ELDER CARE LAW

            Dealing the subject of Elder Care Law, involves touching on many issues.  A few of them would be the following: 1) the rights to receive medicare; 2)  medicaid when you are eligible; 3) use of trusts and general estate planning; 4) what housing options that would be available to the elder person; 5) the use of powers of attorney or guardianships in the case of incompetent or infirm elder persons; 6) long term care insurance; 7) strategies in planning your estate as well as your retirement benefits; 8) rights of long term care facilities residence; 9) veteran benefits for the elderly; and 10) living wills and durable powers of attorney for healthcare and use of annuities, social security benefits.  It is not my intent by this summary to touch on all of the subjects and it would include volumes, but only to address a few issues of your interest and any other issues that you may have questions about.  You should contact the law firm for an appointment to discuss these matters in more detail.

            1.  MEDICARE AND MEDICAID ELIGIBILITY - Medicare is a federal health insurance program that provides basic hospital and medical insurance to beneficiary.  Eligibility for medicare is unrelated to financial need whereas eligibility for medicaid is based upon stringent limitations on income, as well as property owned.  Medicare is available to anyone who is 65 years of age or older or who is disabled and who has paid into the social security system.  A major difference between these programs is there coverage of costs for long term care.  The medicare program covers only skilled nursing care and very restricted circumstances for a limited period of time in a nursing home.  By comparison, Medicaid covers most long term care costs for institutionalized persons in a nursing home.

            A person eligible for medicaid must be a resident of the State and must have certain income limitations as well as asset limitations.  The income of limitations generally are that the applicants income is less than the nursing home charges.  The applicant is allowed to keep a small allowance of his or her own income in the amount of $40.00 per month plus pay certain insurance premiums for medical care.  The assets limitations depends whether the institutionalized person is married or not.  If he is not married, his assets must be less than $1,500.00 in cash, household goods and personal affects, one automobile valued at $4,500.00, burial space for the applicant, certain income producing property with equity of $6,000.00 or less for which there is no market value prepaid funeral contracts.  If the institutionalized person is married, the community spouse will be allowed to keep exempt assets similar to the above plus his or her residence. 

            The community spouse, the one living in the home may be able to keep some of the income that is earned by the institutionalized spouse if the income being received is less than what is termed the minimum monthly income allowed.  There is a formula that is allowed to determine whether all additional funds can be taken from the institutionalized spouse. 

            Some States, including Ohio do allow for some care under medicaid for in-home services.  Some of the same income, assets and limitations apply to determine eligibility for in-home services.

            2.  Estate Planning - A second be aspect of Elder Care Law is estate planning.  This involves drafting wills, properly designating title to property, drafting trust in the appropriate situations, drafting powers of attorneys, living wills, and reviewing 401K plans and IRA’s.

                        a) Wills - This is your basic estate plan and you can name the person who will ensure the transfer of your estate to family members.

                        b) Titling - By properly titling property, one can direct without probate the passing of your property.  Property can be held jointly with rights of survivorship.  ¹This is a typical plan and a recommended plan between a husband and wife unless total estate including life insurance IRA, etc. exceeds $1,000,000.00.  In this event, trusts or other planning needs to be done (see advanced planning).  This would not be recommended in second married situation since the property should not be intermengled.

                        c) Trust - Use of trust is a complex area and needs to be discussed with an attorney.  The use of trusts can be for management purposes of assets for those who cannot or do not want to manage their own assets.  It involves creating a written trust agreement and a trust agreement which spells out who controls the property transferred into the trust and how and when it is terminated.  There are income tax implications to a trust unless it’s a grantor trust where the Grantor is also the beneficiary at least during his lifetime.  Creating trusts for medicaid purposes is possible, but generally not advisable since any transfers to a trust may disqualify a person from being eligibly for medicaid for a period of 60 months rather than outright transfers which only require a 36 month look back for gifts made by the person applying for medicaid.

                        d) Powers of Attorney - Powers of attorney are used by persons who may become unable to handle their own business affairs.  The appointment of an attorney-in-fact may be necessary to pay bills, transact business, sell property, or even make gifts.  Rights and duties between the grantor of the power and the attorney-in-fact (the one given the power to act on behalf of the grantor) must be discussed.  Powers can be drafted to become effective only upon becoming incompetent and these are called springing powers of attorney.  Most powers created that become effective either at incompetency or immediately upon signing are also referred to as durable powers of attorney.  This means they are still valid even if the grantor becomes incompetent.  Powers of attorney can be created for limited purposes, called special powers of attorney or for any purposes, called general powers of attorney.

                        e) Living Wills and Healthcare Powers of Attorney - These are documents for the purposes of terminating life support in the event a person has a terminal illness or upon a person becoming brain dead if such situation is diagnosed by two physicians.  The healthcare power of attorney goes further when giving a person named to authorize medical treatment. 

            3.  Handling the affairs of a senior person - Decision making by family members for an incompetent spouse or parent.

            This is a common concern that is faced by all of us.  In making decisions there are many questions that need to be addressed to enable a caregiver or an elder to make good decisions. There are a few.

                        a)  A caregiver or elder should explore housing options, what exist?

                        b)  Is in-home care an option? 

                        c)  Can I sell the parents home and add on to my own house?  What are the tax implications of such a decision?  A gift of a residence from the parents to a child may create a period of ineligibly for medicaid especially of one spouse or parent can still live in the home. 

                        d)  If there is only one parent, should he or she make gifts to family members, and if so, how much? 

                        e)  Should a caregiver be paid for his or her services and should there exist a contract between the parent and the child for payments for services?  Payments to children for services create no period of eligibility for medicaid if funds of the parent are depleted.  Legal advice must be secured on these subjects.

                        f)  Passport - Some states, including Ohio do allow for some care under medicaid for in-home services.  Some of the same income and asset limitations apply to determine eligibility or in-home services.

                        g)  Estate Planning and Medicaid Planning -  What changes should be made at this point in the Will.  Should we have a Power of Attorney and Living Wills?  What gifts, if any, should be considered?  Should we pay off debt?  Should you purchase long term care insurance, and if so, how much?

                        h)  Income Tax Consequences of Gifts -   If I decide to transfer assets to the children, what tax implications are implicit in making these transfers.  Additionally, will I need these assets for my own care in the event I go into assisted living or independent living, which are not covered by medicaid.

                        i)  Housing options - A senior might want to consider housing option at some point in time, including having the children care for the person. There include moving into a child’s home, moving into assisted or independent living, having child move into parents’ residence, building a residence or selling a residence to become eligible for medicaid and others.

            To consult with an attorney about these issues, please contact Gene E. Schaefer or Edward B. Schaefer.