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Nancy Burner Esq.

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Community Medicaid covers care at home, such as a home health aide to assist with daily activities.

By Nancy Burner, ESQ.

Nancy Burner, Esq.

For most of us, if a time ever comes when we need assistance, the preferred option would be to remain at home and receive whatever care services we need in our familiar setting surrounded by family. For many, the Community-Based Long-Term Care Program, commonly referred to as Community Medicaid makes that an affordable and viable option.

Often we meet with families who are under the impression that they will not qualify for these services through the Medicaid program due to their income and assets. In most instances, that is not the case.

Although an applicant for Community Medicaid must meet the necessary income and assets levels, often with planning we are able to assist in making an individual eligible with little wait. An individual who is applying for home care Medicaid may have no more than $14,850 in nonretirement liquid assets. Retirement assets will not be counted as a resource so long as the applicant is receiving monthly distributions from the account. An irrevocable prepaid burial fund is also an exempt resource.

The primary residence is an exempt asset during the lifetime of the Medicaid recipient. However, if the applicant owns a home, it is advisable to consider additional estate planning to ensure that the home will be protected once the Medicaid recipient passes away.

With respect to income, an applicant for Medicaid is permitted to keep $825 per month in income plus a $20 disregard. However, if the applicant has income that exceeds that $845 threshold, a pooled income trust can be established to preserve the applicant’s excess income and direct it to a fund that can be used to pay his or her household bills.

It is important to note that there is no “look-back” for Community Medicaid. These pooled trusts are created by not-for-profit agencies and are a terrific way for persons to take advantage of the many services available through Community Medicaid while still preserving their income for use in meeting their monthly expenses.

Functionally, the way that these trusts work is that the applicant sends a check to the fund monthly for the amount that exceeds the allowable limit. Together with the check, the applicant submits household bills equal to the amount sent to the trust fund. The trust deducts a small monthly fee for servicing these payments and then, on behalf of the applicant, pays those household bills.

This process allows the applicant to continue relying on his or her monthly income to pay his or her bills and, at the same time, reduce the countable income amount to the amount permitted under the Medicaid rules. Once an individual is financially approved by the local Department of Social Services for Community Medicaid, he or she must enroll with a Managed Long-Term Care agency. This is the agency that will coordinate care services for the Medicaid recipient.

The MLTC will send a nurse to the Medicaid recipient in order to evaluate and create a care plan. The evaluation will result in an award of hours to the Medicaid recipient for a home health aide to come to the home and assist the recipient with activities of daily of living.

The amount of hours can vary from a few hours per day where the needs are less all the way to live-in care. This award of hours depends solely on the needs of the Medicaid recipient. If the Medicaid recipient is satisfied with the care plan, he or she may choose to enroll with the MLTC. Otherwise, he or she can request another evaluation with a different MLTC. What this means is that for most people, with minimal planning, 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.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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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.

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By Nancy Burner, ESQ.

In terrorem is a term derived from Latin that translates to “in fear.” An in terrorem provision in a decedent’s last will and testament “threatens” that if a beneficiary challenges the will then the challenging beneficiary will be disinherited (or given a specified dollar amount) instead of inheriting the full gift provided for in the will.

Nancy Burner, ESQ
Nancy Burner, ESQ

An in terrorem clause is intended to discourage beneficiaries from contesting the will after the testator’s death. New York State law recognizes in terrorem clauses; however, they are strictly construed. An example of an in terrorem clause might read as follows: “If any person shall at any time commence a proceeding to have this will set aside or declared invalid or to contest any part or all of the provisions included in this will they shall forfeit any interest in my estate.”

There are, however, some limits on in terrorem clauses in the interest of preventing fraud, undue influence, or gross injustice. These statutory “safe harbor provisions” allow a beneficiary to inquire into the circumstances surrounding the drafting of a will without risking forfeiture of any bequest. Since, as discussed above, New York State courts strictly construe in terrorem clauses, these safe harbor challenges are a means by which a beneficiary can evaluate the risk of contesting the will. In relevant part, the statute provides for the preliminary examination of (i) the testator’s witnesses, (ii) the person who prepared the will, (iii) the nominated executors and (iv) the proponents in a probate proceeding.

These persons “may be examined as to all relevant matters which may be the basis of objections to the probate of the propounded instrument.” If the beneficiary challenges the will and the will is found to be invalid due to lack of mental capacity, undue influence or failure to have the will properly executed, then the in terrorem clause also fails. It is important to note that a beneficiary may present a petition to the court, prior to the will being admitted to probate and before formal objections have been filed, seeking a determination as to the construction or effect of the in terrorem clause of the will. The basic principle of construction is that the decedent’s intent, as expressed from a reading of the relevant provision of the will under the circumstances under which it was drawn, is to be given effect by the courts.

Keep in mind that simply having an in terrorem clause in your will may not be enough to dissuade beneficiaries from potentially challenging your will. Theoretically, however, for an in terrorem clause to have any weight at all, a beneficiary under a will must be left a substantial amount to incentivize their compliance with the will. An in terrorem clause may have no effect on a beneficiary who was not left anything under a will as they risk losing nothing by challenging the will. While in terrorem clauses may be effective in minimizing a will contest, for some it holds no power. It is important to discuss your estate plan and your wishes regarding the ultimate disposition of your assets with an experienced estate attorney to determine the proper provisions to include in your will.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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By Nancy Burner, ESQ.

Nancy Burner, Esq.
Nancy Burner, Esq.

While the best elder law and estate plan is to have a valid health care proxy naming agents and a valid durable power of attorney naming an agent to make financial decisions, not everyone has done the proper planning.

It is not uncommon for an elderly person to fall ill, be hospitalized and then need nursing home care with no time to plan. If there are no advance directives in place, a guardianship proceeding under Article 81 of the Mental Hygiene Law may be required.

In an Article 81 proceeding the court will making a finding that a person is in need of a guardian and has the ability to consent or the court will determine that the person lacks capacity to understand and consent. In either case, a guardian will be appointed to protect the person and/or property of the individual. It is in this context that we often request that the court will allow the guardian the opportunity to formulate a Medicaid plan to protect assets, if possible.

The court utilizes “the doctrine of substituted judgment” when permitting the guardian to create a Medicaid plan. There must be clear and convincing evidence that a competent, reasonable person in the position of the incapacitated person would adopt such a plan.

The approved Medicaid plan could include an exempt transfer of the family home to a spouse, minor, blind or disabled child, an adult sibling who resides in the home for at least one year and has an “ownership” interests in the property or a caretaker child that has lived with the parent for two or more years and has cared for the parent.

Assets, other than the homestead, could be transferred to a spouse or a disabled child. The court has also approved Medicaid plans where there are transfers of assets that create periods of ineligibility provided there is a promissory note transaction or other assets, like individual retirement accounts to pay for any period of ineligibility.

Of course, this type of emergency planning is done all the time by competent individuals or their duly appointed agents. In this case, the court would be giving the guardian the same powers if adequate proof is submitted on the application to approve a Medicaid plan. Typically, the court would not allow guardians to this type of Medicaid planning, until a challenge was brought alleging that among other things, incapacitated persons were not afforded the same rights as people without disabilities.

In an important decision, the highest court in New York State, in the Matter of Shah, held that: “No agency of the government has any right to complain about the fact that middle class people confronted with desperate circumstances choose voluntarily to inflict poverty on themselves when it is the government itself which has established the rule that poverty is a prerequisite to the receipt of government assistance in the defraying of costs of ruinously expensive, but absolutely essential, medical treatment.” As a result of this case, the guardianship judges in New York State started to approve Medicaid planning by guardians. This has been an important case for individuals who have failed to plan in advance of their incapacity.

There are also instances where an individual is in a nursing facility that could cost anywhere from $10,000 to $18,500 per month and they still have assets in excess of the permitted amount but are unable to make the transfers. Under a New York State Department of Health administrative directive, the incapacitated person would be immediately eligible for Medicaid as the assets would be deemed unavailable. The person would get Medicaid without any review of their assets, even though they have assets well in excess of the Medicaid limits. This often occurs when an individual is in a nursing home and receiving care and there is no one to access his or her funds. If the nursing home makes an application for a guardian to be appointed, the nursing home can immediately apply for Medicaid as well. This is a useful and necessary tool for nursing homes that frequently suffer the economic effects of residents that cannot pay and due to incapacity cannot cooperate in making an application to the Department of Social Services for Medicaid reimbursement.

While this option is available, it is far better for individuals to be prepared and take the time to execute a power of attorney and a health care proxy. Guardianship cases are legal proceedings that are expensive and can become contentious between family members. In addition, the individual is at the mercy of the court to determine what their wishes would have been using the doctrine of substituted judgment. It is far better to be proactive and choose your own plan and the agents to implement it.

Nancy Burner, Esq. practices elder law and estate planning from her East Setauket office.

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