New Federal Medicaid Changes
President signs Bill Substantially Changing Asset Transfer Rules
Congress recently passed a budget plan designed to save the federal budget 40 billion dollars over the next five years. The President signed this bill (named the Deficit Reduction Act) into law on February 8, 2006.
The law contains provisions making it even more difficult for middle-class seniors to receive long-term care coverage. The measure extends Medicaid's "lookback" period for all asset transfers (made on February 8th or thereafter) from three to five years and changes the start of the penalty period for transferred assets from the date of transfer to the date of Medicaid application or the date the applicant is elegible for nursing care. Accordingly, whereas previously, a widow who gave gift to grandchildren or to the church and thereafter went into a nursing home and applied for medicaid may be denied benefits.
The Deficit Reduction Act also:
∑ Codifies the income-first rule, meaning that a healthy spouse at home no longer is given the option to keep extra assets above the basic threshold in lieu of some of the Medicaid recipient spouse's income.
∑ Makes any individual with home equity above a certain limit ineligible for Medicaid nursing home care.
∑ Establishes new rules for the treatment of annuities, including a requirement that the state be named as the remainder beneficiary.
∑ Requires Medicaid applicants to provide "full information . . . concerning any transaction involving the transfer or disposal of assets during the previous period of 60 months.
∑ Allows Continuing Care Retirement Communities (CCRCs) to require residents to spend down their declared resources before applying for medical assistance.
∑ Sets forth rules under which an individual's CCRC entrance fee is considered an available resources.
A few of the likely victims of such measures are: the grandparent caring for a grandchild who provides savings to help pay for the grandchildís education; the devoted church supporter who donates personal assets to the church; the family farmer or small business owner who passes on the farm or business to the next generation; the widow who lacks records of her now deceased husbandís spending; the caring sister who uses savings to help a needy sister remain in her home. Under the proposals to tighten transfer of asset rules, each of these individuals may be denied Medicaid if they subsequently get sick and need long-term care.
Further problems with the law include:
∑ All of those affected by these provisions will unquestionably need long-term nursing home or home health care, yet be unable to pay for that care, placing them in serious jeopardy.
∑ Those who need nursing home care may not be able to gain entry. State law often allows facilities to deny admission when there is no payment source. It punishes unwitting elders who have helped their families with commonly made gifts and then experience medical events.
∑ These provisions will create unacceptable new obstacles to nursing home admission for vulnerable, frail elderly and disabled persons to get care, by requiring record keeping and documentation that is far beyond the normal practices of the elderly, especially the poor and chronically ill, and those with Alzheimerís disease.
∑ The proposals will generate unintended consequences. Rather than stopping asset transfers and encouraging the purchase of long-term care insurance, the proposal will encourage earlier and larger asset transfers by the elderly, and discourage responsible decision-making.
--Despite the passage of the Deficit Reduction Act, it will still be possible through careful planning (and to a lesser degree even in the event of a crisis where no pre-planning has occurred) to maximize care and the utilization of one's assets to achieve one's goals, including maximizing the healthy spouse's assets and income, and protecting a single person's assets to augment the care of the individual receiving Medicaid while preserving any unused portion for family and charitable causes upon death. This will not be possible without the utilization of knowledgeable and experienced advocates in the field of Elder Law.
1. Pursuant to Ohio's Medicaid changes passed in the Ohio Budget bill of 2005, failure to disclose assets of $500 or more is a felony.
Ohio Medicaid Eligibility Rules
To be eligible for Ohio Medicaid, an individual must meet the following criteria:
1. Applicant must be living in the state where the nursing home is located
Age or Disability
1. Either 65, blind or disabled
1. Single Person
a. $1,500.00 in cash
b. House (for 13 months)
c. Car (up to $4,500.00) NADA value
d. Personal belongings
e. Irrevocable Pre-paid burial plan
2. Married Couple
a. $19,908.00 2006 minimun $20,328.00 2007 minimun. Maximun of $99,550.00 2006, or 101,640.00for 2007
b. House (if one spouse or other exempt person lives there)Maximun value $500,000.00
c. Car (any value)
d. Personal belongings
e. Irrevocable Pre-paid burial plan
a. $40.00 per month
2. Married Couple
a. Minimum of $1,650.00 per month, maximum of $2,541.00.00 per month
b. Special Maintenance needs allowance - $1215 per month.
Ohio Medicaid Application
Qualifying for Ohio Medicaid coverage of nursing home expenses is a detailed, time-consuming process. Each and every unnecessary day of private payment caused by inaccuracy or inefficiency in this process will cause unreimbursed expense of $180-$210.
Our firm provides a wide range of services in conjunction with the application process including assistance in assembling the information necessary to complete the Ohio Medicaid application; compiling the documents required to support the application; attending meetings with the Ohio Medicaid caseworker as a family representative during the application process; tracking the documentation required by Medicaid when money must be spent down prior to Ohio Medicaid approval; and, consulting with the family prior to the mandated annual Ohio Medicaid redetermination. An essential component of our representation is ensuring that you receive every benefit to which you are entitled under the law.
The Department of Job and Family Services located in the County where the applicant for Ohio Medicaid resides will conduct an interview with a family member or Authorized Representative. A thirty-four page application must be completed by this person, and all information must be verified by bank statements, canceled checks, tax returns, etc. The caseworker will use this information to:
1. Review all resources (assets) owned by the institutionalized person and their spouse in the community beginning on the date of the first medical stay outside the home longer than thirty days ("snapshot date"). All assets belonging to either spouse will be pooled together. There is an automatic presumption on joint accounts with non-spouses that 100% is available to the institutionalized person.
2. Divide Assets as either "exempt" or "countable".
3. Identify any transfers for less than fair market value (gifts) made within the look back periods, and assign periods of ineligibility for assistance by reason of "improper transfers".
4. Determine the "resource allowance" permitted to be kept by the spouse in the community.
5. Require a "spend down" of countable assets above the resource allowances.
6. Establish a minimum monthly income allowance for the Community Spouse.
7. After completion of the "spend down", the institutional spouse will be entitled to receive Medicaid benefits to pay for the custodial care, including the nursing home expense as well as prescription costs and other miscellaneous medical expenses not covered by Medicare, and the Community Spouse will retain the asset and income allowances.
An application should not be made for medicaid until and unless the applicant knows precisely what the result of the application will be. Filing too soon or too late can cost the applicant thousands or even tens of thousands of dollars. Moreover, it is likely that, with guidance, an applicant will be able to qualify for assistance sooner, and just one month can save five to six thousand dollars!
Ohio Medicaid Gifting Rules
The "Lookback Period" vs. the "Ineligibility Period"
The look back period begins on the date the individual is both institutionalized and applies for Ohio Medicaid assistance.
The look back period currently is five years. (See "New Federal Medicaid Changes")
A transfer made outside the look back period is not counted against the institutionalized person.
A transfer made within the look back period is either "proper" or "improper", depending on whether the transfer was made to a qualified person, such as a spouse or dependent, and depending on the purpose of the transfer.
An improper transfer is assigned a penalty of time where the institutionalized spouse is ineligible for Ohio Medicaid. This is the "ineligibility period".
The ineligibility period is determined by dividing the amount of the transfer by a divestment penalty divisor.
Trap for the unwary: The penalty period begins on the date the individual is otherwise eligible for Medicaid but for the transfer(s), meaning once the individual is otherwise under $1,500.
A "sale" for less than full market value is a gift to the extent full value was not received in return.
NOTE: Gifting may be still possible when a person enters a nursing home but you need to consult with us before entering a nursing home if possible. Once a spouse or parent need assisted care that is the time to consult with us . Moving in with the assisted person, providing outside assistance by you or a hired person you need some advise on what to do, what documents my be needed such as powers of attorney, living wills, health care powers of attorney etc.
Ohio Medicaid Annuity the use of Medicaid annuities in Ohio. Subsequent changes were enacted in June of 2005 by the state of Ohio, and federally in February 2006.
Use of information not specific to the state of Ohio or without consideration of the recent changes can cause devastating results. Most insurance agents have no training regarding Ohio Medicaid annuities. Many that do have some training receive their information from out-of-state sources and/or are not current regarding the new rules. For instance, an article issued by an insurance company offering "Medicaid friendly" annuities in Ohio states that, in those circumstances where an individual enters a nursing home and there is a healthy spouse at home, the agent should advise the spouse at home to purchase an Ohio Medicaid annuity to avoid a spend-down of sassets. The unfortunate person following this advice in Ohio would later find that their spouse will be ineligible for Ohio Medicaid for months or even years, and that the funds necessary to pay the bills during this period of time are now unavailable due to the annuity. The insurance companies and the literature they provide to their policy holders universally proclaim that the purchase of an annuity for Ohio Medicaid purposes only should be done under the direction of an experienced elder law attorney, but this disclaimer is often overlooked by the agent or simply glossed over in the face of a commission.
Ohio Medicaid annuities can be extremely powerful tools in planning for long-term care and in dealing with current nursing home situations. (See Case Studies 1 & 4 for examples of appropriate uses). As noted above, however, their use can be like walking through a mine field. Use of the wrong type of annuity, for instance, may result in denial. Even when a qualified contract is used, the election of the wrong settlement option or the wrong term can spell disaster. Similarly, the selection of the incorrect owner or annuitant can be fatal to the plan. The timing of the purchase of the annuity or the pensioning of the contract is essential.
It also must be recognized that they are not the best tool in every situation. For example, Robert enters a nursing home. His wife Edith remains at home. They have a residence (with a $30,000 mortgage), a car (loan balance of $10,000), $40,000 jointly in the bank between checking, and savings, and Edith has an annuity in the amount of $40,000. Edith receives $440 a month in income from Social Security and Robert receives $1,100.
Option 1: Edith could pension the annuity and receive approximately $450 each month from the annuity. She would be entitled to keep half of the $40,000 as her resource allowance, and would have to spend down the other half. The $20,000 spend down goes towards paying off the mortgage. The budget indicates that she is entitled to receive $1,500 in income each month, so she receives $610 from Robert's income ($1,500-$890 from her Social Security and her annuity). The rest of Robert's income ($490.00) is paid to the nursing home every month. She still must make payments on her car loan.
Option 2: Edith does not pension the annuity. She is now entitled to keep $40,000 as half of the countable assets, and must spend down the other half. She spends down the other half by paying off the mortgage and the car loan. She is now debt free and has an additional $20,000 in the bank (as compared to Option 1). Additionally, she still receives $1,500 per month in income ($1,070 from Robert's income). Only $40 per month from Robert's income is paid to the nursing home (in actually, Robert would be able to retain this $40 as his personal allowance, meaning Medicaid would pay the entire bill).
Ohio Medicaid Spend-Down Rules
Medicaid spend-down applies when an individual or a couple have countable resources in excess of the eligibility limits. Before the individual or couple will be entitled to Ohio Medicaid assistance, the excess resources must be expended in some permissible manner. Most expenditures, other than gifts, will qualify for this purpose.
When a couple is involved, this will generally mean that the countable resources must be reduced by half, subject to a "floor" and "ceiling." The floor is currently $20,328.00. The ceiling is currently $101,640.00 In determining values, the assets of the couple at the time the one spouse entered the nursing home is utilized. Accordingly, if the countable assets were $100,000 when the one spouse entered the nursing home, this amount is cut in half and the assets must be spent down to $50,000. If the original amount was $200,000, the ceiling comes into play and more than half must be spent (maximum that can be retained by the healthy spouse is $100,000.00. Similarly, if the original amount was $15,000, then there is no required spend down because of the $20,328.00 floor.
An example will illustrate the importance of understanding these rules. Take two couples with a pending nursing home stay on the part of the husband. The wives, Jennifer and Kimberly, are in the exact financial situation. Each has a home worth $150,000, subject to a $25,000 mortgage, assets in the bank worth $50,000, and credit card debt of $15,000.
Jennifer decides that she should take care of a few things before her husband enters the nursing home. So she sells their home, places the proceeds from the sale in the bank, and pays off her debts. She now has $160,000 in the bank. Jennifer's husband then is placed in the nursing home, and upon application for Ohio Medicaid, she is told they must spend down $80,000.
Kimberly does nothing until after her husband enters the nursing home. She has $50,000 of countable assets, so she must spend down $25,000. She does this by paying off the mortgage. Kimberly does not have to spend any money on the nursing home and the facility begins to receive Ohio Medicaid vendor payments immediately.
New Ohio Estate Recovery and Lien Laws
Sweeping new changes to the Ohio medicaid estate recovery and lien laws were enacted with the signature of Governor Taft to the budget bill (House Bill 66) on June 30, 2005. The nature of this law and its unfortunate effect upon Ohio seniors having catastrophic medical events and long-term care needs is largely unknown to the public due to its "midnight" insertion into the state budget process without independent legislation or discussion of its merits.
Federal medicaid law requires participating states to seek recovery from a medicaid recipient's estate for medical assistance consisting of nursing facility services, home and community-based services, and related hospital and prescription drug services. "Estate" is defined as including the real and personal property and other assets of the medicaid recipient which is subject to state probate law. At the option of each state, the "estate" may be defined to be more inclusive, to the extreme of including any real and personal property and other assets in which the medicaid recipient had any legal title or interest at the time of death (to the extent of such interest), including such assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement.
The effect of House Bill 66 is that Ohio joins about fourteen other states in adopting an expanded definition of "estate", and just the second state to adopt the most expansive definition permissible under federal law. Accordingly, whereas previously only the assets of the medicaid recipient passing through probate was subject to recovery by the state, now any asset in which the individual had an interest at the time of death may be recovered by the state. This may include the house, life insurance and annuity benefits, in addition to survivorship accounts and trust assets. And unlike other states, Ohio's statute did not expressly limit the expanded recovery to the future. Therefore, Ohio may attempt to recover resources retroactively.
Fortunately, the federal law provides that no recovery may be made while the individual's spouse, child under 21 or disabled child is alive.
The new law also requires liens be placed on real property of a medicaid recipient who is permanently institutionalized and against the real property of the recipient's spouse. However, no lien may be imposed if the one of the following persons lawfully resides in the home: recipient's spouse, child under 21, disabled child, or sibling who has an equity interest in the home and who resided in the home for at least one year immediately before the date of the recipient's admission to the institution.
There is a hardship provision that gives discretion to the State to waive recovery. However, current statutes only provide for waivers on a case by case basis and only in "compelling circumstances." A hardship waiver may involve either a permanent waiver of recovery efforts, or a temporary deferral or postponement of recovery. Disputes regarding undue hardship must be resolved through the judicial process.
The Collections and Enforcement Section of the Attorney General's office delegates files to "special counsel" whose job it is to attempt recovery. Because these hired guns are paid a portion of what they recover, they sometimes exceed their authority in what is properly recoverable and in their methods of recovery.
This firm anticipates that there will be a prevalent need for assistance when overreaching agents of the state attempt improper recovery of assets and place liens on real estate in questionable circumstances. We stand ready to zealously represent individuals faced with such difficulties and to help resolve and negotiate settlements with the state. However, the best course of action remains seeking competent elder law counsel ahead of time, so that the issue of estate recovery can be avoided altogether where possible
Many qualified veterans are not aware of medical, compensation and/or pension benefits to which they are entitled. Surviving spouses and dependents of deceased veterans may also be eligible for benefits. Of particular importance to those individuals faced with the costs of long-term care, VA benefits may be available to help pay for home care, assisted living care, and nursing home care. Read below for more information on this important benefit.
Eligibility for most VA benefits is based upon discharge from active duty under other than dishonorable conditions.
Health care benefits may be available, but are subject to funding limitations set by Congress, meaning not all veterans will receive health benefits through the VA. Eligibility is based on priority groups: veterans with service connected disabilities have the highest priority, followed by those with special care requirements and limited resources. Health care benefit programs include prescription benefits, hospital care, outpatient care, emergency care in VA and non-VA facilities, comprehensive rehabilitative services, home health services, respite care, geriatric and extended care, mental health services and dental care.
Burial benefits may also be available and include a burial expense allowance up to $300, a plot or internment allowance up to $300, burial in a national cemetary, free headstone or grave marker or reimbursement for privately purchased headstone or marker, payment for conveying remains and burial flag.
A popular VA benefit is the home loan guaranty benefit. This program is designed to help a veteran purchase his or her home on terms more favorable than those of conventional mortgage loans by providing a VA guarantee for the lender against the veteran's default. As a result of the guarantee, the lender is likely to provide better mortgage terms, such as no downpayment and lower interest rates. Generally, veterans who served at least 90 days with one day falling within WWII, the Korean Conflict, or the Vietnam Era, and who were discharged under other than dishonorable conditions, will be eligible.
Other available benefits may include education benefits; automobile, conveyances and adaptive equipment; clothing allowance; and specially adapted housing and home adaptation grants.
Compensation benefits are available to those discharged or released under honorable conditions, and where disease or injury was incurred or aggravated in the line of duty. Compensation rates for a single veteran with no dependents currently run between $108 per month (10% disabling) to $2,299 per month (100% disabling).
Pension benefits are afforded qualifying veterans, spouses and dependents, who meet a means (financial needs) test. The qualifying veteran must be permanently disabled or over the age of 65, must have served at least 90 days of active service with at least one day during wartime, and must have been discharged honorably. If qualified, then the benefit is determined in part by deducting countable income from the maximum annual pension rate (MAPR) determined by Congress. The current MAPR for a veteran without dependent is $10,162. This amount increases with the number of dependents. The VA will also consider, on a case by case basis, the individual's net worth in light of the persons life expectancy and potential rate of depletion of the assets, including unusual medical expenses.
Special Monthly Pensions, available when qualifying persons have extraordinary disability, are largely under-utilized by qualifying veterans and spouses of deceased veterans. Those who are housebound or in need of the regular aid and attendance of another person may be entitled to receive a higher pension amount (up to $1,412 per month for a single veteran with no dependents). Moreover, the costs being incurred for the individual (home care, assisted living care, nursing home care) can be used to offset the countable income. Accordingly, a veteran with forty thousand dollars in assets and fifteen hundred dollars in fixed income per month who is subject to a monthly assisted living expense of thirty five hundred dollars will run out of money in twenty months, very possibly requiring him or her to be admitted to a nursing home and apply for Medicaid. However, because the individual's assisted living cost exceeds the monthly income, he or she will be entitled to the full monthly benefit. As a result, the veteran will have sufficient funds to stay in the assisted living facility of choice for five and one half years or more.
Veterans, and spouses and dependents of veterans should seek independent counsel from experienced elder law attorneys to help evaluate and educate regarding their possible entitlements to VA benefits in coordination with all other public benefit programs (such as SSI, SSD, Medicare and Medicaid) and other options when planning for the future or addressing current crises.
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