As a part of Medicaid eligibility, existing members must recertify with the local Department of Social Services (“DSS”). This is a mini application wherein your will have to provide current financial statements, monthly income verification and pooled income trust deposits if using one. This has always been the case for recipients of Community Medicaid and Chronic Medicaid; however, this may be a new concept for those that started with the program post-March 2020.
Due to the COVID pandemic, DSS was extending benefits without the requirement of submitting the necessary documents. You may have even received a notice from your local department stating that “we will extend Medicaid coverage” and “based on the federal legislation signed into law on Wednesday, March 18, 2020, no person who currently has Medicaid coverage will lose their coverage during this time of the COVID-19 pandemic.” For some people, this meant no recertification for three years. But that time is over and as the new notices from DSS say it is time to “ACT NOW.”
Since this is the first time in three years that benefits have been adjusted, you could see a dramatic change in the income budgeting for the Medicaid recipient. One of the main reasons for recertification (other than confirming continued eligibility) would be to assess the monthly income budgeting. This would be the net available monthly income (“NAMI”) for Chronic Medicaid recipients which needs to be the amount paid over the nursing home each month. For Community Medicaid recipients it would mean adjustments to the funding of the pooled income trust. This is usually adjusted annually, and the change is barely noticeable.
But now, after three years, the adjustment may seem dramatic, especially if there has been a major change with the Medicaid recipient, including the death of a spouse, change in value of a retirement account, or an increase in social security benefits. All of these circumstances can impact the monthly benefits.
Retaining an attorney to prepare and submit the recertification is typically advisable. If the application is not filled out correctly, or documentation is missing, the recertification could be denied for failure to provide information. This would result in a loss of benefits for the Medicaid recipient and the possibility of a gap in coverage.
Nancy Burner, Esq. is the founder and managing partner at Burner Law Group, P.C. with offices located in East Setauket, Westhampton Beach, New York City and East Hampton.
Each year, the Department of Health will release updated resource and income levels for theMedicaid program. This year there has been a significant increase. Beginning January 1, 2023,New York State will be increasing the asset limits for community and nursing home Medicaid and income limits for community Medicaid.
For both community (home health aides) and chronic (nursing home) Medicaid, the availableasset limit for 2023 is being increased to $28,133 for an individual applicant (the former assetlimit for 2022 was $16,800) and $37,902 for a married couple (up from $24,600), allowingMedicaid applicants to retain significantly more assets and still be eligible for Medicaid.
The income limit for community Medicaid applicants is being increased from $934/month to$1,563/month for individual applicants and for married couples the income limit is beingincreased from $1,367/month to $2,106/month. There is an additional $20.00 disregard thatcan be added to each allowance; therefore, the total of income allowance for an individualapplying for Medicaid can have $1,583/month and married couples can have $2,126.00.
Underthis program, any excess income can be directed to a Pooled Income Trust for the benefit ofthe Medicaid applicant and the monies deposited into the trust can be used to pay thehousehold expenses of the Medicaid applicant. In New York, all Pooled Income Trust aremanaged by charitable organizations. It is important to use the monies in the Pooled Income Trust because when the applicant passes away, the balance goes to the charity.
As for nursing home Medicaid applicants, the monthly income limit will continue to be $50, but the income limit for the non-institutionalized spouse is being increased to $3,715/month.Additionally, federal guidelines permit community spouses to retain up to $148,620 in assets plus a primary residence with a maximum value of $1,033,000.
Even if the communitysouse has assets and income over the threshold, New York’s spousal refusal provisions provide even more protection in that a community spouse can elect to sign a documentwhich allows them to retain assets in any amount, including assets which were previously in the name of the spouse that requires care in a nursing facility.
Individuals applying for Medicaid benefits after January 1, 2023, should apply based on theasset and income limits discussed above. For those individuals who are already receivingcommunity Medicaid and are using a pooled trust for their excess monthly income, yourmonthly budget/spend-down will remain the same until you recertify, at which time theincreased income limits will be applied.
However, starting in January 2023 Medicaidrecipients may ask their local Medicaid office to re-budget their spend-down based on thenew income limits before their next renewal, enabling community Medicaid recipients tokeep more of their monthly income sooner. It is advisable to consult an elder law attorneyin your area to determine if a re-budget is appropriate in your case.
While the asset allowance has been increased, keep in mind that the five-year look-backperiod for nursing home Medicaid still applies, which means that any transfer of assets madewithin this period for below market value will incur a penalty period and Medicaid coveragewill commence only after the penalty period has elapsed. Typically, there is alwaysMedicaid planning that can be accomplished even if the individual immediately needsMedicaid coverage and has done no pre-planning.
*Please note, the income and assets are based on the 2022 Poverty Level. This is subject tochange based on the 2023 Poverty Level.
Nancy Burner, Esq. is the founder and managing partner at Burner Law Group, P.C with offices located in East Setauket, Westhampton Beach, New York City and East Hampton.
A Durable Power of Attorney (“DPOA”) is a statutory form that enables a person to empower a loved one or trusted individual to manage finances and property on their behalf. The concept is, even if one lacks legal capacity to handle their own financial and business affairs, their appointed agent will be able to use the document to access bank accounts, sign checks, pay bills, and carry out essential estate planning for Medicaid asset protection purposes. Note that not all powers of attorney are the same, the particular powers that the agent will have will depend on how the document is drafted.
As long-term care, including home care and nursing home care, is not covered by health insurance, many people look to Medicaid as a pay source. Medicaid, however, is a means- based program for which qualification requires an individual prove they have no more than $16,800 in assets (in 2022). Further, there is a 5-year lookback period for nursing home Medicaid. This means that upon application, there is a scrutiny of the prior five years of the financial life of the applicant and their spouse, looking for any assets gifted within the 5 years prior to applying. While there are certain allowable or exempt transfers, all other transfers will result in a “penalty period,” a period of time during which Medicaid will not assist with the costs of care.
Fortunately, there are several exempt transfers that do not incur a penalty period, the most common being a transfer of assets to one’s spouse. Thus, if one urgently needs nursing home care, but has assets above the Medicaid limit, they can transfer assets to their spouse to bring themselves under the resource limit to qualify for Medicaid without penalty. In certain circumstances, assets can also be transferred to individuals other than the spouse,
This is where the DPOA comes into play because if the Medicaid applicant lacks mental capacity, they will not be able to transfer assets. And, contrary to popular belief, a spouse does not have the authority to access the other’s bank accounts or other assets simply because they are married—unless the spouse were a joint owner, they would need a DPOA or be appointed legal guardian by the court, a costly and time-consuming process.
Since the standard statutory form does not include any gifting over $5,000, modifications must be included with additional provisions supplementing the authority granted to the agent. For starters, the document must specifically authorize gifting. In the scenario where assets need to be transferred to the spouse and the spouse is the agent in the document, it must also specify the authority for self-gifting.
While authorizing your agent to gift assets to themselves can be critical to securing Medicaid coverage, it should not be done without careful consideration. Any assets transferred would no longer be governed by the will, trust, or other estate planning documents of that person. Once property is transferred to another person, it is theirs and, while one would hope they would follow the wishes of the principal, it raises the risk that chosen beneficiaries will be disinherited. Choosing an agent that a principal trusts completely to follow their wishes and only do what is in their best interest is a necessary part of this type of planning.
The decision whether to grant the agent the authority to self-gift under a DPOA is not an easy one and there is no “right” answer. On the one hand, allowing the agent to gift assets to themselves may be the only way to quickly qualify for nursing home Medicaid coverage if one lacks the legal capacity to transfer the assets. On the other hand, an agent may never be needed to gift or self-gift because Medicaid is not needed or there are other ways of gaining eligibility.
The moral of the story is to address estate planning with an experienced elder law attorney sooner rather than later to advise on these issues and draft the appropriate DPOA document. There are various strategies by which assets can be protected for Medicaid eligibility while effectively ensuring that assets are left to chosen beneficiaries at the time of death.
Nancy Burner, Esq. is the founder and managing partner at Burner Law Group, P.C with offices located in East Setauket, Westhampton Beach, New York City and East Hampton.
Medicaid will pay the long-term care needs for individuals who meet certain income and asset criteria. This means that Medicaid will pay the high cost of home care or nursing home care for seniors.
Since Medicaid is a means tested program, many people believe that they cannot access benefits. This common misconception results in people failing to plan ahead and spending down most of their assets before realizing their mistake. Yet, even with little planning, families can preserve funds by moving assets out of the Medicaid applicant’s name.
While everyone’s situation is different, the one irreplaceable document every senior needs is a durable power of attorney.
A durable power of attorney allows an agent to step into the applicant’s shoes as a fiduciary. A comprehensive power of attorney allows the agent to transfer assets, gain eligibility and apply for Medicaid. This is crucial if the applicant has become incapacitated — or cannot easily meet with an attorney. Without giving an agent the authority to do this planning, optimal asset protection may not be possible.
Community Medicaid covers home care needs in the home. There is currently no lookback period for Community Medicaid. This means an applicant can transfer assets one month and apply for Medicaid benefits the following month.
In contrast, with Chronic Medicaid — which covers nursing home care — there is a 5-year lookback. Thus, an applicant is penalized for transfers made for less than fair market value or “gifted” within the 5 years immediately before institutionalization. But, there are certain exempt transfers that can be made within the 5-year lookback period which make an applicant immediately eligible for Chronic Medicaid.
Exempt transfers include transferring an unlimited amount of money to a spouse or disabled child. To effectuate thesetransfers, the Medicaid applicant must either complete the paperwork or have a valid power of attorney allowing another to do so.
Often, the Medicaid applicant does not have capacity to transfer the assets or complete the application.The agent under a power of attorney can do this emergency planning and preserve assets even in the eleventh hour. The only alternative when there is no power of attorney and the applicant has no capacity, is applying to the court for guardianship.
When protecting income in the Community Medicaid setting, a pooled income trust is typically required. An applicant for Community Medicaid has an income limit of $904.00 per month, plus the cost ofhealth insurance premiums. Individuals with income that exceeds this level must contribute the excess income to their cost of long term care each month.
This can be avoided with the establishment of a pooled income trust. If the Medicaid applicant does not have capacity, an agent through a power of attorney will need to establish a pooled income trust on their behalf. The power of attorney must specifically grant the agent the authority to establish trusts. Without such a power, the excess income cannot be preserved.
Finally, the actual Medicaid application and corresponding paperwork needs the Medicaid applicant’s signature. If the applicant is unable to sign the paperwork, an agent under a power of attorney may sign the paperwork on their behalf. Additionally, numerous financial documents must be submitted (i.e. proof of income, tax returns, bank statements). Gathering this information from specific institutions requires a power of attorney granting such authority.
A valid and comprehensive power of attorney is an integral part of any estate plan, especially when dealing with Medicaid eligibility. The power of attorney is used in every step of the process and proves to be invaluable in preserving assets and income.
Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office. Visit www.burnerlaw.com.
Dr. Jason Kronberg during a meet the candidates event at Port Jefferson High School April 24. Photo by Alex Petroski
A Port Jefferson School District board of education candidate has agreed to pay a settlement to resolve a legal issue pertaining to his day job.
A pediatrics practice with several Long Island locations, including one in Port Jefferson, and its current and former partner physicians agreed to pay $750,000 to settle claims of improper Medicaid billing practices, according to an April 25 announcement by the United States Attorney’s Office for the Eastern District of New York. One of the partners of Pediatrics and Adolescent Medicine, the practice named in the press release, is Dr. Jason Kronberg, a Port Jefferson resident running for one of the school district’s three board of education seats up for election May 15. The practice operates as a limited liability partnership under the name Freed, Kleinberg, Nussbaum, Festa & Kronberg M.D. The legal action was brought about by a whistleblower, and the case was pursued under the federal False Claims Act and the New York State False Claims Act jointly by federal and state investigators.
“The practice corrected the problem on our own in 2011, and we have had no issues since that point.”
— Jason Kronberg
According to the release, the practice billed the Medicaid program, which provides health coverage to millions of Americans including eligible low-income adults, children, people with disabilities and others and is jointly funded by state and federal governments, for services provided by physicians who were not enrolled in the program. Between July 2004 and December 2010, the practice and its partners employed a number of physicians who were not enrolled in the Medicaid program yet still provided care to Medicaid patients, the government’s investigation revealed. The defendants sought reimbursement from Medicaid for services provided by non-Medicaid enrolled physicians and did so by misrepresenting the identities of the individuals actually providing the treatment, the release said.
“The settlement related to billing practices from over eight years ago, a period when, for the most part, I was just an employee of the practice,” Kronberg said in an email, adding that the settlement shouldn’t interfere with his school board candidacy. “The practice corrected the problem on our own in 2011, and we have had no issues since that point. Given the extraordinarily complex nature of Medicaid billing rules, settlements like this are quite common – the government enters into thousands of them every year. We cooperated fully with the government investigation of this matter and we resolved the case with the government amicably.”
According to the complaint by the whistleblower’s attorneys accessed after Kronberg’s initial statement, he was a partner “at all relevant times herein.”
“I was a partner starting July 2009,” Kronberg said. “The complaint was 2005 to 2010. The statement said ‘for the most part’ — which is accurate.”
A request for comment sent to Kronberg’s defense attorney Christopher Fenlon was not returned, nor was a request sent to district Superintendent Paul Casciano.
“Today’s settlement reflects this office’s commitment to safeguarding taxpayer programs like Medicaid by vigorously investigating allegations of fraud in False Claims Act cases.”
— Richard Donoghue
According to Jay Worona, deputy executive director and general counsel of the New York State School Board’s Association, an organization that provides support for school boards in the state, the settlement will have no impact on Kronberg’s bid for Port Jeff’s board. Worona said anyone qualified to vote is eligible to run for a board of education position in New York, with a felony conviction being the only disqualifier, adding that it will be up to the voters to decide.
“Providers serving Medicaid beneficiaries must be properly credentialed and thoroughly vetted to ensure that proper care is provided and to preserve the integrity of the Medicaid Program, which serves our neediest citizens,” U.S. Attorney Richard Donoghue said in a statement. “Today’s settlement reflects this office’s commitment to safeguarding taxpayer programs like Medicaid by vigorously investigating allegations of fraud in False Claims Act cases.”
As part of the settlement, New York’s Medicaid program will receive $450,000 of the $750,000 payment, according to New York Attorney General Eric Schneiderman’s office’s press release on the matter.
Kronberg said during a meet the candidates event at the high school April 24 he was seeking a seat on the board to lend his willingness to listen to all sides of a debate and weigh in impartially. He is one of six candidates running to fill three seats.
“I was asked to become a member of the school board to serve as a rational and non-biased voice in what has become a contentious environment,” he said in a personal statement. “I believe I will bring to the board a fiscally conservative yet socially liberal viewpoint.”
This post was updated May 1 with information from the complaint filed by the whistleblower and a second comment from Jason Kronberg.
The final budget left spousal refusal intact. Stock photo
By Nancy Burner, ESQ.
Nancy Burner, Esq.
On March 31, the New York State Legislature and Gov. Andrew Cuomo (D) finalized the budget for the 2019 fiscal year. In January, the governor’s office set forth a budget proposal. Using that as a jumping-off point, the Legislature and the executive started a negotiation process that resulted in the budget beginning the fiscal year on April 1, 2018.
Elder law attorneys across the state watch the budget proposal and negotiations closely to see what, if any, impact there will be on the Medicaid program. Many elderly and disabled individuals in the state rely on the Medicaid program to cover their costs of long-term care. The budget proposals often suggest changes to eligibility as well as to the methods by which care is provided.
One item that was in the governor’s original proposal, but eventually left out of the final budget, was the elimination of spousal refusal. Spousal refusal is the method by which a spouse in need of care can enroll in the Medicaid program while the healthy spouse can maintain assets in their own name to support their own needs. The final budget left spousal refusal intact. This is a tremendous benefit to the spouses of Medicaid recipients.
The budget did include a change in the way the Medicaid program will be administered to long-term nursing facility residents. Until the budget was enacted, long-term patients in a nursing facility were enrolled in a managed long-term care plan. These plans receive a flat rate from the state for each enrollee regardless of whether the enrollee is receiving a small amount of in-home care, round-the-clock care in the home or nursing facility services.
The new rule is that a patient that has been in a nursing facility for three months will be disenrolled from the managed long-term care plan and their services will be paid directly to the facility from the Medicaid program. The stated purpose for this change is to eliminate any duplication of care coordination services. The concern from the governor’s office was that both the facility and the plan were providing this same service.
Another change to the Medicaid program will impact managed long-term care plan participants who want to switch plans. Prior to the new budget, there were no restrictions on such changes. The new budget states that a plan participant can change plans within the first 90 days after enrollment without cause. However, after the first 90 days, the participant can only change plans once in every 12-month period. Any additional changes after the first 90 days must be for cause. Good cause is listed to include, but is not limited to, issues relating to quality of care and access to providers.
The managed long-term care plans will also be affected by the budget provision that will limit the number of licensed home care agencies with whom a plan can have a contract. As stated above, each plan receives a set rate from the state for each enrollee. That plan then has to contract with an agency to provide the aide in the home for a Community Medicaid recipient.
Until now, a plan was not limited on the number of agencies with which it could hold a contract. As of Oct. 1, 2018, a plan can only hold a contract with one agency for every 75 members it enrolls, and on Oct. 1, 2019, it will be one contract per 100 members.
These budget provisions adjust the ever-changing landscape of the long-term care Medicaid program. The direct impact of these changes on consumers is not yet known. The stated purpose of the managed long-term care program is to streamline the care provided to the aging and disabled population of New York state. Advocates in this area continue to work with the governor and Legislature to make Medicaid long-term care benefits available to all New York residents who require such assistance. Stay tuned.
Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.
Medicare and Medicaid are both invaluable programs that can be used to cover various medical and custodial expenses.
By Nancy Burner, ESQ.
Nancy Burner, Esq.
This is a question we receive often. Navigating the maze of healthcare coverage can be confusing.nFor starters, a brief overview of the programs will help to demystify and clear some of the confusion. Medicare is a federal government program first implemented in 1965 as part of the Social Security program to provide health coverage to persons 65 or older and in some cases younger so long as they can show a qualifying disability.
Coverage through Medicare is broken down into sections, Part A is considered hospital insurance and covers inpatient hospital care, rehabilitation in a skilled nursing facility, hospice services, lab tests surgery and home health care. There is no premium for Part A provided you or your spouse have worked at least forty quarters and paid into the program.
It is important to note that the coverage for skilled nursing is limited to the first twenty days in full and then there will be a co-pay of $167.50 per day for days twenty-one through one hundred. A person must continue to qualify based on their skilled need throughout the hundred-day period for Medicare to continue cover. There is no guarantee that a person will receive all hundred days of coverage. Custodial care and extended stays will not be covered by Medicare.
Part B covers doctors and other health care providers’ services and outpatient care. The monthly premium for Part B is typically $134.00 but can vary depending on the person’s income. Part D provides cover with respect to prescription drugs. This is a stand-alone drug plan that can assist in reducing prescription drug costs. Finally, Medicare Part C, is also known as the Medicare Advantage which are optional plans offered by Medicare-approved private companies which replace Medicare Part A and B.
Unlike Medicare, Medicaid is a means tested program and is state specific. Medicaid can provide coverage for a personal care aide at home through the Community Medicaid program or can also cover an extended custodial stay at a skilled nursing facility through the Chronic Medicaid program. In order to be financially eligible to receive services at home, an applicant for Community Medicaid cannot have liquid non-retirement assets in excess of $15,150.00.
Also exempt is an irrevocable pre-paid burial, retirement assets in an unlimited amount so long as the applicant is receiving monthly distributions and the primary residence. With respect to income, an applicant for Medicaid is permitted to keep $837.00 per month in income plus a $20.00 disregard. However, where the applicant has income which exceeds $862.00 threshold, a Pooled Income Trust can be established to preserve the applicant’s excess income.
Even though there is a resource limit of $15,150.00, there is no “look back” for Community Medicaid. In other words, both the income and asset requirements can be met with a minimal waiting period allowing families to mitigate the cost of caring for their loved ones at home.
With respect to coverage in a nursing facility, Chronic Medicaid can cover an extended custodial stay at a nursing facility. In New York, an applicant applying for Chronic Medicaid will be required to provide a sixty-month lookback with respect to all financial records, including bank statements and tax returns. Unlike Community Medicaid, an applicant for Chronic Medicaid will be penalized for any monies transferred out of the applicant’s name during the sixty-month lookback except for transfers to exempt individuals, including to but not limited to spouse or disabled child. If your loved one requires long term nursing home placement, it is imperative to consult and Elder Law attorney in your area to discuss how to preserve the maximum amount of assets.
Medicare and Medicaid are both invaluable programs that can be used to cover various medical and custodial expenses. Understanding the difference and what each program covers will allow you to be an advocate for yourself or a loved one.
Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.
Christina Loeffler, the co-owner of Rely RX Pharmacy & Medical Supplies in St. James, works at one of the few non-major pharmacies in the county participating in the program to give low to no cost Narcan to those with prescription health insurance coverage. Photo by Kyle Barr
By Kyle Barr
The opioid crisis on Long Island has left devastation in its wake, and as opioid-related deaths rise every year, New York State has created an additional, more affordable way to combat it. To deal with the rash of overdoses as a result of addiction, New York State made it easier for people with prescription insurance to afford Naloxone, a common overdose reversal medication.
On Aug. 7, New York Gov. Andrew Cuomo (D) announced starting Aug. 9 that people with prescription health insurance coverage would be able to receive Naloxone, which is commonly referred to as Narcan, for a copay of up to $40. New York is the first state to offer the drug for such a low cost in pharmacies.
Narcan kit are now available for low to no cost at many New York pharmacies. File photo by Rohma Abbas
“The vast majority of folks who have health insurance with prescription coverage will be able to receive Naloxone through this program for free,” said Ben Rosen, a spokesperson for the New York State Department of Health.
Before the change, the average shelf cost of Narcan, which is administered nasally, was $125 without prescription with an average national copay of $10. People on Medicaid and Medicare paid between $1 and $3, Rosen said.
This action on part of the state comes at a critical time. Over 300 people from Suffolk County died from opioid-related deaths in 2016, according to county medical examiner records. On Aug. 10, President Donald Trump (R) declared the opioid issue a national emergency, meaning that there is now more pressure on Congress to pass legislation to deal with the crisis, as well as a push to supply more funds to states, police departments and health services to help deal with the problem.
The drug is available in over 3,000 pharmacies across New York and well over 100 pharmacies in Suffolk County. This includes all major pharmacies like CVS Health, Walgreens and Rite Aid, but also includes a few local pharmacies that already participate in the state Aids Drug Assistance Program and Elderly Pharmaceutical Insurance Coverage and Medicaid, according to Kathy Febraio, the executive director of the Pharmacists Society of the State of New York, a not-for-profit pharmacists advocacy group.
The program is only available for people who either have Medicare, Medicaid or health insurance with prescription coverage. Otherwise, officials said that those who lack insurance who need access can get it through a number of free Narcan training courses.
“We think that anything that can have an affect on this crisis is a good thing,” Febraio said. “This will certainly help. We need anything that will get Naloxone into the hands of those who need it.”
While Suffolk County Legislator and Presiding Officer DuWayne Gregory (D-Amityville) likes the idea of additional access to Narcan, he is skeptical about whether those who get it know how to properly administer it.
Narcan kits are now available for low to no cost at many New York pharmacies, like at Rely RX Pharmacy & Medical Supplies in St. James. Photo by Kyle Barr
“You don’t need a PHD to know how to use it, but there is some training that would help people be more comfortable, such as how to properly use it in an emergency situation and how to store it so that it is accessible while making sure children can’t get their hands on it,” he said. “Unfortunately the epidemic is so wide spread. Everyone knows someone who is affected.”
Christina Loeffler, the co-owner of Rely RX Pharmacy & Medical Supplies in St. James, one of the few non-major pharmacies in the county participating in the program, said though the business has not yet received many calls for Narcan, the state requires pharmacists to demonstrate how to use it.
“You have to counsel the patient and show them how to use it,” she said. “We were showed videos, we were given kits to practice on before we were certified to do it. I feel like it’s a good thing that they’re doing it.”
The county currently provides numerous Narcan training courses for locals, where they receive training and free supplies of the life-saving drug. Suffolk County Legislator Sarah Anker (D-Mount Sinai) said that she will be co-hosting a free Narcan training course Oct. 5 at Rocky Point High School with support from the North Shore Youth Council.
“They absolutely need to be trained,” she said. “Narcan is almost a miracle drug — it brings people back from death. However, people need to know what they’re doing so that it is administered correctly.”
Check on the New York State Department of Health website’s opioid overdose directories section for a full list of participating pharmacies.
A common concern is that after paying premiums on a long-term care policy for years, it will never be accessed for care. Stock photo
By Nancy Burner, ESQ.
Nancy Burner, Esq.
With the ever-changing health care landscape both federally and on a state level, and the aging of the baby boomers, it may be time to take a second look at long-term care insurance. Historically, New York State residents have had the opportunity to receive long-term care benefits through the Medicaid program.
New York has been one of the most generous states in providing care for disabled and aged residents. But you do not have to be a health care expert to see that state and federal budgets are threatening to curtail Medicaid benefits, and many current programs cannot be relied upon to provide the same amount of care that they have in the past.
To battle these changes, a proper estate plan should provide an arsenal to protect against catastrophic health care costs. It is often advisable to consider all available resources when putting together a long-term care estate plan.
We do not have a crystal ball that will show the future of Medicaid or what the needs of each individual will be. But we do know that the baby boomers represent a critical mass of individuals moving toward unprecedented longevity.
In addition, we know that a large percentage of these individuals living longer will likely need care. Further, while many baby boomers and their relatives traditionally cared for aging parents, the economics facing future generations shows that third-party caregivers will be the norm, not the exception.
For clients facing these looming questions of who will provide care, where will the care be provided and how will it be paid for, long-term care insurance is one possible solution. Prudent estate planning may require putting together a team of professionals to help make decisions to protect your assets and autonomy, regardless of what the future holds. This team may include an elder law attorney, financial advisor and an insurance professional. Working together, they can provide you with options for protecting assets to avail yourself of public benefits, preserving and growing assets and purchasing insurance products that make sense in your plan.
Long-term care insurance can often pay for home care assistance or the cost of a nursing facility. If you start accessing your long-term care benefit while living at home and then transition into a nursing facility, the proper planning could make a huge difference in the amount paid toward the cost of care.
Also, many individuals do estate/elder law planning by creating irrevocable trusts, which commences the five-year look-back period for Medicaid nursing home care. They purchase long-term care insurance to cover the initial five-syear period.
Some clients find themselves in a position where they have high income and therefore fear that they will never qualify for Medicaid. Some have income that exceeds the lower Medicaid rate charged by the facility. This leaves them in the dubious position of not qualifying for Medicaid and therefore forced to pay the higher private pay rate.
Needless to say, current daily rates for nursing home care can be financially ruinous. Fortunately, there is a federal law that states that if an individual is eligible for Medicaid but for the fact that their monthly income exceeds the Medicaid rate at the nursing facility, the facility must allow that individual to pay privately at the Medicaid rate. This offers a large savings in the cost of nursing care; and, in the final analysis, the individual is never a Medicaid recipient.
The income of the individual can include Social Security payments, pensions, distributions from retirement assets, payouts on a long-term care policy, etc. With proper long-term care planning, the assets could be protected in an irrevocable Medicaid asset protection trust while the income is being used to pay for the facility.
While many will need long-term care in their lifetime, not everyone will require prolonged care. A common concern is that after paying premiums on a long-term care policy for years, it will never be accessed for care. It’s the age-old problem of paying for insurance that they hope they will never use. This creates a mental bias against insurance to pay for that kind of care.
Individuals prefer to believe that they will never need long-term care. For those with this concern, there are new policies commonly referred to as “hybrid policies.” These are life insurance policies with a long-term care rider attached. In this way, you can access the policy to cover the cost of care while living, but heirs can receive a death benefit if it is not used up. Some polices also allow the insured to cancel the policy and receive their investment back at any time.
The bottom line is that the landscape is ever changing, the assumptions we relied upon have changed, and if you plan on living long, you need to live and plan smarter. Maybe it’s time to reconsider long-term care insurance. If you can qualify medically and you can afford it, it may be just another necessary tool in your arsenal of weapons for “aging in place” and with autonomy. It may not be for everyone but it could be right for you. Take a second look.
Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.
What does “look-back” mean? What is spousal refusal? Will Medicaid take my house if my husband has to go into a nursing home? All too often these are the questions we hear from our clients who are faced with navigating the Medicaid landscape once a crisis occurs.
In New York State, the Medicaid program can provide a source of payment for those who are financially eligible and require care, either in a nursing facility or in their own home. In order to be eligible for Chronic Care Medicaid (payment for nursing home care), an individual must meet certain income and asset requirements.
To start, the applicant may have no more than $14,850 in liquid nonqualified (nonretirement) assets in their name. They may have qualified (retirement) assets in an unlimited amount provided they are taking a monthly distribution.
When applying, the Department of Social Services will require a full financial accounting from both the applicant and his spouse for the five years immediately prior.This is what is often referred to as the look-back. The purpose of this investigation is to determine among other things whether any transfers were made during this time period that would affect eligibility. The rule is that for every $12,390 that was transferred, a one-month penalty will be imposed.
For example, if in the financial review it is discovered that the applicant gifted $40,000 to his children during the look-back period, a determination will be made that imposes a penalty for roughly three months. This means that Medicaid will not pay for the first three months of nursing care, and the family will be responsible to pay privately. The aggregate result of this type of penalty is roughly a dollar-for-dollar penalty, meaning that for each dollar that you transfer you will have to pay a like amount in nursing home care should the need arise. This rule applies unless the transfer is considered an exempt transfer.Transfers that are exempt do not create a penalty and therefore do not affect Medicaid eligibility. In New York State, transfers to spouses are exempt under the provisions of spousal refusal.
We use the term “spousal refusal” when the community spouse (the spouse who is not institutionalized) chooses not to contribute to the cost of care for an institutionalized spouse. This means that the institutionalized spouse cannot be denied Medicaid because the community spouse refuses to contribute. Moreover, the above penalties cannot be assessed due to the fact that the signing of a spousal refusal makes it such that the transfer is an exempt transfer.The refusing spouse must still provide any and all financial information and cooperate fully with the Medicaid application. It is important to note that once Medicaid is approved, the county does have the right to seek recovery against the community spouse. Other exempt transfers include transfers to disabled children, transfers of the primary residence to a caretaker child and finally transfers of a primary residence to a sibling with an equity interest.
With respect to income, an applicant for Chronic Care Medicaid may only keep $50.00 of his income monthly. His spouse may retain the greater of (1) all of his or her own income or (2) all of his or her income and enough of the institutionalized spouse’s income to bring them to $2,980.50.
Community Medicaid is the program that covers care at home.This program will cover the cost of a personal care aide to assist with activities of daily living such as bathing, cooking, dressing, etc. The program may also cover day programs, transportation to medical appointments, assisted living programs and some durable medical equipment and supplies. For 2015, an individual applying for Community Medicaid can have no more than $14,850, not including their home, in nonqualified (nonretirement) liquid assets. They may have qualified (retirement) assets in an unlimited amount, provided they are taking a monthly distribution.
It is important to realize that the home is an exempt resource while the Community Medicaid recipient is alive; however, additional estate planning should be considered to avoid a Medicaid lien after the recipient’s death. While these limitations may seem daunting, the good news is that there is no look-back period. That means someone looking to get care at home can transfer assets in one month and be eligible for Community Medicaid the following month with no penalty assessed for the transfer of assets.
With respect to income, an applicant for Community Medicaid may have no more than $845 per month.An individual with an income over the $845 can opt to use a Pooled Income Trust. The excess income would be paid to a pooled trust company, and the trustees of the trust would pay expenses for the benefit of the applicant.
As you can see from this brief overview of Medicaid, there are many options available for care when the need arises. Make sure you are seeking advice from those knowledgeable in the area to make sure that you are getting the care that you require without sacrificing all that you have worked for.
Nancy Burner, Esq. has practiced elder law and estate planning for more than 25 years.
