Monday, April 30, 2012
Assisted Living- Income Eligibility
As long as I have been a practicing elder law attorney, I advocated for clients in nursing facilities. However, over the last two years more and more clients have come to me seeking advice regarding Assisted Living facilities. I attribute the shift in client needs to three factors 1) the proliferation of Assisted Living facilities in New Jersey, 2) the substantial lack of regulation of Assisted Living facilities, and 3) baby boomers entering the Assisted Living communities.
My greatest concern for any person entering an Assisted Living facility is their long term financing plan. Many facilities have a formal or informal requirement that a patient pay for at least 2 years before receiving Medicaid benefits. However, for numerous reasons, paying for 2 years does not necessarily mean that the patient will get the Medicaid benefit. My next few blog entries will address the most common reasons why patients do not get those Medicaid benefits, but this entry deals with something called the "Income Cap."
Medicaid home care benefits (which include assisted living benefits) are subject to a monthly income cap of $2,094. That means a person whose monthly fixed income exceeds $2,094.00 cannot get Medicaid benefits in an Assisted Living facility under current law. This is not true in a nursing home environment. As a result of the income cap, many Assisted Living patients have no choice but to go to a nursing home when they run out of private pay funds.
However, there may be good news on the income cap front. Last week I attended the 14th annual Elder Law Retreat. A decision maker with State was in attendance. She advised the lawyers present that the State has requested the federal government to allow a "waiver" of the income cap. Even though the State plan has not been finalized, but the current proposal individuals with income over the cap can get Medicaid home care and Assisted Living services by paying a premium equal to the difference between their fixed income and the current cap of $2,094. So, for example, if I have monthly fixed income of $3,000.00, I would pay a monthly premium of $906.00 and I would then be eligible for Medicaid. We do not know who the premium will be paid to, but this issue should be resolved in July of 2012.
Monday, November 15, 2010
Making a Gift That is Not a "Gift" For Medicaid Purposes
One way to eliminate a Medicaid penalty period is to prove that a gift was not intended to protect assets from nursing homes. The State Courts have been reluctant to enforce as specific administrative code section that details when a gift is not considered a gift for Medicaid purposes.
An Administrative Law Judge is a case arising out of Hudson County, has recently issued one of the rare rulings indicating a gift was not made for Medicaid purposes.
In the case, a healthy man, while he was still working, loaned money to a child who was about to loose her house. The man then had a stroke, and other illnesses which required long term nursing care.
The Court ruled that the financial circumstances surrounding the gift, and the sudden onset of disability, merited a ruling that the gift should no result in a Medicaid penalty.
The case will be reviewed by the Director of the Division of Medical Assistance and Health Services, and if the Director acts consistently, the decision will be reversed.
An Administrative Law Judge is a case arising out of Hudson County, has recently issued one of the rare rulings indicating a gift was not made for Medicaid purposes.
In the case, a healthy man, while he was still working, loaned money to a child who was about to loose her house. The man then had a stroke, and other illnesses which required long term nursing care.
The Court ruled that the financial circumstances surrounding the gift, and the sudden onset of disability, merited a ruling that the gift should no result in a Medicaid penalty.
The case will be reviewed by the Director of the Division of Medical Assistance and Health Services, and if the Director acts consistently, the decision will be reversed.
Monday, November 1, 2010
Spousal Resource Figures for 2011 to remain unchanged at 2009 level
Although no official word has been given, a source at the Centers for Medicare and Medicaid Services has informed as my information source, that for the second year in a row the agency will not be increasing the community spouse resource allowances (CSRA). Spousal impoverishment figures for 2009 will remain in effect.
The 2009 minimum CSRA was $21,912 and the maximum was $109,560.
The 2009 minimum CSRA was $21,912 and the maximum was $109,560.
Monday, October 25, 2010
Payments to Agents under Power of Attorney are Considered Gifts (appeal pending).
Payments to a child or children who are the “agent(s)” or more commonly understood as power of attorney for a parent are often examined when applying for Medicaid. In order for a payment to be not considered a gift, the power of attorney document must specifically allow compensation for the agent. In addition, the compensation has to be similar to what a person would pay a third party to do the same tasks. Compensation should not be in lump sums and the recipient should report the payments as income on their State and Federal income tax returns.
A case currently on appeal in New Jersey deals specifically with payments to a child/power of attorney.
In V.M. v. Division of Medical Assistance and Health Services, et al., OAL Docket No. 5769-09 (March 22, 2010, Union County). A New Jersey administrative law judge ruled that a Medicaid applicant's payment to his adult children for services rendered under a power of attorney was properly considered a gift and subject to a penalty period.
V.M., an elderly widower, executed a power of attorney, appointing two of his four adult children as co-agents. In January 2008, after having been admitted to a nursing home and approved for Medicaid nursing home benefits, V.M. sold his former home and received approximately $202,748 in net proceeds. The co-agents reported the sale and receipt of the proceeds to Medicaid. Later they filed an action in superior court seeking compensation of $102,555.55 for services they had rendered over the preceding five or so years, including taking their father to family gatherings, doctor visits, the bank and to dinner, plus $24,400 for expenses incurred on their father's behalf. Medicaid was not notified of the action. As the matter was uncontested, the superior court eventually awarded the co-agents the amounts they had requested.
Subsequently, Medicaid terminated V.M.'s nursing home benefits, concluding that the payment to his adult children for services rendered under the power of attorney was actually a gift. V.M. appealed, asserting that because the superior court had authorized payment to the co-agents for the services, the agency was precluded from treating the payment as an uncompensated transfer and denying benefits.
An administrative law judge (ALJ) disagrees and affirms the denial of Medicaid benefits. The ALJ notes that the superior court had not ruled on Medicaid eligibility but rather on compensating agents under a separate state law. Accordingly, the ALJ concludes that the agency is entitled to consider the payment to the co-agents in the context of the Medicaid eligibility rules and to thereby find that in light of the lengthy time that the co-agents were not compensated for their services, the payment was actually an uncompensated transfer.
A case currently on appeal in New Jersey deals specifically with payments to a child/power of attorney.
In V.M. v. Division of Medical Assistance and Health Services, et al., OAL Docket No. 5769-09 (March 22, 2010, Union County). A New Jersey administrative law judge ruled that a Medicaid applicant's payment to his adult children for services rendered under a power of attorney was properly considered a gift and subject to a penalty period.
V.M., an elderly widower, executed a power of attorney, appointing two of his four adult children as co-agents. In January 2008, after having been admitted to a nursing home and approved for Medicaid nursing home benefits, V.M. sold his former home and received approximately $202,748 in net proceeds. The co-agents reported the sale and receipt of the proceeds to Medicaid. Later they filed an action in superior court seeking compensation of $102,555.55 for services they had rendered over the preceding five or so years, including taking their father to family gatherings, doctor visits, the bank and to dinner, plus $24,400 for expenses incurred on their father's behalf. Medicaid was not notified of the action. As the matter was uncontested, the superior court eventually awarded the co-agents the amounts they had requested.
Subsequently, Medicaid terminated V.M.'s nursing home benefits, concluding that the payment to his adult children for services rendered under the power of attorney was actually a gift. V.M. appealed, asserting that because the superior court had authorized payment to the co-agents for the services, the agency was precluded from treating the payment as an uncompensated transfer and denying benefits.
An administrative law judge (ALJ) disagrees and affirms the denial of Medicaid benefits. The ALJ notes that the superior court had not ruled on Medicaid eligibility but rather on compensating agents under a separate state law. Accordingly, the ALJ concludes that the agency is entitled to consider the payment to the co-agents in the context of the Medicaid eligibility rules and to thereby find that in light of the lengthy time that the co-agents were not compensated for their services, the payment was actually an uncompensated transfer.
Gifts Made with a Power of Attorney – Case Law.
A Minnesota appeals court rules that a son who transferred his father's assets to himself in conjunction with Medicaid planning breached a fiduciary duty to his father and that the transferred assets are part of his father's estate.
This is a very significant case and it provides a good Medicaid Pitfall. If the facts allow planning through gifts, the maker of the gift must be empowered to do so. If the older person is incapable of making a gift, their agent, through a Power of Attorney, must have a specific gift making power. The power of attorney must say something similar to “I give my agent the right to make a gift of my assets, including a gift to my agent.” Otherwise the gift can be reversed.
This is a very significant case and it provides a good Medicaid Pitfall. If the facts allow planning through gifts, the maker of the gift must be empowered to do so. If the older person is incapable of making a gift, their agent, through a Power of Attorney, must have a specific gift making power. The power of attorney must say something similar to “I give my agent the right to make a gift of my assets, including a gift to my agent.” Otherwise the gift can be reversed.
Parent’s Soured Investment in Child’s Business is Not a Gift.
A court in Massachusetts also held that a parent’s investment in a Child’s business was not a gift. In the case the parent loaned money to a business started by a child. The business in essence failed. The Court ruled "there is no Medicaid rule that prohibits an applicant, member or spouse from making speculative investments," and seeing no evidence that the loans were a sham, the Superior Court concludes that there was no disqualifying transfer of assets.
Exempt Gifts - Caregiver Child Exception
One of the major exclusions to the gift penalty rules associated with Medicaid is a transfer to a caregiver child. On my web site you can find my article entitled, “Saving The Family Home” which details the caregiver child exception. We have been hearing grumblings from the State of New Jersey that they want to try and make it harder for caregiver children to take advantage of the exempt gift provision. For instance, at one point New Jersey authorities indicated that they wanted to see a contemporaneous log of the care the child provided for the two year period.
Another real problem with the caregiver child exception is that the rule is very complicated. Children often innocently give Medicaid officials the wrong facts that are then turned against the child. For instance, the child’s motivation for moving in the house should have been to care for the parent. It does not have to be the only motivation, but it has to be the reason conveyed to Medicaid. So if a child moved in because she was divorced or out of work, Medicaid will try and deny the use of the caregiver child exception.
In another case, a Massachusetts court ruled that the parent was not sick enough to need the level of services that the child has to provide in order to make use of the gift penalty exception. A child must provide care above a custodial level and the parent must have a special medical need requiring the care.
So for instance, if an entirely healthy parent suddenly has a stroke, the child may not be considered a caregiver child because the parent would not have needed care for the two years prior to the stroke.
Another real problem with the caregiver child exception is that the rule is very complicated. Children often innocently give Medicaid officials the wrong facts that are then turned against the child. For instance, the child’s motivation for moving in the house should have been to care for the parent. It does not have to be the only motivation, but it has to be the reason conveyed to Medicaid. So if a child moved in because she was divorced or out of work, Medicaid will try and deny the use of the caregiver child exception.
In another case, a Massachusetts court ruled that the parent was not sick enough to need the level of services that the child has to provide in order to make use of the gift penalty exception. A child must provide care above a custodial level and the parent must have a special medical need requiring the care.
So for instance, if an entirely healthy parent suddenly has a stroke, the child may not be considered a caregiver child because the parent would not have needed care for the two years prior to the stroke.
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