provides homecare and skilled nursing home care services.

Medicaid Eligibility

• Medical need

• Financial need

Medicaid Financial Eligibility (Nursing Home)

•Resources

• Income

Resources

• For 2011, an individual can have no more than $13,800 in resources.

• ($218 increase)

• Community (“well”) spouse may retain resources up to approx. $110,000.

Exempt Resources

• Irrevocable Funeral Trust (no limit)

• $1,500 burial fund

• Primary residence (generally)

• IRA’s or qualified retirement accounts if applicant is receiving RMD.

• Personal property (jewelry, car, etc.)

• Reparation payments

Income

• 2011 Income Levels:

• New York is a “spend down” state with regard to income. Income over the personal needs allowance ($50/month) must be contributed toward the cost of care.

• UNLESS – there is a community spouse with income under $2,739/month.

Transfers

• Look Back Period

• Penalty Period

Look Back Period

• Medicaid will now look back at applicant’s financial information for the 60 month period prior to the date applicant requests benefits.

• THIS IS A CHANGE FROM 36 MONTHS!!!!!!!! (THE RESULT OF THE DEFICIT REDUCTION

ACT)

What is DSS Looking For?

• Looking to see if the applicant (or spouse) made uncompensated transfers of income or resources (i.e., gifts)

What if DSS discovers a gift was made?

Penalty Period• When gifts are made during the look-back period,

Medicaid imposes a penalty or period of ineligibility for benefits.

• OLD LAW - Penalty period commences on first day of the month following the gift.

• NEW LAW - Penalty period commences on THE DATE INDIVIDUAL APPLIES FOR MEDICAID, IS FINANCIALLY ELIGIBLE FOR MEDICAID AND IS RECEIVING INSTITUTIONAL CARE (IN NURSING HOME).

Penalty PeriodWHEN THE APPLICANT IS AN “OTHERWISE

ELIGIBLE INDIVIDUAL …. RECEIVING NURSING FACILITY SERVICES FOR WHICH MEDICAID COVERAGE WOULD BE AVAILABLE BUT FOR THE IMPOSITION OF A TRANSFER PENALTY.”

How long is the penalty period?

Penalty Period Calculation

• Divide the total gifts transferred during the look-back period by the current average monthly cost to a private-pay patient in a nursing facility in NYS (as determined by DSS).

• The quotient equals the number of months the applicant will be ineligible for Medicaid benefits.

Current Average Monthly Costs

SEVEN REGIONS

NYC $10,579

Nassau & Suffolk $11,445

Northern Metro $10,105

Central $7,688

Northeastern $8,323

Rochester $8,942

Western $7,863

Exempt Transfers

• Transfers between spouses

• Transfers to a disabled child of any age

• Transfers to a Trust for the sole benefit of any disabled individual

• Transfers for value (compensated transfer)

EXAMPLE• Facts: Suffolk resident gifts $100,000 cash to his son

on January 1, 2011.

• Calculation: $100,000 / $11,445 = 8.74

EXAMPLE

OLD LAW: penalty period starts February 1, 2011 and ends on September 30, 201. Partial month is calculated at a dollar value based on the regional rate and considered as an income overage for the partial month.

EXAMPLE

NEW LAW: 8.74 MONTH PENALTY PERIOD BEGINS THE DATE THE INDIVIDUAL APPLIES FOR MEDICAID, IS FINANCIALLY ELIGIBLE FOR MEDICAID AND IS RECEIVING INSTITUTIONAL CARE (IN NURSING HOME).

WHEN THE APPLICANT IS AN “OTHERWISE ELIGIBLE INDIVIDUAL …. RECEIVING NURSING FACILITY SERVICES FOR WHICH MEDICAID COVERAGE WOULD BE AVAILABLE BUT FOR THE IMPOSITION OF A TRANSFER PENALTY.”

Footnotes

• Community (“well”) spouse can make transfers without affecting institutionalized spouse’s eligibility only AFTER acceptance.

• No “cap” on penalty periods.

Options for the Homestead

• Sell it

• Transfer (gift) it

• Life Estate

• Transfer it into protective trust

Homestead – Sell it or Gift it

• What if the the Medicaid applicant sells the homestead and then transfers (gifts) the sale proceeds to his/her children? Similarly, what if the applicant transfers title to the house to his/her children?

• The gift creates a penalty or ineligibility period beginning … WHEN THE APPLICANT IS AN “OTHERWISE ELIGIBLE INDIVIDUAL …. RECEIVING NURSING FACILITY SERVICES FOR WHICH MEDICAID COVERAGE WOULD BE AVAILABLE BUT FOR THE IMPOSITION OF A TRANSFER PENALTY.”

Homestead – Life Estate• MA gifts remainder interest to the kids and retains a life estate for him or herself.

• Penalty period is shortened (only gifting part of the real property)

• Life estate in not considered a resource and is not attachable by Medicaid.

• Life Estate does not afford the MA control of the ultimate disposition of the asset.

Homestead – Transfer Into Trust

• Trust provides MA with more control over the ultimate disposition of the asset.

• Trust requires the MA retain the right to receive income from the trust for life.

Homestead – Exempt Transfers

• Spouse

• Child under 21

• Blind/disabled child

• Adult child, residing in home (2 years), that provided care to MA.

• Sibling of MA who has equity interest in house and who has resided in home one year immediately prior to MA’s institutionalization.