Medicaid and the Family Home (REDUX)

MEDICAID AND THE FAMILY HOME (REDUX)

Preserving the family home is one of the biggest concerns of Medicaid applicants and their families. In addition to being the largest single asset for most, it holds deep sentimental value and provides shelter and security to close family members.

To qualify for Medicaid in Ohio, an individual can have no more than $2,000 in countable resources. If property is owned by the Medicaid applicant, his spouse or their revocable trust, Medicaid considers it a resource. The individual’s home is excluded (not countable as a resource) so long as the individual or a recognized dependent resides there.

What classifies as a home?

A person’s home is his principal residence whether it is a house, mobile home, or houseboat. It includes all the land and buildings of the property. If multiple properties are owned, the Medicaid applicant must designate in a signed writing which one is considered “home”.

Excluding the House as a Resource

  • The Individual – The home is excluded as a resource so long as the Medicaid applicant resides there receiving services from a home Medicaid program such as PASSPORT. It continues to be excluded if there is a temporary absence such as a hospitalization or nursing home so long as the applicant submits a signed written statement of his intent to return home. It is no longer excluded if the individual moves into another residence such as an assisted living facility or a relative’s home without the intent to return home.
  • The Spouse – Even if the applicant is “institutionalized” in a nursing home or an assisted living facility, the home is excluded if the spouse resides there. In these situations, transferring the house into the spouse’s name alone may avoid future problems on the sale of the house or upon death of either spouse. It will also make it easier for the spouse to secure an equity loan or reverse mortgage if needed.
  • Dependent Relatives – The house may also be “excluded” for Medicaid purposes if other relatives who are dependent on the applicant reside there. “Relatives” can mean a child, stepchild, grandchild, parent, stepparent, grandparent, aunt, uncle, niece, nephew, brother, sister, stepbrother, stepsister, half-brother, half-sister, cousin or in-law. “Dependent” is not clearly defined. It can include financial, medical, etc. A signed written statement explaining the relationship and the reason for dependency should be submitted.
  • Co-Owners – If the property is co-owned by a person it would be excluded as a resource of the Medicaid applicant if it is the principal residence of the co-owner and he would be left homeless if forced to sell.

 

Transferring the Medicaid Applicant’s Interest in the Home

  • Spouse – The Medicaid Applicant may transfer his interest in the home to his spouse. This transfer is exempt (not penalized) so long as the spouse does not later transfer the house for less than fair market value. Once the house is transferred to the spouse, she may want to change her Estate Plan to exclude the Medicaid Applicant. If the home is held jointly and the healthy spouse dies first, the entire value of the house could become countable resources for the ill spouse again. Even with a change, the Medicaid Applicant may still be entitled to a portion of the estate if he survives the spouse.
  • Disabled Child – The home may be transferred to a disabled child with no penalty. It will be necessary to document the disability to Medicaid.
  • Sibling with an Equity Interest – The home may be transferred to a sibling who holds equity interest without penalty so long as the sibling has resided in the home for at least a year prior to the individual’s nursing home admission.
  • Caretaker Child – A caretaker child is one who has resided in the home and cared for the Medicaid Applicant for at least two years. A doctor must certify that without the caretaker, the individual would have required nursing home care two years earlier. Caretaker child transfers are exempt. They should be made as soon as possible and before the Medicaid Applicant’s death.
  • Penalized Transfers – If the home is given to someone whose status is not exempt less than 60 months before the Medicaid Application, the transfer may create a penalty preventing the individual from qualifying for Medicaid for some period of time. Situations must be examined individually to determine the length of the penalty, if any.

Special Situations

  • Home Equity – High value homes (with equity in excess of $500,000) may be subject to special rules. If necessary, equity may be reduced by taking a loan on the property.
  • Income Producing Property – A home that produces income for the owner, such as a duplex, apartment building or farm is also subject to special rules.
  • Medicaid Recovery – If the individual who received Medicaid passes away, any interest he holds in the home may be subject to Medicaid Recovery. If dependents reside in the home at the time of his death, Medicaid Recovery may place a lien on the home to be collected when dependents no longer reside there.
  • Sale of the Home – The appraised value on the county property tax bill will be considered the “fair market value” of the home unless other evidence in the form of a private appraisal is presented. If the home is sold to a relative or friend for less than the fair market value, Medicaid may consider it a gift. Former rules indicated that 90% of the fair market value would not be considered a gift. The present rules do not indicate how much of a discount would be allowed without being considered a gift. Once sold, the proceeds from the house are considered countable resources and, to the extent they exceed $2,000, will disqualify the individual from Medicaid.
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Baby Steps

Baby Steps

If you stopped by to see us in 2016, no doubt you met Dominic, our legal assistant Laura’s son and Williger Legal Group’s resident baby. Dominic has been bringing smiles and fun to our office since March when Laura came back to work. It’s been amazing to watch him grow and even more astounding to see Laura hold him in one arm while typing with the other. But Dominic is now on his feet, hands free to explore, and no longer content to sit and watch.

A new child brings many new responsibilities. One of these responsibilities is making sure the child is protected in the event something happens to the parents. Here are a few tips for young families to consider when creating or updating their estate plan:

Who will raise your child if you can’t?

  • Nominate a guardian for your minor children in your will. Also, name a back-up in case that person is unwilling or unable to serve. The guardian will have legal custody of your child. Choose someone who is willing to take on the responsibility and has a similar child rearing philosophy. Also consider the age, health and location of the guardian as well as his or her stability and family situation.

What will the child’s financial needs will be?

  • Young families should consider life insurance to supplement inheritance and social security death benefits. Level term premiums are usually the least expensive option.
  • Consider using a trust to name someone responsible to manage the money while your child is young. The trustee can use the money for the child’s health, education, maintenance and support. You can designate how you would like the money to be used as well as the age at which the child should receive the money. Some families feel that 25 is a more appropriate age to receive a lump sum than 18.

Do you need to change your beneficiary designations?

  • Not all assets pass by your will or trust. Make sure the beneficiaries named on your life insurance policies, retirement accounts, annuities, and other assets match the intent of your will or trust. If properly titled, your beneficiaries may be able to “stretch” IRA’s to continue to enjoy deferred tax benefits.
  • How would you care for your child if you couldn’t care for yourself?
  • Create Health Care and Financial Powers of Attorney. If you become incapacitated your powers of attorney give your agent the ability to help you with medical decisions and make sure your bills get paid. Without these documents, the only alternative may be a court appointed guardian.

How will your family find information?

  • Keep an Inventory of your assets and key documents as well as contact information for your attorney, doctor, insurance agent, broker, and other trusted advisors. Make it easy for your agent, executor or trustee to determine what you have and what you owe. Don’t forget to include digital assets, and those precious digital photos, keep a master list of accounts, insurance policies, important legal documents and passwords.

How can you make sure the plan will work?

  • Review your plan every year to be sure it is kept up to date. Update your plan as your life changes. Are there any new family members? Is anyone named in the document no longer appropriate to serve in the role you have given them? Has your net worth changed?
  • Consult an attorney. Each state has specific requirements as to how a will and other legal documents must be executed. Be sure that yours comply.

Pooled Trusts & Medicaid Planning

Pooled Trusts & Medicaid Planning

A powerful tool for Medicaid planning that we are seeing more use from is a Pooled Trust. A Pooled Trust (sometimes referred to as a (d)(4)(C) trust) is a very specific type of trust used to help disabled individuals qualify for the government benefits they need while maintaining some funds set aside for things they may want to preserve the quality of life they are used to. A pooled trust is one of many tools an elder law attorney can use to help a person qualify for Medicaid. There are many different types of trust, and it is important to make sure you have the right trust for your situation. If used in the wrong way, a trust can actually cause more harm than good.

Basics of Medicaid

Medicaid is a needs-based governmental program to help people who cannot afford to pay for their medical care. In order to qualify for Medicaid, one must have less than $2,000 in assets. Once qualified for Medicaid, a person gets to keep $50 per month for personal spending. The rest of their income goes to pay the initial cost of the nursing home. Medicaid then picks up the tab for whatever that income does not cover that month. With the average monthly nursing home cost ranging between $7,000 – $8,000 a month, Medicaid is often the only choice for senior citizens in need of care.

Basics of Pooled Trusts

One thing all trusts have in common is that there are at least three parties to a trust; the Settlor, the Trustee, and the Beneficiary. The Settlor is the person who funds the trust. The Trustee is the person who manages the trust. The Beneficiary is the person who benefits from the trust. Often there is a primary beneficiary and then contingent beneficiaries named for after the primary has passed away.

The purpose of a Pooled Trust is to pay for items or services not provided by Medicaid. These items and services are not meant to replace SSI or Medicaid benefits but rather enhance the life of the beneficiary by supplementing them.

Pooled Trusts must be irrevocable, which means once they are set up and funded, there is no way a person can demand their money back. If they could, the trust would not qualify for Medicaid purposes.

Who can be the Settlor?

Pooled Trusts are unique in that the trust itself is already set up. An individual opts to join into an already established trust. Pooled Trusts get their name from fact that the funds in the trust are “pooled” with funds of other disabled individuals into one main trust and each individual gets their own account when they opt in. The account must be set up solely for one disabled individual’s benefit and must be funded with the individual’s assets. The person who sets up the account can be the disabled individual herself, or her power of attorney, parent, grandparent, legal guardian, or the court.

Who can be the Trustee?

The trust must be managed by a nonprofit organization. Currently in Ohio there are three companies that specialize in pooled trusts to choose from:

  • The Community Fund Management Foundation (CFMF) in Cleveland
  • The Disability Foundation in Dayton
  • The Ohio McGivney Pooled Special Needs Trust in Columbus

Separate from the trustee, who manages the funds, is the Designated Advocate, often a spouse or power of attorney, who represents the beneficiary and submits requests for money on behalf of the beneficiary.

Who can be the Beneficiary?

The primary beneficiary must be the disabled individual. “Disabled” is defined in rules adopted by ODJFS. There is currently no age limit in the state of Ohio on who can be a beneficiary. There can be no other primary beneficiaries named on the account, including the spouse or children.

Once the primary beneficiary has died, the pooled trust must contain an express provision for reimbursement to the state of Ohio for Medicaid services provided. If there are still excess funds remaining in the account once Medicaid has been paid back, those remaining funds may go to the spouse or other named remainder beneficiaries.

Funding the Pooled Trust

The trust is funded exclusively with the individual’s assets. The trust cannot receive funds from people other than the individual. A pooled trust is funded exclusively with cash. You would not put a house or personal property in a pooled trust. Assets that would otherwise be countable for Medicaid can be transferred into the pooled trust penalty free. Excess funds can later be added as they become available such as an inheritance or a lawsuit settlement. The individual can fund the trust with assets or irrevocably assign his or her income to the pooled trust. Generally there is a required minimum initial deposit of at least $5,000 to set up a pooled trust, however there is a method to fund pooled trusts with less.

Getting Money out of the Pooled Trust

Once the trust is set up and the Beneficiary is on Medicaid, the Designated Advocate represents the Beneficiary and submits forms (including receipts) to the pooled trust to request money from the trust account for the Beneficiary’s supplemental services. Once a request is approved, the Trustee releases the money from the trust account for payment to the vendor, service provider, or Designated Advocate. Cash can never be distributed directly to the Beneficiary.

Distribution requests can be submitted at any time and there is no limit on the number of distribution requests that can be submitted. The entire process may take three to four weeks from the date the request is issued. If there is an emergency, an emergency distribution request can be made at any time, but there is a fee. Reoccurring payments can be set up if the amount of the item or service remains the same, for example, a distribution request can be made for cable TV or other such common expenditure each month.

Money distributed from a trust account must be used for supplemental services for the sole benefit of the Beneficiary. The trust cannot provide for other people in the beneficiary’s life, such as for example, tuition for a child. A request may be denied if the Trustee feels it would interfere with the beneficiary’s governmental benefits, if they do not have proper documents and receipts, or if they feel the request is unreasonable.

A pooled trust can be used only to pay for supplemental services. It cannot be used for food and shelter. Supplemental services are those items or services that will not be paid for by insurance or a government program, but supplement and can enhance the quality of life of an individual with a disability. Examples include:

  • Dental Care
  • Plastic, cosmetic surgery or non-necessary medical procedures
  • Psychological support services
  • Recreation and transportation
  • Differentials in cost between housing and shelter
  • Supplemental nursing care and similar care which public assistance programs may not otherwise provide, including payments to those providing services in the home
  • Telephone and television services
  • Electric wheelchair and other mobility aids
  • Mechanical bed
  • Periodic outings and vacations, including costs incurred by caretaker companions
  • Hair and nail care
  • Stamps and writing supplies
  • More sophisticated medical, dental or diagnostic treatment, including experimental treatment, for which there are not funds otherwise available
  • Private rehabilitative training
  • Payments to bring in family and friends for visitation if the trustee deems that appropriate and reasonable
  • Private case management to assist the primary beneficiary, or to aid the trustee in the trustee’s duties
  • Medication or drugs prescribed by a physician
  • Drug and/or alcohol treatment
  • Prepay funeral and burial expenses
  • Companions for reading, driving and cultural experiences

A Pooled Trust is one of many tools that can help a person qualify for Medicaid while maintaining some funds that enhance the beneficiary’s life. It can be a powerful tool in your long term care plan. Because all types of trusts are complex, consult your attorney if you feel a Pooled Trust would be advantageous to you or someone you love.

The Split Gift & Annuity Plan (Creating and then Curing Penalties

 The Split Gift & Annuity Plan
(Creating and then Curing Penalties)

Long Term Care Medicaid is a welfare based program. This means that in order to qualify for Medicaid a person must not only have a medical need, but they must also financially qualify by having less than $2,000 in countable assets. A person, who has more than $2,000 in assets, can expect to pay privately until the money runs out and they qualify financially for Medicaid.

Many seniors are distressed by the idea of their life savings being drained to pay for final expensive days in a nursing home. They worry about how they will get by with only $50 in income once they are on Medicaid, and they wanted to leave behind an inheritance for their children. In some cases it may be possible to do emergency plans that can protect a portion of the assets from being spent down for Medicaid. We call this strategy a Split Gift & Annuity Plan.

Reducing assets to $2,000 can be accomplished by either giving away the assets or turning the assets into income for the Medicaid Applicant. The Split Gift Annuity Plan uses a combination of both techniques to shelter some of the assets while still providing payment for the applicant’s care.

Who This Plan is Good For

  • Single clients about to receive nursing home care with children, or others who they trust and want to inherit.
  • Clients who do not have other penalty free transfers available to them.
  • Clients who have already pre-purchased funerals, spent down assets, and still have assets left over.
  • Clients with at least $100,000 in assets half of which are liquid.

Making the Gift

The government does not want to encourage people who could pay for their care to give away their assets, so they penalize gifts.  Making gifts is not illegal, but is discouraged through the rules of Medicaid. Any gifts made within five years of your Medicaid application (the “look back” period) will cause a period of Medicaid ineligibility. Gifts made more than 60 months before your application need not be reported and will not be penalized. Once the gift is made, it will be penalized unless it is returned in full. A partial return of the gift will not shorten the penalty period.

Gifts made within this “look back” period will cause you to be ineligible for Medicaid for one month for every $6,327 transferred.  In other words, if you were to transfer $63,270, you would be ineligible for full Medicaid for 10 months ($63,270 divided by $6,327= 10 months).

During this penalty period when you are on Restrictive Medicaid, Medicaid does not pay for your nursing home care. This means you need to find another way to pay for your nursing home bill. However, the clock on the penalty period does not start until you are otherwise qualified for Medicaid (remember you must have less than $2,000 to qualify). With less than $2,000 in assets, there must be another way to pay for care during the penalty period without returning the gift. To accomplish this, we use a Medicaid Qualified Annuity.

Paying During the Penalty Period

During the penalty period, you will be required to come up with the funds for this nursing home bill elsewhere. Your regular income from Social Security or pensions will presumably cover part of the costs, but presumably you will still need some other way to supplement your income to afford your nursing home bill. To accomplish this, you use a portion of your assets not gifted away to purchase a Medicaid Qualified Annuity to pay for your care during the penalty period. Each month, the annuity will provide a guaranteed payment. Once the penalty period has passed, your annuity will run out and Medicaid will kick in and pay for all your care. The gifted assets will then be in your children’s hands, and Medicaid will not be able to come back for them.

Dealing with High Income

Medicaid has income limits that do not allow people to qualify for Medicaid without a special type of trust. If a person’s income is over $2,199, in order to qualify for Medicaid they will need to place their excess income in a Qualified Income Trust (QIT). Because the annuity will raise the applicant’s income over the limit, a QIT will need to be set up during the penalty period. Many people do not need the QIT after the penalty period has passed. For more information, please ask your attorney.

Possible Problems

While the Split-Gift Annuity Plan can work very well when used appropriately, there are some risks involved. There can be tax consequences. The people who receive the gift may run into issues while holding onto it. Sometimes a change in the applicant’s health or a death can interfere with the plan.

Because assets need to be liquid in order for this type of plan to work, you may be required to cash out assets. This may cause unfavorable income tax consequences. If IRA or 401K assets are liquidated, every dollar is taxable.  Withdrawing a large sum may also put you into a higher tax bracket. Accumulated income on deferred annuities and savings bonds are taxable. You may also have capital gains if you liquidate appreciated assets.  Depending on your circumstances, the cost of medical care may be deducted from your taxes.

Once the applicant gives away their assets, they lose all control over them. A gift to your children means that the funds transferred belong to them, no matter what promises they may make to hold them for you. The funds are vulnerable in the event of a child’s death, divorce, a lawsuit, bankruptcy, or the child’s decision to simply use the funds for herself. If these issues are a concern, a special type of trust can protect against some of these possibilities.

Another thing to consider is the applicant’s health. If an annuity is calculated for 10 months, but the applicant goes into the hospital for a month, they don’t need the money to cover nursing home costs during that time and will have too many assets to continue to qualify for Medicaid. Sixty-eight percent of nursing home stays last less than three months, however many last significantly longer than this. Sometimes if the applicant is in very poor health and may pass away before the penalty period would pass, it may make more sense to pay privately to avoid tax burdens and administrative costs.

It is important to remember Medicaid law is complex and dynamic. Not every plan will work for every situation. There may be better options available to you and your family. You should always consult a qualified elder law attorney before attempting any Medicaid transfer plan.

Hypothetical Example

Claire needs long term care. Her nursing home costs $7,500 a month. She has $126,540 in assets. She receives $1,250 in income each month. She has two children, Annie and Bobby. Under the supervision of her attorney, Claire splits her assets in half and gifts half ($63,270) to her two children, and uses the other half to purchase herself a Medicaid Qualified Annuity that pays her an income of $6,250 a month guaranteed for ten months.

She then applies for Medicaid, and is put on Restrictive Medicaid for ten months (due to the gift). During the penalty period she uses the annuity and her income to pay privately for her care for ten months. Because her income is high, she will need a Qualified Income Trust during this period.

At the end of the ten months the annuity is all used up. Her income drops back down to $1,250 a month and Medicaid pays for her care. The children have a bank account in their names with $63,270 in it. They use this to pay for any extra things Claire may need during her life time. When Claire dies, they divide the bank account as an inheritance.

 

Power’s of Attorney – Stepping Up & Stepping In

Powers of Attorney
Stepping Up & Stepping In

            It is a great honor to be named Agent for another person in a Power of Attorney. It means that that person (the Principal) trusts you enough to make decisions for her in the most important areas of her life – her health or her wealth. With great power comes great responsibility. How do you know when to Step Up to the job and when to Step In to make decisions?

Ohio law provides for two types of power of attorney: Power of Attorney for Health Care and Power of Attorney for Finances.

A Health Care Power of Attorney names the person or persons who can make decisions about medical treatment. This includes choice of doctors, placement in a rehab or nursing home, specific procedures and medications, as well as, do not resuscitate orders and other end of life decisions. The Agent under a Power of Attorney for Health Care can only act, however, if the Principal is incapacitated to the point where she is unable to make decisions for herself.

An Agent under a Financial Power of Attorney (sometimes simply called a “Durable Power of Attorney”) may be authorized to handle bank and brokerage accounts, IRA’s, contracts, sale or purchase of cars or real estate, life insurance and other financial matters. The agent is limited to only those matters specified in the document. The Financial Power of Attorney generally allows the Agent to handle these matters even if the Principal is still capable of doing it herself.

An Agent is bound to do what the Principal reasonably expects, to act in good faith and always in the Principal’s best interest. When acting as the Agent, you should disclose your identity as well as the Principal’s signing (“Principal’s Name”) by (“Agent’s Signature”) POA.

Stepping Up

How will you know when the Principal needs you to start acting and what you will need to do?

When you receive your paperwork, talk to the Principal about her health and/or wealth and expectations. Go through documents together, the bills she pays, the medications she takes, the names of her doctors, bankers, stockbrokers, insurance agents, etc. Let family, friends, and neighbors know to call you in an emergency.

If you are named as Health Care Agent, consider visiting doctors with your Principal and have her sign a HIPAA release so that you can ask the doctor questions and look at medical records even if your Principal is still able to make decisions for herself.

If you are named as Financial Agent, you might help your Principal sign up for automatic deposits and automatic payments of utilities and other regular bills. This will reduce the burden on her and allow her to continue managing her own business longer. Meet periodically to review statements and balance the checkbook or consider signing up to monitor her accounts electronically.

Stepping In

          You must keep contact with your Principal regularly to know when her capacity is diminished and it is time to Step In and make decisions. You may notice confusion, physical disability, or changes in mood, housekeeping habits, or hygiene. Missed appointments, unpaid bills, unfilled or untaken medication, weight loss, unexplained damage to the car, and falls are all signs that your Principal may need your help.

Check the refrigerator to be sure there is fresh food. You may need to help with the shopping or arrange for meals to be brought in. If your Principal can no longer use a stove safely, you may need to disable it.

When your Principal can no longer drive safely, you may need to talk with her doctor about having her license revoked or disabling or selling the vehicle. A Principal will often accept these restrictions more easily coming from her doctor rather than a relative or friend. If she continues to drive while impaired it is possible her insurance company will deny claims because of recklessness.

If your Principal is unable to drive, assist in arranging transportation. Isolation may become an issue. Regular phone communication, home health services and adult day care can help your Principal remain at home longer. If health care or other workers are in the home, check frequently to be sure your Principal is getting proper care and no items or money is missing. Be sure the workers are properly screened, bonded and insured.

When care at home is no longer possible, you will need to arrange placement in an Assisted Living Facility or Nursing Home. Visit facilities with your Principal if possible on multiple occasions and at different times of the day. Talk to residents and their families. Stay for a meal and a tour or consider a short respite stay to try it out.

If your Principal is resistant to a move, but unsafe at home, talk to the doctor. It is far easier to move to a facility upon doctor’s orders from a hospital or the doctor’s office than to attempt a direct placement from home by force or deceit. Later, when your Principal asks to go home, you can say with conviction that she can return home when her doctor says she can.

As Financial Agent, you will need to see that your Principal’s bills are paid and that her estate plan is followed if you know what that plan is. You must see that taxes are paid and that required minimum distributions are taken on IRA’s. You may need to make a claim on long term care insurance or Medicaid if necessary. Keep careful records of everything that you do on the Principal’s behalf.

Stepping In as agent can be a difficult and thankless job. If the Principal is unhappy with what you are doing – right or wrong – she can remove you since the power came from her in the first place. If this should happen and you feel your Principal is incapacitated and unsafe, your only resort may be to seek authority from the court in a guardianship proceeding. If you are in doubt as to your responsibilities or need assistance in understanding any of your duties as agent, seek the advice of a qualified elder law attorney.

Home Is Where The Care Is

HOME IS WHERE THE CARE IS

Home is where the heart is. Though you may love your home, the day may come when you are unable to receive the care you need there. Sometimes living in the home is no longer practical or safe. The home may be too hard to navigate or too isolated and sometimes healthcare needs just exceed what can be provided at home.

Many seniors’ biggest fear is leaving their homes. Some fear leaving home will mean a total loss of independence. They fear that if they leave home, they will be “locked away” in a nursing home. The good news is there are many options available for seniors besides nursing home care. When facing a housing change you need to be asking the right questions. What level of care do you need? Who will provide the care? Where can you get this care? How will you pay for this care?

STAYING AT HOME

Sometimes staying in the home is the best option, whether for financial or emotional reasons. Accepting care in the home early can help prolong the period of time seniors can remain safely in their homes. The next question is what resources do you have available to you to allow you to remain in your home while still getting the care you need. Some people are low in funds, but rich in family. Some people may not have family in the area, but can afford to pay for care in the home. There are also some low cost home services available for those who qualify.

Care Taker Child Services

If you are lucky enough to have a child or grandchild in the area whom is able to care for you, you may receive basic care from them. Sometimes it’s enough for your children to split up duties and visit or call every day. Sometimes someone may need to move into the senior’s home to make sure 24/7 care is provided or the senior may choose to go live with relatives in their home.

Care contracts can be very helpful in laying out the terms of who is expected to pay and do what. Drawing up a care contract early on can ensure both parties know what they are getting into, and make things clear to other family members that no fraud is taking place. A good care contract can also serve to transfer funds within the rules of Medicaid. Medicaid also has certain exceptions for transferring the home to caretaker children and rules for mother-in-law suites. You should consult with an elder law attorney if you are considering moving in with a relative.

Home Care Services

Some people don’t have family nearby who are able to help. A senior who would like to remain at home may consider hiring in some home services. There are two types of Home Services; Home Care and Home Health Care. Home Care services offer personal care and can be provided by any agency or individual. Home Health Care deals with medical issues, and requires licensed skilled nursing. Many times, some combination of the two is needed.

It can be hard for seniors who have saved their whole life to pay for work they’re used to doing, but it can ease burdens and prevent injury. Just about everything can be hired out these days. Lawn services, cleaning services, meal prep and taxis are usually the first thoughts, but anything consisting of assistance with personal hygiene, dressing or feeding, nutritional or support functions can be hired. Medical needs can also require services which include skilled nursing care, speech, physical or occupational therapy or home health aide services.

When hiring someone to come into your home it is important that you find a good fit. Check to make sure an agency is licensed and bonded and runs background checks on their workers. Usually these services are private pay, or offered through a church, a specialty charity, or by friends. If you cannot afford to pay for these services, you may be able to qualify through a welfare program such as PASSPORT. Consult with your elder law attorney to see if you qualify for assistance.

Adult Daycare

Adult Daycare is group supervision for elderly persons in a community facility. It provides social, recreational and sometimes health services. Seniors go to a location for the daytime and come home in the evenings. This setup works particularly well for seniors who need full time supervision and live with a working child or spouse.

There are three main types of Adult Daycare. Adult Social Daycare provides meals, recreation, organized social activities and some minor health related services. Adult Health Daycare provides some social activities, and more intensive health and therapy services. Specialized Adult Daycare Centers serve only specific care recipients such as those with diagnosed dementia.

Ohio does not license and regulate adult day care. Because of this, there may be a great difference between individual centers; do your research. Costs vary greatly and can range from $25 to over $100 per day. Adult Daycare is not usually covered by Medicare and is usually private pay. Some financial assistance may be available through other programs (e.g. Medicaid, Older Americans Act, Veterans’ Health Administration).

SENIOR FACILITIES

Sometimes staying at home is no longer an option. When this is the case, most people automatically think “Nursing Home” but depending on the level of care needed, there may be less expensive and less intrusive options for facilities

Independent Facilities

If staying at home is no longer feasible because of isolation or transportation, but the senior is still very high functioning, an Independent Living Facility may be a great option. Independent living is any housing arrangement designed exclusively for seniors, generally those aged 55 and over.

The senior has their own private space which is a part of a larger senior community. Housing varies widely, from apartment-style living to freestanding homes. While residents live independently, most communities offer amenities, activities, and services. Since independent living facilities are aimed at older adults who need little or no assistance with activities of daily living, most do not offer medical care or nursing staff however, as with regular housing, though, you can hire in-home help separately as required.

Costs can vary widely with independent living. Average monthly cost of independent living ranges from about $1,500 to $3,500. Medicare does not cover the cost of independent living.  Some long term insurance with home care benefits may contribute to independent living expenses. Most people pay privately. There is subsidized housing for low-income seniors available.

Assisted living facilities

For those seniors who are unable to perform activities of daily living or who have a cognitive impairment beyond the point of independent living, Assisted Living is the next step up after independent living, but still is a step below a nursing home.

Assisted living residences vary considerably. Most provide meals, laundry, housekeeping, transportation, and social activities. They also offer personal care, like assistance with eating, bathing, grooming and personal hygiene. Some nursing care is also provided, including medication administration and dressing changes.

Costs for Assisted Living can vary widely, even within a facility, depending on the amount of care needed. Costs generally range from $2,000 to $4,000 per month and vary depending on the size of the living area chosen, location and the amount of care needed. Basic room and board is set at one fee, and as you add on extra services costs go up. If a senior moves to an assisted living facility, she should budget expecting costs to go up as their need for care increases over time.

Medicare does not cover the cost of assisted living. Most people private pay for assisted living facilities. Ohio’s Assisted Living Waiver Program pays the costs of care in an assisted living facility for certain people with Medicaid, allowing the consumer to use his or her resources to cover “room and board” expenses. Individuals who meet certain medical and financial criteria may be eligible for Ohio’s Assisted Living Waiver Program. Unfortunately, very few assisted living facilities accept Medicaid and even if they do, there may be a limited amount of “Medicaid qualified beds”. If looking at an assisted living, consult with your elder law attorney on payment and planning options.

Nursing Homes

Nursing Homes offer full 24/7 care for seniors. The senior may have a private, semi private, or shared room. The facility provides all meals and social activities. Some have locked units for people suffering from dementia and wandering. Each nursing home has its own personality, so it is important to shop around for a good fit. You may need to get on a waiting list ahead of time. While some seniors live at a nursing home for an extended period, more than half of all nursing home stays are for three months or less.

Nursing Homes must be licensed by the state of Ohio. There is a wide range in costs between different nursing homes, but statewide, the average cost of a nursing home is more than $6,000 per month (though costs may be significantly higher). Medicare does not cover the cost of a nursing home (other than for limited rehabilitation). Long Term Care Insurance or Private Pay are often used to cover nursing home stays.

Many people staying long term in a nursing home facility cannot afford to private pay for long.  Because of this, Medicaid is the primary payer for over 63 percent of nursing facilities. In order have Medicaid pay, you need to have spent your assets down to a qualifying level, and need to be receiving care in a nursing home that accepts Medicaid and has a Medicaid bed open. It is important that if you are looking to move into a nursing home for long term care to consult with your elder law attorney. There are many legal strategies available to help qualify for Medicaid while possibly protecting some assets.

Continuing Care Retirement Communities (CCRCs)

Continuing Care Retirement Communities offer a spectrum of care from independent living to nursing home care in the same community. A senior may start out in independent living in an onsite condo, and then transfer to the nursing home facility later on depending on need. People like CCRC’s because they can age in the same place. They can be especially good for spouses who would like to stay together, but may need different levels of care.

CCRCs are almost always private pay. On top of this, most CCRCs generally require a large entrance fee which covers some of the costs associated with higher care levels later on. Once this large entrance fee is paid, residents then pay a monthly rent, which increases as care levels increase. If a senior decides to move elsewhere later on, it can be difficult to recover the entrance fee. Consult your elder law attorney on the pros and cons of CCRCs and how you might pay for care at one.

VA Contract Home & Services

The VA offers everything from full nursing home care, to home care, and financial assistance for eligible veterans. All of the options listed above may have some VA alternative for eligible veterans. Funding may be partly private, but the VA helps financially provided the senior meets their financial, medical, and service requirements.

The VA has its own private contract nursing home known as the Ohio Veterans Home in Sandusky. This is a contract home that is a 427-bed nursing home facility. It offers two levels of care: standard care for those veterans in need of any intermediate level of care, and special care for veterans with Alzheimer’s disease and other types of dementia. Unlike other nursing homes, the VA contract home is mostly populated by men. For more info, call toll free (866) 644-6838

SHORT TERM SOLUTIONS

Sometimes you are not looking for a long term solution you just need help “right now” in the moment. There are short term solutions available to seniors looking for help while they make other arrangements.

Respite Care

Respite Care is a short-term stay at a senior community, usually an assisted living or memory care community. It is not a long term solution, but can be a great living option for an elderly or disabled person who needs some day-to-day supportive services, but still desires social stimulation, engagement and activities. It can provide a good for break for caregivers, so that they know the senior is receiving good care while they are out of town, or unable to be available for a period of time. It can also be a good way to ease into a transition or try out different facilities. Many nursing homes and assisted living offer short term stays. It is almost always private pay, but Medicare may cover up to 100 days if the short term stay is for rehab.

Hospitals

Hospitals are not a feasible long term care solution. They are for short term emergencies generally. A hospital can be a good solution to caring for a senior with health or mental problems while placement is being arranged at a nursing home or assisted living. When a hospital inpatient is staying at the hospital and there is no medical necessity for being in there, this is considered an “alternate level of care”.

Hospice Care

Hospice is a program for persons who are terminally ill and have a life expectancy of six months or less. Hospice can treat patients in their home, a nursing home, or a hospital. Hospice offers palliative care only, which is specialized medical care for people with serious illness. It focuses on providing relief from the symptoms and stress of a serious illness.

The goal of hospice is to improve quality of life for both the patient and the family. Services extend outside of medical care. Hospice services also may include; running errands, preparing light meals, staying with a patient to give family members a break, lending emotional support, companionship, grief counseling, “make a wish” type programs, and more.

In order to qualify for hospice, a doctor has to certify that you are terminally ill and have a life expectancy of six months or less. Hospice care is then provided for two 90-day benefit periods, followed by unlimited number of 60-day benefit periods. You have the right to change providers only once during each benefit period. At the start of each period, the doctor must re-certify that you’re terminally ill so you can continue to get hospice care. If you get better or go into remission, you can “fail out” of Hospice. Once you choose hospice care, your hospice benefit should cover everything you need, other than room and board, which is still paid privately. Hospice is covered by your Medicare, Medicaid and insurance completely.

As people age, the level of care they need can change. There are many places where seniors can get the care they need. It is not just a question of home vs. nursing home. The important thing is that people have access to the help they need and know their options. When considering care and housing for yourself or a loved one, please call your elder law attorney to discuss your specific situation and what your options may be.

Major Changes in Ohio’s Medicaid Laws – The 1634 Transition

Major Change in Ohio’s Medicaid Laws
The 1634 Transition

“The world hates change, yet it is the only thing that has brought progress.”
–Charles Kettering

A change to Ohio’s system of qualifying for need based public benefits is long overdue. The current system is fragmented and complex requiring needy individuals who are aged, blind or disabled to navigate a maze of different agencies, policies and procedures to qualify for SSI, Medicaid, and other programs. 

SSI Ohio Medicaid
OOD – Opportunity for Ohioans with Disabilities ODM – Ohio Department of Medicaid
Resources – $2,000 Resources – $1,500
Income – $743 Income – $634

STREAMLINING QUALIFICATION

On July 1, 2016 Ohio will streamline its Medicaid system by using the same eligibility requirements for Medicaid as are used by the Social Security Administration to determine eligibility for SSI. Only one application will be necessary and those qualified for SSI will automatically qualify for Medicaid.

ELIMINATION OF SPENDDOWN

Under the present Medicaid system, individuals with income higher than the qualifying level can “spenddown” their excess income on medical expenses each month in order to qualify. Spenddown can be made in a variety of ways and expenses are sometimes grouped together making individuals qualified in some months, but not in others.

Reoccurring Expenses “Pay In” Delayed
Established monthly costs or unpaid medical bills that meet spend down Pay excess assets directly to Medicaid by the 15th of the month Expenses are “incurred” in the month whether or not the person pays the bill

The “spenddown” system is inordinately complex both for the applicant and for the Medicaid worker who must review the bills and payments used to determine eligibility month by month. Depending on the type of spend down, the system is also patently unfair as some people may be forced to pay up front while others may “incur” bills that are never paid.

THE 1643 TRANSITION

Effective July 1 there will be no spenddown option. Those with income more than the qualifying level will no longer be eligible for Medicaid benefits. ($733/month for community Medicaid –$2,199/month for institutional Medicaid)

The majority of Ohioans receiving Medicaid will not be affected by the change. Some who are will leave Medicaid and seek medical coverage through the exchange or through Medicare. Individuals with severe and persistent mental illness will be covered under a new state plan with an income cap of 300% of the Federal Benefit Rate ($2,199 in 2016).

“What we call progress is the exchange of one nuisance for another nuisance.”
–Havelock Ellis

QUALIFIED INCOME TRUSTS (Miller Trusts)

In place of monthly spenddown, individuals with too high an income to qualify for Medicaid must place their excess income in a Qualified Income Trust (QIT) each month. Income properly placed in the QIT is disregarded and the individual will qualify for Medicaid.

Ohio has issued regulations regarding the qualification and operation of QIT’s and has engaged the services of Automated Health System to educate applicants and facilitate the establishment of QIT’s. These services will be provided free of charge for those already on Medicaid who will lose their benefits because of excess income when the transition occurs on July 1 (an estimated 30,000 people).

A QIT can only be used to establish Medicaid eligibility by a primary beneficiary who is eligible for LTC Services by the Ohio Medicaid Program.

  • Inpatient care in an institution such as a nursing home
  • Home and Community Based Services
  • Program for All-Inclusive Care for the Elderly (PACE) Services

WRITING THE QIT

The Trust itself must meet all the statutory requirements:

  • Established by primary beneficiary, his agent or guardian
  • Irrevocable
  • Primary beneficiary cannot serve as trustee
  • Medicaid payback on the death of the primary beneficiary

FUNDING THE QIT

Trustee must establish a QIT account with a bank, credit union or other financial institution.

  • Only the primary beneficiary’s income can be placed in the QIT account
  • No other property or resources can be put into the QIT account (income received in one month and held into the next month is then considered a resource)
  • The primary beneficiary cannot assign his income directly to the QIT account, but must first receive the income then move it to the QIT in the same month
  • The primary beneficiary can put some of all of his income into the QIT, but all of the income from any one source must be put into the QIT account
  • The source of the income must be reported to Medicaid

DISTRIBUTING FROM THE QIT

  • Each month after the excess income is deposited into the trust account, distributions must be made as follows:
    • Personal allowances for the beneficiary
    • Maintenance allowance for the beneficiary’s spouse or dependents
    • Medical expenses incurred by the beneficiary
    • Up to $15 for bank fees, attorney fees, or other administrative costs
OLD
Income Social Security – $2,050

Pension – $1,000

 

$50 PSA

$1,000 MIA

$2,000 NH

Resources $1,500 Medicaid ^

 

NEW
Income Social Security – $2,050

Pension – $1,000

 

QIT

$2,050

$1,000

$50 PSA

1,000 MIA

$15 Bank

$1,985 NH

Resources $2,000   Medicaid ^

PENALITIES

  • If the QIT is not established, the beneficiary cannot qualify for Medicaid
  • If the QIT document is not drafted correctly, everything in the QIT account will be considered available resources
  • If the verifying information is not provided to Medicaid every month, the income will be considered available and the beneficiary will be ineligible for Medicaid – any payments made by Medicaid during a period of ineligibility are subject to recovery
  • Any funds other than the permitted income put into the QIT account will be considered an improper transfer
  • Any distributions made from the QIT account other than those permitted will be considered an improper transfer

Some questions remain regarding the QIT process. Who will establish the QIT’s for disabled individuals who do not have an agent or guardian? Who will arrange for the transfer of their income to the QIT each month? Who will serve as Trustee for those who have no one?

“Any change, even a change for the better, is always accompanied by drawbacks and discomforts.
–Arnold Bennett