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Medicaid Planning 2009
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Medicaid Planning 2009

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This presentation describes the current Medicaid eligibility rules and shows various techniques that permits individuals and families to preserve assets in the face of crushing long-term care costs

This presentation describes the current Medicaid eligibility rules and shows various techniques that permits individuals and families to preserve assets in the face of crushing long-term care costs


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  • 1. Elder Law and Medicaid Richard J. Shapiro, J.D. Mindy Menke, J.D. Blustein, Shapiro, Rich & Barone, LLP 90 Crystal Run Rd., Suite 409 Middletown, New York 10941 (845) 692-0011 www.mid-hudsonlaw.com
  • 2. Medicaid (generally)
    • Joint Federal-State medical assistance program
    • “ Means-tested” program providing payment for institutional and community medical care
    • Payer of last resort
    © 2009 Richard J. Shapiro
  • 3. Residency/Citizenship
    • Medicaid applicant/resident must be resident of the state to which he or she is applying
    • Medicaid applicant/recipient must be a legal resident of the U.S. (i.e. citizen or qualified resident alien)
    © 2009 Richard J. Shapiro
  • 4. Financial Eligibility
    • Applicant is required to seek all income benefits to which he or she is entitled
    • In “spend-down” states (including New York), applicants who possess excess income will be eligible for Medicaid provided that all excess income is paid to the Medicaid provider
    • In “Income-Cap” states, applicants who possess excess income will NOT be eligible for Medicaid
    © 2009 Richard J. Shapiro
  • 5. Medicaid Income and Resource Levels 2009 © 2009 Richard J. Shapiro
  • 6. Medicaid Financial Eligibility Requirements
    • Limits on resources
      • Individual = $13,800
    • Limits on income
      • Non-institutionalized
        • Individual = $767/month
      • Institutionalized individual = $50/month plus premiums for Medicare and Medicaid
    © 2009 Richard J. Shapiro
  • 7. Medicaid Financial Eligibility Requirements
    • Community Spouse
      • Resources = $74,820 to max. of $109,560
      • Maximum Income = $2,739 per month
    © 2009 Richard J. Shapiro
  • 8. Transfer of Assets Under Medicaid
      • Look Back Period
      • Penalty Period
      • Exempt Transfers
      • Pre-paid funeral arrangements
      • Supplemental Needs Trusts
    © 2009 Richard J. Shapiro
  • 9. Deficit Reduction Act
    • On February 8, 2006, President Bush signed into law the “Deficit Reduction Act” (DRA)
    • The DRA drastically changed the qualification requirements for Medicaid Long-term coverage.
    © 2009 Richard J. Shapiro
  • 10. The Look-Back Period © 2009 Richard J. Shapiro
  • 11. Look-Back Period for Asset Transfers
      • 60-month look-back period for both outright transfers and transfers to certain trusts
      • Before the DRA, outright transfers were subject to a 36-month look-back period
    © 2009 Richard J. Shapiro
  • 12. The Penalty Period © 2009 Richard J. Shapiro
  • 13. Commencement of Penalty Period
    • Under Deficit Reduction Act signed into law on February 8, 2006, the Penalty Period begins to run on the date the Medicaid application is filed, provided that the applicant were otherwise qualified; under prior law, Penalty Period began to run the first day of the calendar month after the transfer was made.
    © 2009 Richard J. Shapiro
  • 14. Calculation of the Penalty Period The total value of all uncompensated transfers divided by the average monthly cost of nursing home care as established by New York State © 2009 Richard J. Shapiro
  • 15. 2009 Regional Rates
    • Central
    • Long Island
    • New York City
    • Northeastern
    • NORTHERN METROPOLITAN
    • Rochester
    • Western
    • $6,938
    • $10,852
    • $9,838
    • $7,766
    • $9,439
    • $8,720
    • $7,0418
    © 2009 Richard J. Shapiro
  • 16. Transfers by Spouse
    • A transfer by one spouse to a third person will affect the nursing home eligibility of the other spouse
    © 2009 Richard J. Shapiro
  • 17. Rules Protecting the Community Spouse © 2009 Richard J. Shapiro
  • 18. Rules Regarding Income
    • In 2009, Community Spouse allowed a maximum monthly income of $2,739
    • This amount (called “MMMNA”) may be increased by Court order
      • Community Spouse must show “exceptional circumstances resulting in significant financial distress”
    © 2009 Richard J. Shapiro
  • 19. Rules Regarding Resources
    • Community Spouse entitled to maximum resources of $109,560 (2009)
    • This sum may be enhanced to increase spouse’s income to the MMMNA level
    © 2009 Richard J. Shapiro
  • 20. Spousal Refusal
    • Community spouse may retain amounts in excess of CSRA and MMMNA
    • Institutionalized remains eligible for Medicaid
    • DSS will “request” contribution of 25% of Community Spouse’s income in excess of MMMNA
    • DSS retains right to file suit additional contribution
    © 2009 Richard J. Shapiro
  • 21. Advantages of Spousal Refusal
    • Community Spouse may not get sued
    • Medicaid reimbursement rate is a percentage of the private pay rate
    • DSS usually settles for less than the full amount paid by Medicaid
    © 2009 Richard J. Shapiro
  • 22. Exempt Transfers of Home
    • A home can be transferred, without penalty, to:
      • A spouse
      • A child under the age of 21
      • Blind or disabled child of any age
      • Sibling with an equity interest who has lived in the home at least one year
      • “ caretaker” child who has lived in parent’s home at least two years
    © 2009 Richard J. Shapiro
  • 23. Planning Ideas – Annuities and Loans
    • Use of short-term immediate annuities can be used in crisis planning
      • Example: parent with $100,000 gifts $50,000 to children. Parent purchases an immediate annuity with remaining $50,000 for a term shorter than parent’s life expectancy. Penalty period of about 5.5 months begins to run because parent now retained assets below Medicaid level. Annuity payments and other income pays for Nursing Home care through expiration of 5.5-month penalty period
    © 2009 Richard J. Shapiro
  • 24. Planning Ideas – Annuities and Loans
    • As an alternative to an Annuity, parent can make a loan to child(ren), combined with a gift
    • Repayment under note must be made within parent’s life expectancy
    • Note cannot be “cancelled” upon parent’s death, and must be non-assignable
    • Use revocable trust as lender to avoid estate recovery
    © 2009 Richard J. Shapiro
  • 25. Personal Service Contracts
    • Agreement between parent and a child for compensation to child for providing certain type of care and assistance
    • Must be written agreement for reasonable compensation
    • Requires good record keeping, payments made “on the books”
    • Child pays income taxes on payments
    © 2009 Richard J. Shapiro
  • 26. Irrevocable Trusts
    • Irrevocable Trust cannot provide trustmaker access to principal, but can permit access to income
    • Under DRA, funding an Irrevocable Trust today will “start the clock” running so that the five-year look back may expire
    © 2009 Richard J. Shapiro
  • 27. IRT Trustmaker(s) Transfer $ + house? Subject to 5-year look back Trustees (often one or more children) Principal distributions to class of beneficiaries? INCOME NO PRINCIPAL C1 C2 Protective trust Protective trust Capital gains exemption preserved if house sold (Subject to limited power of appointment) Trustmakers may replace trustees (after 2 nd death) Powers of Appointment? © 2009 Richard J. Shapiro
  • 28. Client Action Plan
    • Compare options for long-term care insurance
      • premiums, daily benefit, number of years for benefits
    • Integrate long-term care insurance with well-designed estate plan, preferably including revocable trust for disability planning and well-crafted power of attorney
    • If long-term care insurance is not feasible, consult with elder law attorney to review options before care is needed
    • Especially important to act while person retains mental capacity; otherwise , Guardianship proceeding (which is time consuming and expensive) may be required
    © 2009 Richard J. Shapiro
  • 29. Elder Law and Medicaid Richard J. Shapiro, J.D. Mindy Menke, J.D. Blustein, Shapiro, Rich & Barone, LLP 90 Crystal Run Rd., Suite 409 Middletown, New York 10941 (845) 692-0011 www.mid-hudsonlaw.com © 2009 Richard J. Shapiro