RECENT DEVELOPMENTS IN MEDICAID AND HEALTH CARE PLANNING 2011 BY ROBERT J. LONGSTREET, ATTORNEY AT LAW
MEDICAID VS. MEDICARE <ul><li>MEDICAID IS A LARGE GOVERNMENT HEALTH INSURANCE PROGRAM </li></ul><ul><li>DIFFERENT FROM MED...
MEDICAID <ul><li>In Michigan, Medicaid implemented by county DHS (Department of Human Services) Offices.  </li></ul><ul><l...
<ul><li>MEDICAID DOES PAY FOR LONG TERM NURSING HOME STAYS FOR SENIORS WHO QUALIFY </li></ul><ul><li>BUT MEDICAID IS ‘MEAN...
WHY DO WE CARE ABOUT MEDICAID ELIBILITY? <ul><li>0ver 6,000 people turn 65 every day, and 40% of these people will spend t...
MEDICAID QUALIFICATION REQUIREMENTS <ul><li>Must be 65 years or older or disabled, blind or receiving SSI </li></ul><ul><l...
AND IF YOU QUALIFY… <ul><li>The nursing home patient is allowed to keep $60.00 per month for ‘personals’ </li></ul><ul><li...
THIS SOUNDS HORRIBLE!!!!
SOME GOOD NEWS <ul><li>NOT ALL ASSETS ARE “COUNTABLE” </li></ul><ul><li>THESE ARE ASSETS A PERSON CAN OWN AND STILL RECEIV...
HOMESTEAD EXEMPTION <ul><li>HOMESTEAD INCLUDES HOME AND ANY CONTIGUOUS LAND </li></ul><ul><li>CAN BE SEPARATED BY ROAD OR ...
<ul><li>OF ANY VALUE </li></ul>ONE AUTOMOBILE
PERSONAL PROPERTY <ul><li>CLOTHING </li></ul><ul><li>JEWELRY </li></ul><ul><li>HOME APPLIANCES </li></ul><ul><li>FURNITURE...
PRE-PAID FUNERAL CONTRACTS <ul><li>MUST BE IRREVOCABLE </li></ul><ul><li>FOR HUSBAND AND WIFE </li></ul><ul><li>CAN INCLUD...
EVERYTHING ELSE IS A “COUNTABLE ASSET” <ul><li>CHECKING ACCOUNTS </li></ul><ul><li>SAVINGS ACCOUNTS </li></ul><ul><li>CERT...
VALUING COUNTABLE ASSETS <ul><li>Joint Assets </li></ul><ul><ul><li>Joint with Spouse =  All counts </li></ul></ul><ul><ul...
Valuing Countable Assets <ul><li>Retirement Funds and Annuities </li></ul><ul><ul><li>If the owner can make a withdraw, th...
EXTRA EXEMPTION FOR “COMMUNITY” SPOUSE <ul><li>OF REMAINING ASSETS, SPOUSE IS ENTITLED TO KEEP: </li></ul><ul><li>½ THE CO...
EXAMPLE:  Mr. Brown is entering a long term care facility.  Mr. and Mrs. Brown own the following assets: <ul><li>HOME ($18...
IF MR. BROWN APPLIED FOR MEDICAID: <ul><li>MR. BROWN COULD KEEP $2,000 </li></ul><ul><li>MRS. BROWN (THE COMMUNITY SPOUSE)...
WHAT ABOUT INCOME? <ul><li>MR. BROWN GETS TO KEEP $60.00 PER MONTH  </li></ul><ul><li>IF MR. BROWN WERE SINGLE, THE REMAIN...
WHAT ABOUT THE REMAINING $80,000 THE BROWNS OWN?
WHAT ABOUT THE REMAINING $80,000 THE BROWNS OWN? <ul><li>THEY COULD SPEND IT ON THE NURSING HOME (APPROX. 1 YEAR) </li></u...
MEDICAID PENALIZES GIFTS <ul><li>ON MEDICAID APPLICATION, ASKED IF MEDICAID APPLICANT HAS GIVEN AWAY ASSETS IN LAST 60 MON...
IF MR. BROWN GIFTS REMAINING $80,000 TO CHILD <ul><li>AND MR. BROWN APPLIES FOR MEDICAID WITHIN 60 MONTHS OF GIFT </li></u...
SO WHAT IS LEFT FOR CLIENTS TO DO? <ul><li>FOR A SINGLE CLIENT </li></ul><ul><li>CONVERSION :  TRANSFER COUNTABLE ASSETS I...
FOR A SINGLE CLIENT <ul><li>“ HALF-A-LOAF” METHOD </li></ul><ul><li>GIFT APPROXIMATELY 60% OF ASSETS </li></ul><ul><li>REM...
FOR MARRIED CLIENT <ul><li>TAKE ADVANTAGE OF FULL COMMUNITY SPOUSE ALLOWANCE (1/2 OF COUNTABLE ASSETS) </li></ul><ul><li>W...
AS A REVIEW… REMEMBER MR. AND MRS. BROWN?
EXAMPLE:  Mr. Brown is entering a long term care facility.  Mr. and Mrs. Brown own the following assets: <ul><li>HOME ($18...
WE CAN GET MR. BROWN ON MEDICAID IMMEDIATELY! <ul><li>MR. BROWN  </li></ul><ul><li>GETS TO KEEP $2,000 </li></ul><ul><li>$...
MRS. BROWN <ul><li>HOUSE, CAR, PRE-PAID FUNERAL AND PERSONAL PROPERTY </li></ul><ul><li>COMMUNITY SPOUSE ALLOWANCE (1/2 CO...
MR. AND MRS. BROWN SAVE 100% OF THEIR SAVINGS AND ESTATE ASSETS
DRAMATIC LAW CHANGE APRIL 1, 2011 <ul><li>Jointly held real estate cannot be sold without the consent of both joint owners...
Recent Example of New Law <ul><li>Client applied for Medicaid two years ago.  Michigan home exempt (homestead) and Florida...
<ul><li>FINALLY!  SOME DIRECTION ON MICHIGAN ESTATE RECOVERY! </li></ul><ul><li>Following is language from the June 2011 p...
<ul><li>What is an estate? </li></ul><ul><li>An estate includes all property and assets that pass through probate court. <...
<ul><li>What is an undue hardship? </li></ul><ul><li>An undue hardship exists when: </li></ul><ul><li>•  The estate is the...
IF YOU HAVE A NURSING HOME ISSUE…. <ul><li>ROBERT J. LONGSTREET </li></ul><ul><li>GEE & LONGSTREET, LLP </li></ul><ul><li>...
GEE & LONGSTREET, LLP
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Recent Developments in Medicaid and Health Care Planning Without Probate

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Attorney Rob Longstreet (http://www.ElderLawOfMichigan.com) provides information on how the recent developments in Medicaid and Health Care Planning have an impact on today's consumer. Longstreet specializes in long term care planning, Medicaid, Medicare, nursing home law and related elder law issues.

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Recent Developments in Medicaid and Health Care Planning Without Probate

  1. 1. RECENT DEVELOPMENTS IN MEDICAID AND HEALTH CARE PLANNING 2011 BY ROBERT J. LONGSTREET, ATTORNEY AT LAW
  2. 2. MEDICAID VS. MEDICARE <ul><li>MEDICAID IS A LARGE GOVERNMENT HEALTH INSURANCE PROGRAM </li></ul><ul><li>DIFFERENT FROM MEDICARE IN THAT MEDICAID ELIGIBILITY REQUIRES AGED OR DISABLED + STRICT FINANCIAL ELIGIBILITY REQUIRMENTS </li></ul><ul><li>COOPERATIVE FEDERAL & STATE PROGRAM </li></ul><ul><li>FEDERAL LAW PROVIDES BROAD PARAMETERS, STATE PROVIDES SPECIFIC RULES AND ADMINISTERS ELIGIBILITY </li></ul>
  3. 3. MEDICAID <ul><li>In Michigan, Medicaid implemented by county DHS (Department of Human Services) Offices. </li></ul><ul><li>Many Medicaid Programs for various populations. </li></ul><ul><li>Medicaid Long Term Care Programs: </li></ul><ul><ul><li>Nursing Home (NH) Medicaid </li></ul></ul><ul><ul><li>MI Choice Waiver </li></ul></ul>
  4. 4. <ul><li>MEDICAID DOES PAY FOR LONG TERM NURSING HOME STAYS FOR SENIORS WHO QUALIFY </li></ul><ul><li>BUT MEDICAID IS ‘MEANS TESTED’, MEANING THE STATE WILL LOOK AT ASSETS AND INCOME </li></ul><ul><li>(FOUR TESTS TO PASS… WE’LL DISCUSS IN A FEW MINUTES) </li></ul>
  5. 5. WHY DO WE CARE ABOUT MEDICAID ELIBILITY? <ul><li>0ver 6,000 people turn 65 every day, and 40% of these people will spend time in a nursing home. </li></ul><ul><li>The average cost in 2009 for 1 month in a nursing home in the State of Michigan? </li></ul><ul><li>$6,816 </li></ul><ul><li>66% of all single people will be &quot;broke&quot; after 13 weeks in a nursing home. </li></ul><ul><li>90% of married couples with one spouse in a nursing home will be &quot;broke&quot; after two years. </li></ul>
  6. 6. MEDICAID QUALIFICATION REQUIREMENTS <ul><li>Must be 65 years or older or disabled, blind or receiving SSI </li></ul><ul><li>Must be a resident of the State of Michigan </li></ul><ul><li>Income must be below the monthly private pay cost of the nursing home ($7,000) </li></ul><ul><li>An applicant cannot own more than $2,000 of countable assets (individually or with spouse) </li></ul>
  7. 7. AND IF YOU QUALIFY… <ul><li>The nursing home patient is allowed to keep $60.00 per month for ‘personals’ </li></ul><ul><li>The remainder of the patient’s income goes to the nursing home </li></ul><ul><li>MEDICAID will pay the remainder of the nursing home bill </li></ul>
  8. 8. THIS SOUNDS HORRIBLE!!!!
  9. 9. SOME GOOD NEWS <ul><li>NOT ALL ASSETS ARE “COUNTABLE” </li></ul><ul><li>THESE ARE ASSETS A PERSON CAN OWN AND STILL RECEIVE MEDICAID BENEFITS </li></ul><ul><li>HOMESTEAD </li></ul><ul><li>ONE AUTOMOBILE </li></ul><ul><li>PERSONAL PROPERTY </li></ul><ul><li>PREPAID FUNERAL CONTRACTS </li></ul>
  10. 10. HOMESTEAD EXEMPTION <ul><li>HOMESTEAD INCLUDES HOME AND ANY CONTIGUOUS LAND </li></ul><ul><li>CAN BE SEPARATED BY ROAD OR RIVER, BUT NOT BY ANOTHER’S LAND </li></ul><ul><li>NEED NOT BE IN MICHIGAN </li></ul><ul><li>FOR A SINGLE PERSON: LESS THAN $500,000 IN EQUITY VALUE </li></ul><ul><li>NO VALUE CAP IF OCCUPIED BY SPOUSE, DISABLED CHILD, OR CHILD UNDER 21. </li></ul>
  11. 11. <ul><li>OF ANY VALUE </li></ul>ONE AUTOMOBILE
  12. 12. PERSONAL PROPERTY <ul><li>CLOTHING </li></ul><ul><li>JEWELRY </li></ul><ul><li>HOME APPLIANCES </li></ul><ul><li>FURNITURE </li></ul>
  13. 13. PRE-PAID FUNERAL CONTRACTS <ul><li>MUST BE IRREVOCABLE </li></ul><ul><li>FOR HUSBAND AND WIFE </li></ul><ul><li>CAN INCLUDE BURIAL PLOTS </li></ul><ul><li>FOR ENTIRE FAMILY </li></ul>
  14. 14. EVERYTHING ELSE IS A “COUNTABLE ASSET” <ul><li>CHECKING ACCOUNTS </li></ul><ul><li>SAVINGS ACCOUNTS </li></ul><ul><li>CERTIFICATE OF DEPOSITS </li></ul><ul><li>OTHER REAL ESTATE (BESIDES HOMESTEAD) </li></ul><ul><li>STOCKS, BONDS, ETC. </li></ul>
  15. 15. VALUING COUNTABLE ASSETS <ul><li>Joint Assets </li></ul><ul><ul><li>Joint with Spouse = All counts </li></ul></ul><ul><ul><li>Joint with Non-Spouse </li></ul></ul><ul><ul><ul><li>For Bank Accounts = All counts unless demonstrate contribution </li></ul></ul></ul><ul><ul><ul><li>Real Estate, Stocks and Mutual Funds = valued in proportion to ownership </li></ul></ul></ul>
  16. 16. Valuing Countable Assets <ul><li>Retirement Funds and Annuities </li></ul><ul><ul><li>If the owner can make a withdraw, the value is the amount that can be withdrawn, reduced by any withdrawal penalty (but not reduced for taxes owing). </li></ul></ul><ul><ul><li>Annuity in pay status or pension that pay monthly benefit (with no right of withdrawal) in treated as income. </li></ul></ul>
  17. 17. EXTRA EXEMPTION FOR “COMMUNITY” SPOUSE <ul><li>OF REMAINING ASSETS, SPOUSE IS ENTITLED TO KEEP: </li></ul><ul><li>½ THE COUNTABLE ASSETS </li></ul><ul><li>UP TO A MAXIMUM OF $109,500 </li></ul>
  18. 18. EXAMPLE: Mr. Brown is entering a long term care facility. Mr. and Mrs. Brown own the following assets: <ul><li>HOME ($180,000) </li></ul><ul><li>ONE CAR </li></ul><ul><li>PERSONAL PROPERTY </li></ul><ul><li>PRE-PAID FUNERAL </li></ul><ul><li>$100,000 IRA (Mr. Brown) </li></ul><ul><li>$20,000 savings (Mrs. Brown) </li></ul><ul><li>$35,000 CDs (joint) </li></ul><ul><li>$7,000 checking (joint) </li></ul>
  19. 19. IF MR. BROWN APPLIED FOR MEDICAID: <ul><li>MR. BROWN COULD KEEP $2,000 </li></ul><ul><li>MRS. BROWN (THE COMMUNITY SPOUSE) COULD KEEP: </li></ul><ul><li>THE HOUSE </li></ul><ul><li>THE CAR </li></ul><ul><li>THE PREPAID FUNERAL </li></ul><ul><li>PERSONAL PROPERTY </li></ul><ul><li>$80,000 IN CASH </li></ul>
  20. 20. WHAT ABOUT INCOME? <ul><li>MR. BROWN GETS TO KEEP $60.00 PER MONTH </li></ul><ul><li>IF MR. BROWN WERE SINGLE, THE REMAINDER OF HIS INCOME WOULD GO TO THE NURSING HOME BILL </li></ul><ul><li>MRS. BROWN GETS TO KEEP ALL OF HER INCOME </li></ul><ul><li>PLUS, ENOUGH OF MR. BROWN’S INCOME TO PAY HER MONTHLY BILLS (APPOX. $1,500 - $2,500 PER MONTH) </li></ul>
  21. 21. WHAT ABOUT THE REMAINING $80,000 THE BROWNS OWN?
  22. 22. WHAT ABOUT THE REMAINING $80,000 THE BROWNS OWN? <ul><li>THEY COULD SPEND IT ON THE NURSING HOME (APPROX. 1 YEAR) </li></ul><ul><li>OR THEY MIGHT BE TEMPTED TO GIFT THE MONEY TO RELATIVES….. </li></ul>
  23. 23. MEDICAID PENALIZES GIFTS <ul><li>ON MEDICAID APPLICATION, ASKED IF MEDICAID APPLICANT HAS GIVEN AWAY ASSETS IN LAST 60 MONTHS </li></ul><ul><li>FOR TRANSFERS BEFORE FEBRUARY 8, 2006, ONLY ASKED ABOUT LAST 36 MONTHS </li></ul><ul><li>IF YES, APPLICANT PENALIZED FOR AMOUNT OF TIME GIFTED MONEY COULD HAVE PAID FOR NURSING HOME STAY </li></ul><ul><li>GIFT AMOUNT / $6,816 = Penalty Time </li></ul>
  24. 24. IF MR. BROWN GIFTS REMAINING $80,000 TO CHILD <ul><li>AND MR. BROWN APPLIES FOR MEDICAID WITHIN 60 MONTHS OF GIFT </li></ul><ul><li>$80,000 / $6,816 = 12 MONTH PENALTY </li></ul><ul><li>RESULT: MR. BROWN WILL NEED TO GET THE MONEY BACK TO PAY FOR NURSING HOME STAY! </li></ul>
  25. 25. SO WHAT IS LEFT FOR CLIENTS TO DO? <ul><li>FOR A SINGLE CLIENT </li></ul><ul><li>CONVERSION : TRANSFER COUNTABLE ASSETS INTO EXEMPT ASSETS </li></ul><ul><li>EX: $25,000 IN CASH PUT INTO HOME FOR NEW ROOF, AIR CONDITIONING AND KITCHEN. $8,000 SPENT ON PRE-PAID FUNERAL ARRANGMENT. </li></ul>
  26. 26. FOR A SINGLE CLIENT <ul><li>“ HALF-A-LOAF” METHOD </li></ul><ul><li>GIFT APPROXIMATELY 60% OF ASSETS </li></ul><ul><li>REMAINING 40% USED TO COVER THE PENALTY PERIOD </li></ul><ul><li>EX: MR. X HAS $100,000 IN COUNTABLE ASSETS. WE HELP HIM GIFT $60,000 AND USE $40,000 TO COVER THE 9 MONTH PENALTY PERIOD. </li></ul>
  27. 27. FOR MARRIED CLIENT <ul><li>TAKE ADVANTAGE OF FULL COMMUNITY SPOUSE ALLOWANCE (1/2 OF COUNTABLE ASSETS) </li></ul><ul><li>WE THEN DRAFT AN “IRREVOCABLE ANNUITY TRUST” TO HOLD REMAINING ASSETS FOR SPOUSE </li></ul><ul><li>TRUST PAYS OUT REMAINING FUNDS TO SPOUSE BASED ON LIFE EXPECTANCY </li></ul>
  28. 28. AS A REVIEW… REMEMBER MR. AND MRS. BROWN?
  29. 29. EXAMPLE: Mr. Brown is entering a long term care facility. Mr. and Mrs. Brown own the following assets: <ul><li>HOME ($180,000) </li></ul><ul><li>ONE CAR </li></ul><ul><li>PERSONAL PROPERTY </li></ul><ul><li>PRE-PAID FUNERAL </li></ul><ul><li>$100,000 IRA (Mr. Brown) </li></ul><ul><li>$20,000 savings (Mrs. Brown) </li></ul><ul><li>$35,000 CDs (Jointly) </li></ul><ul><li>$7,000 checking (Jointly) </li></ul>
  30. 30. WE CAN GET MR. BROWN ON MEDICAID IMMEDIATELY! <ul><li>MR. BROWN </li></ul><ul><li>GETS TO KEEP $2,000 </li></ul><ul><li>$60 PER MONTH OF HIS INCOME FOR MISCELLANEOUS </li></ul>
  31. 31. MRS. BROWN <ul><li>HOUSE, CAR, PRE-PAID FUNERAL AND PERSONAL PROPERTY </li></ul><ul><li>COMMUNITY SPOUSE ALLOWANCE (1/2 COUNTABLE ASSETS) $80,000 </li></ul><ul><li>REMAINING $80,000 IN IRREVOCABLE TRUST PAID TO HER ANNUITY STYLE </li></ul><ul><li>ALL OF HER INCOME, PLUS ENOUGH OF MR. BROWN’S INCOME TO PAY MONTHLY BILLS </li></ul>
  32. 32. MR. AND MRS. BROWN SAVE 100% OF THEIR SAVINGS AND ESTATE ASSETS
  33. 33. DRAMATIC LAW CHANGE APRIL 1, 2011 <ul><li>Jointly held real estate cannot be sold without the consent of both joint owners. As such, jointly held real estate, in the eyes of Medicaid, has been &quot;exempt&quot;, or more specifically, &quot;unsalable&quot; without any questions asked. </li></ul><ul><li>The new law requires states that a joint owner can only refuse to sell under a &quot;hardship&quot; exception. What constitutes a hardship? The rule states: </li></ul><ul><li>Undue hardship for this item is defined as: a co-owner uses the property as his or her principal place of residence and they would have to move if the property were sold and there is no other readily available housing. </li></ul>
  34. 34. Recent Example of New Law <ul><li>Client applied for Medicaid two years ago. Michigan home exempt (homestead) and Florida vacation home exempt (jointly held with child for more than 5 years). </li></ul><ul><li>Renewal for Medicaid due in May, 2011. </li></ul><ul><li>Because of new law, Florida home is not exempt because there is no “hardship” for child to sell home i.e. not child’s home. </li></ul><ul><li>Forced to sell vacation home after two years on Medicaid? </li></ul>
  35. 35. <ul><li>FINALLY! SOME DIRECTION ON MICHIGAN ESTATE RECOVERY! </li></ul><ul><li>Following is language from the June 2011 proposed changes to the BEM 400 regarding “preliminary estate recovery” provisions. Note, it clarifies that recovery only applies to probate assets. It appears to seek recovery from any Medicaid beneficiary over the age of 55 (meaning broader than just long term care), and provides for yet to be elaborated upon undue hardship exceptions. Here it is in all of its glory: </li></ul><ul><li>“ The federal government requires Medicaid to recover money that it paid for services from the estates of Medicaid beneficiaries who have died. Medicaid will only recover the amount Medicaid paid for a beneficiary. This is estate recovery. The state will not seek recovery of certain Medicare cost-sharing benefits. </li></ul>
  36. 36. <ul><li>What is an estate? </li></ul><ul><li>An estate includes all property and assets that pass through probate court. </li></ul><ul><li>Example: homes, cars, insurance money and bank accounts. </li></ul><ul><li>Who is subject to estate recovery? </li></ul><ul><li>Medicaid beneficiaries who are age 55 or older. </li></ul><ul><li>Are there exceptions to estate recovery? </li></ul><ul><li>The state may decide not to recover money if it creates an “Undue Hardship” or if any of the following people lawfully live in the beneficiary’s home </li></ul><ul><li>• Beneficiary’s spouse. </li></ul><ul><li>• Beneficiary’s child who is under the age of 21, blind, or permanently disabled. </li></ul><ul><li>• Beneficiary’s sibling who has an equity interest in the home and was living in the home for at least 1 year immediately before the beneficiary’s death. </li></ul><ul><li>• A survivor who: </li></ul><ul><li>•• was living in the beneficiary’s home for at least 2 years immediately before the beneficiary went into a medical facility: and </li></ul><ul><li>•• provided care so the beneficiary could stay at home during that period. </li></ul>
  37. 37. <ul><li>What is an undue hardship? </li></ul><ul><li>An undue hardship exists when: </li></ul><ul><li>• The estate is the sole source of income for the survivors, such as a family farm or business; or </li></ul><ul><li>• The estate is a home of modest value; or </li></ul><ul><li>• A survivor would become or remain eligible for Medicaid if recovery occurred. </li></ul><ul><li>How does estate recovery work? </li></ul><ul><li>When a Medicaid beneficiary age 55 or older dies, the state sends an estate recovery notice to the estate representative or heirs. The estate recovery notice tells them: </li></ul><ul><li>• the state plans to file a claim; </li></ul><ul><li>• how much the state will claim; </li></ul><ul><li>• how to apply for an undue hardship waiver. </li></ul><ul><li>If no exceptions apply, then the state will file a claim with the estate. </li></ul>
  38. 38. IF YOU HAVE A NURSING HOME ISSUE…. <ul><li>ROBERT J. LONGSTREET </li></ul><ul><li>GEE & LONGSTREET, LLP </li></ul><ul><li>269-945-3495 </li></ul><ul><li>607 N. BROADWAY, HASTINGS </li></ul><ul><li>[email_address] or www.longstreetlegalservices.com </li></ul>
  39. 39. GEE & LONGSTREET, LLP
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