medicaid –it’s complicated · gifting penalty exemption child two year care‐giver rule must...

3/3/2020

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“Who Respects the Elderly is as if he Respects the Lord.”

‐Alphabet of Ben Sira

4240 Hunt Road 7310 Turfway Road, Ste. 550Cincinnati, Ohio 45242 Florence, Kentucky 41042 513-818-1111 859-372-6790

www.elderlawcincinnati.comwww.elderlawkentucky.com

*Note: Power Point packet is intended for informational purposes only and is not to be construed as legal advice

Medicaid – It’s Complicated

*Note: Power Point packet is intended for informational purposes only and is not to be construed as legal advice.

Keep your eye on the MEDICAID ball!

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Medicaid: 3-Headed Monster

Medicaid

Passport At-Home Medicaid

Assisted LivingWaivers

Nursing HomeMedicaid

Passport Part of the Ohio HCBS Waiver.

Can get up to roughly 40 hours/week in home care.

Family members can train to be caregiver and get paid through Medicaid.

Not ideal for single people.

Limited number of home health providers accept it. (especially in rural areas)

Passport Financial Test (more on that

later)

Medical Test – Nursing Home Ready. Need Help with Two Activities of Daily Living.

Feeding

Dressing

Bathing

Toileting

Continence

Transferring from Bed to Chair

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Assisted Living Waiver

Part of the HCBS Waiver.

Most AL Facilities do not accept Waiver.

AL facilities that do accept waiver often require at least two year private pay stay.

No guarantee you’ll get Medicaid even then.

Medicaid for the Aged (Nursing Home) What most people think

of when they hear “Medicaid”.

It is a myth that Medicaid facilities are the “worst

facilities”

NH may not discriminate against Medicaid

recipients for care.

Crossing the Bridge to Medicaid

You need a must‐have document:

Financial Power of Attorney

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•Document that takes effect during your lifetime.

•Designed to allow a chosen agent to step in your place and handle your financial affairs.

•You are giving the keys to your castle!!!!!!


Standard Powers Include:

Banking (Including writing checks and cashing in CD’s)

Sell Real Estate

Buy and Sell Stocks

Borrow Money

Power of Attorney

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Financial Power of AttorneyPowers to Look for in Your

Document

Gifting Power: “To make gifts to herself, my spouse or any one of my lineal descendants……”

Power to Establish and Fund a special needs or pooled Medicaid payback trust.

Power to Self‐Deal

Annuity Power


MOST FINANCIAL POWER OF ATTORNEY

DOCUMENTS DO NOT HAVE THESE ENHANCED

POWERS!!!!!!!!!!!!!

You can be a Hero Advocate!!!

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MEDICAID

INCOME TEST ASSET TEST

MEDICAID‐ IncomeQualified Income Trusts(Miller Trust)• If a Medicaid applicant’s

income exceeds $2349, a QIT must be established.

• Income above the threshold is placed in the trust and then used to pay for care.

• At death, state is paid back.

MEDICAIDAsset Requirement

Single

OHIO

$ 2,000 in assets

House (must eventually sell)

Car (medical transport)

KENTUCKY

$2,000 in assets

House (6 months)

Car (medical transport)Qualified Plans (IRAs, 401K, etc)

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MEDICAID

OH – IO!

$2,000 in Bank

$10,000 IRA

Will be Denied

Go Big Blue!

$2,000 in Bank

$500,000 IRA

Will be Approved!!!!

MEDICAID ‐ Single

What about my income?

o You keep enough to pay for your health insurance premiums.

o You keep $50 spending cash.

o Rest goes to nursing home as part of your “patient liability” {think‐ copay}.

MEDICAID ‐ COUPLE

Couple’s Asset Requirement

One spouse can be on Medicaid & Community Spouse can keep ½ assets up to $128,640

Exemptions

House

Car (Unlimited Value)

Retirement Assets (KY only)

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Snapshot date:

In Ohio, Couple’s resources determined as of the first

day of a period of continuous institutionalization.

(Translation: The 1st

Day of 30 consecutive days in the hospital or nursing

home).

In KY, Snapshot date is day of application of resource

assessment.

Pre Snap‐Shot Planning

Liquidate house prior to snap‐shot date, then establish your

snapshot date and buy a senior‐friendly

home.

MEDICAID ‐ CoupleWhat about spouse’s income?

Formula is used to calculate Community Spouse’s monthly expenses and housing needs.

Usually Community Spouse gets to live on about $2,500 per month. (more if housing costs like taxes and mortgage are high)

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MEDICAID – Real Estate

Rule of Thumb!!

If single and in a facility‐ sell your house asap.

If single or couple, sell off your real estate that is not your primary residence.

MEDICAID Spend Down Options

Single

1. Burial pace

2. Pre‐paid Funeral (Irrevocable)

3. Fix up House

MEDICAID Spend Down Options

Single

1. Burial pace


3. Fix up House

Couple

1. Burial Space


3. Buy a new Car for Spouse

4. Fix up or buy new house

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MEDICAID – Couple’s PlanningSpousal Refusal

An option when almost all assets are in healthy spouse’s name.

Healthier Spouse signs form refusing to participate in Sick Spouse’s Care.

State will get paid back in estate recovery.

Prosecutor may send threatening letter demanding payment.

MEDICAID – Couple’s Planning

Medicaid Specific Annuities

Turns a countable asset into a stream of income that can be stretched over spouse’s actuarial life expectancy

MEDICAID: Can I Give My Money Away?

Not without penalty

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MEDICAID: 5 Year Look‐back

Medicaid Giftingo State will impose a penalty period during which time you will not be eligible for Medicaid and you must private pay for your room.

o Ohio uses divisor of $6905.

o Kentucky uses a penalty divisor of $6066.

o Bigger the gift, the longer the penalty

Beware of Comingling Assets!!!!!

Do Not Reimburse Without Keeping Receipts

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Warning: DO NOT PAY YOUR CHILD FOR CAREGIVING WITHOUT A CONTRACT!!!!

TIP: YOU CAN PAY YOUR CHILD FOR

CAREGIVING WITH A CONTRACT!!!!

MEDICAID Caregiver Contracts

Below Market Rate

Specify Duties

Pay Taxes

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MEDICAID Gifting

May still be able to gift a portion of the assets and purchase a Medicaid Specific Annuity to pay off nursing home/ AL bill during the penalty period.

MEDICAID – Gifting

Run the penalty clock off at home – on Passport

MEDICAIDCan I gift anything without a

penalty?

Yes! You can purchase burial spaces for your immediate

family!!!*

*Note: You don’t “give them the contract. You purchase and hold the space for them.

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MEDICAID ‐ What is a Burial Space?

Burial plot, gravesite, crypt, mausoleum, casket, urn, niche.

Includes vaults, headstones, markers, plaques, burial containers (e.g. for caskets) and arrangements for opening and closing of gravesite.

Includes contract for gravesite care and maintenance.

MEDICAID –Gifting Penalty Exemption

Child Two Year Care‐giver Rule

Must be able to prove that child kept parent out of the nursing home for 2 years.

Child must be living in the home of theparet and document care given.

Gift the home

MEDICAID ‐ Gifting Penalty Exemption

Disabled Child

Elder can gift home and assets to disabled child.

Who is a disabled child? A child that is on disability via SSI or SSDI.

Other disability programs will not qualify

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Medicaid – It’s Complicated

Break time!

Power Point packet is intended for informational purposes only and is not to be construed as legal advice.

MEDICAID ‐ Estate Recovery

After Medicaid Recipient passes, State will seek to get reimbursed for care

provided.

May file claim against estate in Probate Court

May file lien on property

May go after beneficiaries

MEDICAID ‐ Estate Recovery

What about couples?

Estate Recovery takes place after second spouse passes away.

State can only go after assets owned by Medicaid recipient at death.

You need FPOA with gifting power to transfer house!

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IS A TRUST ?

MEDICAID ‐ Trusts

TRUST FUND BABIES…. In reality Trusts are NOT exclusively for the wealthy.Can be used in Medicaid Planning – both Crisis and Pre‐Crisis.

MEDICAID‐Trusts (Crisis Planning)Pooled Medicaid Payback

Trust•State will turn a blind eye to assets placed in this type of trust

•After Medicaid Recipient dies, Trust will pay back state for the amounts that the state has paid for his/her care while on Medicaid.

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MEDICAID ‐ Pooled Medicaid Payback Trust: Why do it, if it pays the state back anyway?

1. The pay back is at the state rate which is cheaper than the private pay rate (usually around $2000‐$3000 a month cheaper)

2. Anything left over can be distributed to heirs.

MEDICAID ‐ Pooled Medicaid Payback Trust

Why do it, if it pays the state back anyway?

You can draw funds out of trust to improve quality of

life.

‐Televisions

‐Computers

‐Cell Phones

MEDICAID ‐ Pooled Medicaid Payback Trust

Why do it, if it pays the state back anyway?

You can draw funds out of trust to improve quality of life.

Upgrade to a private room

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MEDICAID Asset Protection Trust (Pre‐Crisis)

Irrevocable Trust

Good for someone 70 years or older or someone with a diagnosis potentially requiring chronic or long term care.

MEDICAID Asset Protection Trust

Place Assets in a Trust

Let them sit for five years

MEDICAID Asset Protection TrustYou must trust your children.

You name an independent “Distribution Trustee who must sign off on any withdrawal of principal Trust assets.

You do this in case you don’t make it the 5 years and you need the money to be there to pay for your care.

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Idea is to make it beyond the 5 year look‐back and

penalties Medicaid imposes for a transfer of assets.

Advantage: If you make it the 5 years, you have passed a legacy on to your children

while still priming yourself to receive Medicaid.


Disadvantage: It is a permanent gift. You must give up control of your assets. You can’t get it back unless beneficiaries agree.

MEDICAID –Challenging Cases

Mr. K.

• Age 90

• Car Accident Put him in NH

• Life Insurance cash surrender $25k but with $100k with death benefit

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Mr. K.

• Age 90

• Car Accident Put him in NH

• Life Insurance cash surrender $25k but with $100k with death benefit

• Solution? Have child pay him $25K for life insurance. Establish Pooled Trust.


Mr. and Mrs. M.

• Mrs. M. 85,dementia in N.H. on Medicaid

• Mr. M. 87 in AL private pay

• House owned Jointly, and no FPOA with Gifting Power


Mr. and Mrs. M.

• Mrs. M. 85,dementia in N.H. on Medicaid

• Mr. M. 87 in AL private pay

• House owned Jointly, and no FPOA with Gifting Power

Solution? Go to Court and Establish Guardianship of Estate, and ask for court’s permission to transfer title of home.

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MEDICAID – Challenging Cases

The Brady Family

Carol with dementia. Mike is healthy

FPOA with gifting, but capacity questionable

Three homes

“Carol’s” kids at consultation presented as if on same page with Mike but shortly thereafter go to war with Mike

Solution?The Brady Family


Ms. Homebody

Living in daughter’s home. Daughter worked full time.

$120,000 remaining.

Paying private ‐caregivers 45 hours per week. $17/hr.

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Ms. Homebody

Living in daughter’s home. Daughter worked full time.

$120,000 remaining.

Paying private ‐caregivers 45 hours per week. $17/hr.

Solution? Establish Poole Trust, Apply for Passport. Used Trust funds to pay for additional are.


Mr. A.

60 years old. Mrs. A. 61

Mr. A. in NH.on a ventilator. $25,000

Mrs. A with $300,000 401K. Cashed out $100,000, but couldn’t access $200,000 because of plan rules

JFS wanted to count full $300,000

Solution?Mr. A.

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MEDICAID – UNIVERSAL TRUTHS

Clients are Stressed Out!

•Must spend down by last day of month.

•Mad dash to the bank to get cashiers checks.

•Financial Institutions are Notoriously Slow.


You give them a checklist of documentation to organize:


You give them a checklist of documentation to organize:

They bring you:

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You advise them to spend down on:

Funerals

Debt

Housing Costs


You advise them to spend down on:

Funerals

Debt

Housing Costs


Clients Lie!

They mislead you about gifts.

They mislead you about accounts they own.

This mislead about you about cash.

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Clients Lie!

They mislead you about gifts.

They mislead you about accounts they own.

They mislead about you about cash.

Until they Panic…. usually the night before we apply.

MEDICAID

Warning: Do not try to slay the 3 Headed Medicaid Monster by yourself. Medicaid laws and rules are extremely complicated. Seek

competent counsel.

Medicaid is only one piece of the puzzle

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Finding the right facility

Quality of Care Memory Care? Private Room? Is it possible to stay

home?

LIFE CARE PLANNING TEAM

A TEAM APPROACH

ECC ROLE:

*Care Advocacy

*Home Visits

*Care Conference

*Arranging Care

*Chart Reviews

* Insurance Issues

ATTORNEY ROLE:

* Wills

* Trusts

* Medicaid

* Estate Plans

* Probate

* Guardianship

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Don’t bury your head in the sand. Plan ahead!!!!!!!

Thank You!

(Ohio) 513‐818‐1111

(Kentucky) 859‐372‐6790

www.elderlawcincinnati.com

www.elderlawkentucky.com

medicaid –it’s complicated · gifting penalty exemption child two year care‐giver rule must...

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